Apple loses landmark UK lawsuit

CAT ruling on first tech giant trial boosts Britain's 'class action' regime

LONDON:

Apple abused its dominant position by charging app developers unfair commissions, a London tribunal ruled on Thursday, after a trial of the lawsuit, which was brought on behalf of millions of iPhone and iPad users in the United Kingdom.

The Competition Appeal Tribunal (CAT) ruled that Apple had abused its dominant position from October 2015 until the end of 2020 by shutting out competition in the app distribution market and by "charging excessive and unfair prices" as commission to developers.

The CAT ruling in a blow which could leave the US tech company on the hook for hundreds of millions of pounds in damages. Apple has already been facing mounting pressure from regulators in the US and Europe over the fees it charges developers

The case had been valued at around £1.5 billion ($2 billion) by those who brought it. A hearing next month will decide how damages are calculated and Apple's application for permission to appeal. Apple said it would appeal as the ruling, "takes a flawed view of the thriving and competitive app economy".

Rachael Kent, the British academic who brought the case, argued Apple had made "exorbitant profits" by excluding all competition for the distribution of apps and in-app purchases. Her lawyers argued at the start of the trial in January that Apple's "100% monopoly position" allowed it to impose restrictive terms and excessive commissions on app developers, which Apple denied.

The CAT said in its ruling that developers were overcharged by the difference between a 17.5% commission for app purchases and the commission Apple charged, which Kent's lawyers said was usually 30%. The CAT also ruled that app developers passed on 50% of the overcharge to consumers.