UK class action over App Store commission could cost Apple $2B

Posted:
in General Discussion edited June 14
A class action lawsuit filed with London's Competition Appeal Tribunal takes issue with Apple's customary App Store commission rates, arguing the developer fee is passed on to consumers.

App Store


In a press release Tuesday, claimants in the case argue Apple has overcharged nearly 20 million UK App Store customers for years by imposing an "excessive" and "unlawful" 30% cut of in-app purchases on developers.

The group is seeking damages of up to 1.5 billion pounds, reports the BBC.

As noted by the publication, the UK's class action legal structure differs from U.S. proceedings, though "optout" claims have been accepted since 2015. If approved by the tribunal, the action would cover any UK users who purchased paid apps, subscriptions or in-app purchases on an iPhone or iPad since October 2015.

"Apple guards access to the world of apps jealously, and charges entry and usage fees that are completely unjustified," said Dr. Rachael Kent, a digital economy specialist and lecturer at King's College who is leading the collective action. "This is the behavior of a monopolist and is unacceptable. Ordinary people's use of apps is growing all the time and the last year, in particular, has increased our dependence on this technology."

Dr. Kent's arguments closely follow those being argued in U.S. court under the Epic Games v. Apple case. Apple's alleged anti-competitive practices are at the heart of the complaint, reports the News and Star.

"Apple has no right to charge us a 30% rent for so much of what we pay for on our phones - particularly when Apple itself is blocking our access to platforms and developers that are able to offer us much better deals," Dr. Kent said, adding that a recent Congressional inquiry estimated global App Store revenue at $15 billion. "Apple achieves this by slapping 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."

Apple in a statement called the lawsuit "meritless."

"We believe this lawsuit is meritless and welcome the opportunity to discuss with the court our unwavering commitment to consumers and the many benefits the App Store has delivered to the UK's innovation economy," Apple said, according to Bloomberg. "The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces. In fact, 84% of apps on the App Store are free and developers pay Apple nothing. And for the vast majority of developers who do pay Apple a commission because they are selling a digital good or service, they are eligible for a commission rate of 15%."

Earlier this year, Apple reduced App Store commissions to 15% a year for developers who bring in less than $1 million in annual revenue from store sales. App makers who surpass that watermark are charged the customary 30% fee.

The UK suit is the latest attack on Apple's App Store business practices. Developers like Spotify and Epic are strongly opposed to the "App Store tax," as well as other provisions that restrict third-party app stores and alternative in-app payment methods. Last month, the U.S. House Judiciary Committee accused Apple and other Big Tech companies of abusing market power, while the European Commission in a preliminary decision declared Apple in breach of EU competition law.
«13

Comments

  • Reply 1 of 52
    genovellegenovelle Posts: 1,175member
    Apple should close the store to 3rd parties and be done with it. Problem solved. When asked why the answer is. It’s too much trouble and if it doesn’t fit our profit model, it’s not worth doing. 
    danoxviclauyycramanpfaffwatto_cobra
  • Reply 2 of 52
    genovellegenovelle Posts: 1,175member
    In markets like furniture the markup is 300 to 400%. Clothing is the same. Who do you think is paying that 3-4 times wholesale?
    JFC_PAmwhiteaderutterradarthekatmike1ramanpfaffuraharawatto_cobra
  • Reply 3 of 52
    chadbagchadbag Posts: 1,353member
    We’ll have to see how this turns out in the end but if I were the college she (the expert leading this who was quoted) was employed at I’d be embarrassed to have my name associated with her (the expert).  Obviously no knowledge of how actual retail/sales works. 
    mwhiteradarthekatgeorgie01watto_cobra
  • Reply 4 of 52
    docbburkdocbburk Posts: 36member
    Apple is correct, this suit is without merit.  It is sad to see how many people will believe a narrative and try to profit off it, even though it is untrue.  
    radarthekatwatto_cobra
  • Reply 5 of 52
    mobirdmobird Posts: 567member
    I guess these folks have never heard of the line item found on a P&L statement known as COS aka Cost of Sales...
    It is not for any external entity to determine a company's markups, expenses, or Cost of Sales.
    These foolish regulations would have to be applied to all industries not just picking on Apple.
    edited May 10 radarthekatmaximarawatto_cobra
  • Reply 6 of 52
    ...
    "We believe this lawsuit is meritless and welcome the opportunity to discuss with the court our unwavering commitment to consumers and the many benefits the App Store has delivered to the UK's innovation economy," Apple said, according to Bloomberg. "The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces. In fact, 84% of apps on the App Store are free and developers pay Apple nothing. And for the vast majority of developers who do pay Apple a commission because they are selling a digital good or service, they are eligible for a commission rate of 15%."
    ...
    Time and time again, it seems these lawsuits about commissions conveniently ignore the number of free apps out there, and the billions paid to developers that do sell their apps.
    radarthekatbloggerbloguraharamaximarawatto_cobra
  • Reply 7 of 52
    jungmarkjungmark Posts: 6,814member
    Don’t buy apps then. Save the 30% and use the free apps. I may have bought 5 apps in  10 years. 
    qwerty52watto_cobra
  • Reply 8 of 52
    sflocalsflocal Posts: 5,608member
    "Apple has no right to charge us a 30% rent for so much of what we pay for on our phones..."

