Apple faces legal demand to repay 20 million UK customers related to excessive and unlawful App Store charges
London, May 11, 2021 – Hausfeld filed a claim in the Competition Appeal Tribunal on behalf of around 19.6 million eligible UK iPhone and iPad users. Apple faces damages of up to £1.5 billion.
The claim alleges that Apple’s conduct violates section 18 of the UK Competition Act 1998 and Article 102 of the Treaty on the Functioning of the European Union.
Bringing this representative opt-out collective action is Dr Rachael Kent, an expert in the digital economy and lecturer at King’s College, University of London.
The company is accused of using its dominant position by imposing restrictive terms on app developers, stifling efforts by other would-be distributors to offer app purchasers better value for money, reaping excessive profits. Apple has also allegedly abused its dominant position by blocking users’ ability to pay for many app services other than through the company’s own App Store Payment System, which typically also includes the 30% commission payment to Apple. It is argued that this practice is monopolistic and unlawful, and that Apple would be unable to charge customers such an excessive mark-up if its devices were open to competitors.
Ordinary App Store customers are the most obvious and direct victims of Apple’s anti-competitive behaviour and entitled to compensation, since they foot the bill.
Any UK users who purchased paid apps, paid subscriptions or made other in-app purchases within the UK version of the App Store on their iPhone and/or iPad devices at any point since October 1, 2015 may be entitled to compensation from Apple for its anti-competitive practices. All such purchasers are automatically included within the claimant class. Consumers who are interested in finding out more about the claim and signing up for regular updates can visit www.appstoreclaims.co.uk.
Dr Rachael Kent has more than 15 years’ academic and consultancy experience of consumer welfare issues relating to smart mobile technology. At King’s College, her research focuses on how consumers use apps and digital platforms, and the impact apps have on choice, spending and other aspects of consumers’ everyday lives. She has been a regular user of the App Store, and as such has overpaid for her purchases in the same way as other members of the claimant class have.
Rachael Kent said:
“The App Store was a brilliant gateway for a range of interesting and innovative services that millions of us find useful, myself included. But thirteen years after its launch, it has become the only gateway for millions of consumers. It guards access to the world of apps jealously, and charges entry and usage fees that are completely unjustified.”
“Last year’s US Congress inquiry estimated that Apple’s annual global revenue from the App Store is at least $15 billion a year, but the company’s costs for running the platform are just $100m. Apple achieves this by adding exorbitant and unjustified charges on its users. It would not be able to impose these exorbitant charges if competitor platforms and payment systems were allowed to compete on its devices. It is a clear abuse by Apple of the law and its own customers.”
Lesley Hannah, Partner at Hausfeld leading the litigation, said:
“Apple has created a captive market where people who own Apple devices are reliant on it for the provision of both apps and payment processing services for digital purchases. It has been exploiting that market for years, by charging excessive fees that in no way reflect the actual cost of providing those services and making sure no one else can compete. App purchasers have been paying the price and this action seeks fair redress for those purchasers.”
The case has been reported widely:
Daily Mail (2)
Global Competition Review (subscription only)
Global Legal Post
Law.com (subscription only)
Law360 (subscription only)
Conal Walsh / Andreas Grueter, Palatine Communications
- A committee of the US Congress concluded in October 2020 that Apple has leveraged its monopoly power in mobile app distribution to discriminate against and exclude rivals and charge excessive and unfair commission for purchases from and within the App Store. In the UK, the Competition and Markets Authority is investigating complaints that the terms and conditions Apple imposes on app developers to sell their apps via Apple’s App Store are unfair and anti-competitive. And last month the European Commission issued a formal statement of objections against Apple, accusing Apple of breaking European competition law.
- The legal claim applies to most popular apps on iPhones and iPads, including Fortnite, YouTube, Tinder and many others, that require payment at point of download, subscription payments, or allow for in-app purchases. It does not apply to apps providing “physical goods or services that will be consumed outside of the app”. These include Deliveroo and Uber, which are not required to use Apple’s payments system or pay Apple the disputed 30% commission.
- Affected app purchasers, on whose behalf the class action is brought, will not pay costs or fees to participate in this legal action, which is being funded by Vannin Capital, a global litigation funder. The action is insured, which means that class members have no financial risk in relation to the claim.
- Dr Kent is represented by Hausfeld & Co LLP, and Mark Hoskins QC, Jennifer MacLeod and Aaron Khan of Brick Court and Ronit Kreisberger QC of Monckton Chambers.
- Dr Kent is also advised on the claim by a consultative group with expertise and experience in group claims management, digital markets and consumer rights matters. This group consists of Dame Elizabeth Gloster, formerly a judge in the Court of Appeal; James Walker, an adviser to the Scottish government on consumer protection and founder of Resolver, which helps customers resolve complaints with companies; and Kevin Jenkins, former CEO of Visa UK and a veteran of the payments industry.