Apple Faces $1BN+ Lawsuit for Charging “Anti-Competitive” Commissions

In a class action damages claim brought against Apple, the tech giant is being sued for almost 800 million.

The claim, which has been filed on behalf of more than 1,500 UK-based app developers, accuses Apple of abusing its position by forcing developers to pay a 30% anti-competitive" fee on in-app purchases.

The lawsuit has been filed by Sean Ennis, a professor of competition policy at the University of East Anglia. Sean has also held positions at the OECD, U.S. Department of Justice, and European Commission.

I'm really convinced that the type of behavior we're talking about in this case is deeply problematic.Sean EnnisWhat Exactly Is the Lawsuit About?

The lawsuit argues that Apple has been abusing its monopoly of the distribution of apps on its devices by forcing developers to pay exorbitant commissions.

App makers are charged a 30% commission on in-app sales generated through apps on the iOS app store.

In 2020, Apple did offer small businesses some respite by dropping the fee to 15% for developers earning less than $1 billion a year. However, they were still moved to the standard commission rate if they surpassed the $1 billion threshold in a year.

The charges are unfair in their own right and constitute abusive pricing. They harm app developers and also app buyers.Sean Ennis

Professor Ennis described the fees charged by Apple as excessive and claimed that they are only possible because of the company's monopoly on the distribution of apps on iPads and iPhones.

Damien pointed out that Apple has a number of other ways to monetize its app store, such as the $99 annual program fee that the developers are charged.

Besides seeking antitrust damages on behalf of the 1,566 app makers who were allegedly subject to Apple's abusive policy, the lawsuit also claims that the policy harmed consumers.

Money that could be spent on research and development to innovate the apps is spent on the app store's commissions instead, causing consumers to miss out, it alleged.

Sean Ennis is being supported by the law firm Geradin Partner. Partner Damien Geradin highlighted that the tech giant has been implementing the fees in a non-uniform manner, with only 16% of the apps being subject to it.

Only apps providing digital content, such as news, streaming services, and games, have to bear the brunt of the commission, while the rest are spared.

The Repeated Push Backs Against Apple's Commission Policies

This isn't the first time Apple has faced pushback for its exorbitant commission fees. For years, companies like Epic and Spotify have tried to protect against Apple's unfair" tax and filed high-profile complaints with regulators in both Europe and the US against the app store policies and fees.

App makers also end up paying Apple to purchase search ads so that their apps can be discovered by users.

However, Apple has always rejected accusations that the company is profiteering at the expense of the developers. The tech giant argues that the hefty fees enable it to provide iOS users with a premium experience and that the administration of the app store requires several quality controls, including reviewing the apps for safety and privacy concerns.

Several competition regulators have also been criticizing the fairness and the details of the app store's terms and conditions. The UK's Competition and Markets Authority (CMA) also opened a probe on the matter in 2021.

While the company hasn't faced any major regulatory action over its 30% commission fees, it's worth contemplating if Professor Sean Ennis' lawsuit will make a difference.

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