The Lawyer Awards Festival of Talent - Luke Streatfeild
In their Festival of Talent, the Lawyer Awards placed the spotlight on Partner Luke Streatfeild who shares an insight on what it was like to work during a pandemic on the complex and high-profile claim against tech giant Apple for abusing its dominant position with regards to the App Store. This case led to the team being shortlisted as ‘competition and regulatory team of the year’.
For Luke Streatfeild, remote working was perhaps less of a struggle last year than it may have been for the rest of us. “I’ve been commuting from New York for four years as my wife works in a hospital here,” he says, reflecting on the various pressures of his role on the Hausfeld team that advised digital economy expert Dr Rachael Kent on her collective proceedings against Apple.
“So mobile working is normal for me, but to have the whole team on a 100 per cent remote working basis was new for all of us. If you are set up to work it doesn’t really matter where you are, and the pandemic has made that a reality for everyone. The silver lining was that we found it really didn’t impact on our work on this case at all, save for missing out on seeing each other in person – which we are now looking forward to very much.”
Streatfeild, who was made up to partner in January 2021, joined Hausfeld in March 2019, having qualified at Allen & Overy in London in March 2007. He has a broad competition and commercial practice, but most enjoys working on collective proceedings, “as it is at the cutting edge of private enforcement in the UK”.
Apple’s anti-competitive case
The Apple case, he says, will particularly stand out in his memory due to the subject matter. “Apple’s alleged anti-competitive conduct in the App store is a global issue”, he explains. “As we were preparing the case, the issue was continually in the news – whether it was being scrutinised by regulators or litigated by competitors like Epic Games. Obviously, we couldn’t say anything about it. So, it was fantastic when we launched, as our client could finally speak about it publicly, the case on behalf of UK consumers could be part of the public discourse on this issue.”
Previously Streatfeild has advised on the trains competition collective proceedings with partner Anthony Maton, and the proposed CPR 19.6 representative action brought by Duncan McCann against Google Ireland (relating to illegitimate data collection by YouTube) alongside Lesley Hannah, who led on the Apple litigation. He is also part of the team that recently filed competition collective proceedings on behalf of consumer champion Liz Coll against Google for abuse of dominance in relation to the Play Store.
“One of the challenges of competition collective proceedings for the solicitors is project management, as there is a large team. Effective project management is about doing ‘everything and nothing’ – knowing what all the team need to do, keeping them motivated and to time without getting in their way. It is simple to describe, but hard to do in practice (and not what they teach you in law school!)”, he says.
On 11 May 2021, the team from Hausfeld advised Dr Rachael Kent, an expert in the digital economy and lecturer at King’s College, University of London, in bringing an application for collective proceedings seeking redress on behalf of 19.6 million UK iPhone users for £1.5bn in compensation from Apple, for abuse of its dominant position in the App Store.
Apple is the world’s largest company, with a market capitalisation in 2020 of over $2.25trn. Apple’s growth over the past two decades has been based on innovation, bringing revolutionary products such as the iPhone to the world market. However, over recent years there has been increased scrutiny by courts and regulators into Apple’s conduct in the marketplace, amid concern it has begun to abuse its dominant position. Apple’s major competitors and clients from the corporate world have also raised concerns.
For example, in 2019 Spotify complained to the European Commission that Apple was abusing its dominant position in its market-leading App Store, by excluding competition and charging excessive prices. In the light of these concerns, Hausfeld has worked with Dr Kent to put together a collective proceeding on behalf of the constituency who bear the brunt of the cost of Apple’s anti-competitive conduct, but who have no means of redress through regulatory action or the complaints of Apple’s competitors – namely the consumers who pay the prices that are subject to Apple’s anti-competitive fees.
As can be seen from the firm’s other cases, Hausfeld is accustomed to standing toe to toe with the world’s most powerful corporations in legal proceedings against the most high-profile defence firms, but Apple is the single wealthiest adversary in the world at present and represents the greatest challenge in that regard. As a standalone action, the claim required sophisticated competition analysis from the Hausfeld team.