    Actually Apple has every "right" to charge whatever they want.  It's their company, their product, their service.  So to put it politely, go f**k yourself.

    Better go after every other platform, and while you're at it, go to every retail operation that marks-up products tenfold compared to what it costs them to make it.

    Apple doesn't owe these whiners anything.  I know Apple wouldn't do it, but a part of me wishes that Apple would boot those complainers from the App Store, and not just the company, but the individuals themselves from having a dev account, and deny them an AppleID as well.

    One walks into a store and usually one of the first signs one sees is the old "We reserve the right to refuse service to anyone".  Apple should do exactly that to those people that feel they're entitled.  There are plenty of other options and platforms to choose from besides Apple.

    mwhitewilliamlondonviclauyycNYC362bloggerblogwatto_cobra
  • Reply 9 of 52
    zimmermannzimmermann Posts: 265member
    I suppose Apple could open an alternative App store for unguarded apps and a lower fee. Using those apps would mean a different (less long for instance) warranty for the iPhone or iPad. 
    edited May 11 radarthekatgeorgie01watto_cobra
  • Reply 10 of 52
    22july201322july2013 Posts: 2,342member
    genovelle said:
    Apple should close the store to 3rd parties and be done with it. Problem solved. When asked why the answer is. It’s too much trouble and if it doesn’t fit our profit model, it’s not worth doing. 
    Finally. Someone else saying what I've been saying for over 2 years. But Apple should start by voluntarily shutting it down only in a country that's hostile to the idea of an App Store with a profit. Here's what Apple should say for the UK, for example:

    "Okay, UK, you win. We will remove the Apple third-party App Store from the UK. There will be no more apps available for purchase, or for free, in the UK on iOS or iPadOS. Once you pass a law making App Stores and acceptable profit levels legal again, we will consider re-entering your marketplace. I trust you won't be making smartphones illegal if they don't come with any app stores."


    edited May 11 hydrogenkillroy
  • Reply 11 of 52
    Rayz2016Rayz2016 Posts: 6,767member
    There’s one company that makes just about every pair of spectacles on the planet. The markup on eyewear is literally eye-watering. 

    And you never hear about it. 


    jbtuckrwilliamlondonaderutterNYC362badmonkradarthekatkillroyramanpfaffuraharaicoco3
  • Reply 12 of 52
    From an article on the BBC:

    "Apple's competitor Google also charges a 30% fee, along with several other digital platforms

    But the group said it was "not in a position to comment on Google at the moment". "


    Why the FUCK not? Big targets and follow the herd mentality to get your name in the news? What a crock of shit this whole movement is, a big attention and cash grab by unscrupulous agents.

    Bombdoeviclauyycradarthekatkillroymacplusplusuraharawatto_cobra
  • Reply 13 of 52
    EsquireCatsEsquireCats Posts: 1,165member
    The problem is this idea of a monopoly - Apple’s  customers choose the app store over other app distribution models when they purchase the device and Apple is far from satisfying the requirements for a monopoly in smartphones in that regard. The appstore and inseparable security model is one of the many reasons why people choose Apple’s platform over competitors. Meaning that users have a choice and were never forced into the system, rather users may have deliberately chosen the device for this reason. 

    Having a “monopoly” on apps differs from having a monopoly over a specific add-on service. Similar to the EU’s recent findings: where the monopoly is far more narrowly defined to a specific service sub-type. Even still that finding of a “monopoly” raises questions and may not stand to juridical scrutiny. 

