Apple is facing a $1 billion class action lawsuit that claims the tech giant levies “abusive” and “excessive” charges on app developers by way of its effective monopoly on iPhone and iPad app distribution.
The lawsuit is being filed in the UK on behalf of over 1,500 app makers by Professor Sean Ennis, who specializes in competition policy and antitrust economics at the University of East Anglia.
Professor Ennis is being advised by the law firm Geradin Partners, which has offices in London and Belgium, as he looks to recall a small part of the estimated $80 billion annual revenue enjoyed by Apple's services arm – made up of the App Store, Apple Pay and Apple Arcade.
Developers Charged Up To 30% for iPhone and iPad Apps
At the heart of the lawsuit is the fact that Apple charges some developers a commission rate of between 15% to 30% if their products use the Cupertino-based tech giant's in-app payment system.
According to Professor Ennis, this is both unfair and constitutes a breach of competition regulations.
“Apple's charges to app developers are excessive, and only possible due to its monopoly on the distribution of apps onto iPhones and iPads,” he said in a statement.
Professor Ennis added: “The charges are unfair in their own right, and constitute abusive pricing. They harm app developers and also app buyers.”
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Apple: 85% of Devs Pay No Commission
Apple has yet to issue a statement on the UK-based lawsuit, which will be heard by the Competition Appeal Tribunal and amounts to £785 million in local British currency.
Previously, the company has been criticized by antitrust regulators in a number of countries, but has defended itself by saying that approximately 85% of its developers pay no commission whatsoever. Apple has also added that the global reach of its App Store distribution platform means app makers are able to access more than 175 markets around the world.
However, there's no doubting that a commission of up to 30% is on the steep side and that Apple's iOS sandbox means it operates unopposed on its native platform.
Can Anything Stop Apple in 2023?
It has been a busy summer so far for Apple, with the firm going from strength to strength on the stock market following the blockbuster launch of its long-awaited Apple Vision Pro VR headset earlier in 2023. The iconic company is currently up nearly 40% year-on-year and trading at an all-time high as it looks to top the $200 per share milestone for the first time.
Such a feat seems entirely possible, based on both its recent performance and upcoming product roadmap, which includes major new launches like the iPhone 15 range. Businesses and their employees can also now use Apple's password manager on any web browser, while the company recently announced its AppleGPT chatbot. Perhaps most impressively, it has largely resisted the wave of tech layoffs that have otherwise blighted the industry this year.
The new UK lawsuit is one of the few worries it has at the moment, though elsewhere a small handful of top Apple execs are fighting efforts to subpoena them in the major class action lawsuit underway against global chip maker Qualcomm in California.