The causes of action covered three key grounds: first, Apple engages in exclusionary conduct by imposing contractual and technical restrictions on app developers and customers to create a captive audience and ensure that the App Store is the only way to distribute apps to iOS device users. Second, Apple engages in exclusionary conduct by forcing iOS device users to make app and in-app purchases through its own App Store payment processing system, through which Apple typically takes a 30 per cent commission on all app and in-app purchases of digital goods and services. Third, irrespective of Apple’s exclusionary conduct, it is alleged that the level of Apple’s commission is excessive in exchange for the app distribution and payment processing services provided by Apple, particularly when compared to appropriate benchmarks and considering the overall profitability of the App Store.
In a consumer collective there is massive informational asymmetry, and to establish the grounds for the cause of action the legal team had to analyse large quantities of material from related regulatory and court proceedings worldwide (such as expert witness testimonies coming out of Epic Games’ trial against Apple in May 2020), engage with industry experts and instruct and supervise the analysis of the counsel and expert team.
A particular challenge was in establishing the case for excessive and unfair pricing, given that Apple’s costs base is not publicly available. To establish the prima facie case, the Hausfeld team used information from related regulatory proceedings (last year’s US Congress inquiry evidence provided that Apple’s annual global revenue from the App Store is at least $15bn a year, while the company’s costs for running the platform are just $100m). Alix Partners was instructed to perform a sophisticated analysis of Apple’s profitability based on publicly available information to support the prima facie case.
The analysis required to establish these causes of action was extensive and expensive. A team of Hausfeld lawyers, barristers and economists prepared the filing. To enable the case to be developed and brought, Hausfeld helped negotiate a substantial funding package on behalf of the Dr Kent and adverse costs cover, on the strength of the legal and economic analysis performed by the team.
Hausfeld believes its ability to deploy its experience of the collective proceedings regime to offer access to justice for consumers against the world’s largest companies effectively via standalone actions for abuse of dominance is at the forefront of private enforcement of competition law in the UK and internationally.
“This case was the first competition case I have litigated that relates to an issue that is truly global in scope – Apple’s business model in the App Store – even though our case is on behalf of UK users. It is fascinating to see the issue being dealt with in different jurisdictions in parallel in real time”, says Streatfeild.
“This is one of a number of private enforcement cases which we have in hand against tech giants, and I am looking forward to continue working on this kind of cases and to do so across multiple jurisdictions. With an increased focus by regulators and authorities on the practices of big tech business, these issues won’t go away.”
Hausfeld took on significant risk to get the claims up and running; risks that are compounded by the fact that it was bringing parallel claims against other formidable opponents in the tech space. The firm says flexibility to work on risk demonstrates its belief in the strength of the cases and commitment to providing UK consumers with a unique avenue for consumer-redress for competition harms that affect them directly.
It is anticipated that the case against Apple – and some other cases against Big Tech companies – will have a significant strategic impact on tech companies’ relationship with UK consumers and signal to such companies that there are firms prepared to challenge their conduct on behalf of UK consumers. Hausfeld feels it’s politically and socially imperative that such companies are held to account for their conduct, not least in light of the sharp and continued growth of Apple (and other corporates’) profits during the lockdowns resulting from the Covid-19 pandemic. Such profit levels have, in large part, been driven by the unprecedented increase in time spent by consumers of all ages on their smart mobile devices and, in many cases, making the precise app and in-app purchases that are the focus of this claim.
The wider impact of the case lies in supporting the growing desire of civil society to hold multinational corporates to account for their excessive profits and demonstrating that consumers can do so through the application of competition law, regardless of the relevant regulatory authorities’ appetite or resources to do so.
While remote working may not have represented much of a change from the norm for Streatfeild, living through a global pandemic did. “The pandemic was a reminder about how much we depend on the flexibility and goodwill of our colleagues – but another silver lining has been, I think, that it has made it a bit easier to be open about things like work/life balance and managing time and pressure. I have felt it has brought us all closer, even though we have been physically apart. There is now the new challenge of adapting to a hybrid model, but if we can make that work it will help people like me enormously and cut down on flying hours!”