    Additionally the rates charged by Apple aren’t in any way out of step with similar online stores (nor retail software sales in general) and are in no way unjustified, to each of these points Apple is either the best or near-best option in the market.
    williamlondonviclauyycradarthekatkillroywatto_cobra
  • Reply 14 of 52
    danoxdanox Posts: 532member
    jungmark said:
    Don’t buy apps then. Save the 30% and use the free apps. I may have bought 5 apps in  10 years. 
    Which is why just Apple apps, plus 5000 curated apps is all you need on the iPhone or iPad having a free for all store may be coming to a end….
    watto_cobra
  • Reply 15 of 52
    avon b7avon b7 Posts: 5,758member
    The problem is this idea of a monopoly - Apple’s  customers choose the app store over other app distribution models when they purchase the device and Apple is far from satisfying the requirements for a monopoly in smartphones in that regard. The appstore and inseparable security model is one of the many reasons why people choose Apple’s platform over competitors. Meaning that users have a choice and were never forced into the system, rather users may have deliberately chosen the device for this reason. 

    Having a “monopoly” on apps differs from having a monopoly over a specific add-on service. Similar to the EU’s recent findings: where the monopoly is far more narrowly defined to a specific service sub-type. Even still that finding of a “monopoly” raises questions and may not stand to juridical scrutiny. 

    Additionally the rates charged by Apple aren’t in any way out of step with similar online stores (nor retail software sales in general) and are in no way unjustified, to each of these points Apple is either the best or near-best option in the market.
    This is not really true.

    I'd go as far as to say that the vast majority of iPhone purchase decisions do not even touch on the App Store issue and even more literally no idea about commission, fees or whatever you wish to call them.

    That is from a purely consumer perspective. From a developer, business, competition and consumer protection perspective however, things change radically and those monopolies do exist.

    I can't know which was things will swing but they are being investigated with good reason.

    My personal view is that Apple might be able to continue unchallenged if it lays out, in black and white, and clear language, all the restrictions that their current policies impose on users.

    Only then would people be able to claim that people voluntarily buy into the restrictions. 
    muthuk_vanalingamprismatics
  • Reply 16 of 52
    aderutteraderutter Posts: 454member
    Rayz2016 said:
    There’s one company that makes just about every pair of spectacles on the planet. The markup on eyewear is literally eye-watering. 

    And you never hear about it. 


    Indeed, my sister used to work at a retail opticians, they paid $8 for some frames and sold them for well over $100.
    williamlondonkillroywatto_cobra
  • Reply 17 of 52
    hydrogenhydrogen Posts: 262member
    Well, sure, at the end, this is the customer who pays !  What a revelation !
    radarthekatkillroyuraharawatto_cobra
  • Reply 18 of 52
    jungmark said:
    Don’t buy apps then. Save the 30% and use the free apps. I may have bought 5 apps in  10 years. 
    I started with the 3GS.  I've not bought any app in that entire time.  My wife makes up for it though, she's probably spent a couple of thousand on apps over the years. :smiley: 

    watto_cobra
  • Reply 19 of 52
    lkrupplkrupp Posts: 9,121member
    Am I the only one who thinks this sudden interest in Apple’s commission fees is being orchestrated? All of a sudden everybody is suing Apple over this. Is it coincidental or is there a behind the scenes push from someone or somebody?

    Way back when, when I was selling musical instruments at retail, the markup was 40% or more.
    edited May 11 williamlondonradarthekatEsquireCatskillroyGerry-Auraharamaximarawatto_cobra
  • Reply 20 of 52
    NYC362NYC362 Posts: 14member
    Rayz2016 said:
    There’s one company that makes just about every pair of spectacles on the planet. The markup on eyewear is literally eye-watering. 

    And you never hear about it. 


    So very true.  A local optician would charge me almost $1400 for two pairs of glasses with progressive lenses.  Costco was able to do the same for about $400.00.  Warby Parker for about $600. 

    No one is suing Luxottica for the insane prices they charge. 

    The same goes for most jewelry which works on a price scale known in the business as Triple Keystone- 300% over wholesale.  That $600.00 watch cost the store $200.00.   When there's a "sale" things often become Triple Key +25.-- 325% over cost.  Then marked down by whatever.
    watto_cobra
Sign In or Register to comment.