Apple slammed with $1 billion class action lawsuit in UK over 30% App Store fee

AppleInsider

A new class action lawsuit in the UK from over 1,500 developers calls Apple's App Store fee excessive and a result of the company's app distribution monopoly.

Apple Park

Apple charges developers up to a 30% commission on transactions made on its platform. This fee has been long-scrutinized by world governments and developers alike, but so far has survived such scrutiny.

The latest attack on App Store fees comes from a group of 1,566 app developer in the UK. According to a report from Reuters, the group has started a class action lawsuit against Apple on the basis that the fee is excessive and a result of Apple's monopoly on its app distribution platform.

"Apple's charges to app developers are excessive, and only possible due to its monopoly on the distribution of apps onto iPhones and iPads," Sean Ennis, a professor at the Centre for Competition Policy at the University of East Anglia and a former economist at the OECD, said in a statement. "The charges are unfair in their own right, and constitute abusive pricing. They harm app developers and also app buyers."

Ennis is bringing the class action lawsuit forward to the UK Competition Appeal Tribunal. He is being advised by the law firm Geradin Partners.

App Store fees have always been a point of contention

Apple discussed its 30% fee during the Epic Games trial. It has also said previously that 85% of developers on the App Store do not pay a commission and that it helps European developers access markets and customers in 175 countries through the App Store.

Multiple organizations and governments around the world have fought Apple's fee structure. Currently, with few exceptions, a developer owes Apple 30% of any transaction that occurs on its platform and this is reduced to 15% for subscriptions that last over one year.

The Small Business Program also ensures developers that earn less than $1 million in a year is only charged a 15% fee. The 30% fee kicks in once a developer crosses the $1 million threshold in a given year.

Apple faces constant scrutiny over its fees

Companies have even taken up the battle, like Facebook stating that Apple's 30% fee hurts small businesses. Also, cutouts that seemingly help multi-billion dollar corporations increasingly become points of contention.

Apple previously lost a $100 million lawsuit in 2022 that originated in 2019, alleging the $100 developer fee and $0.99 increments hurt developers. The $100 fee is no longer a requirement, as there is a free developer account tier, and the $0.99 tiers were changed out for more granular prices.

This proves that Apple isn't immune to the influence of greater courts. However, a class action lawsuit doesn't always guarantee rule changes.

Apple provided a statement to AppleInsider that covers many of the points we made above about the Small Business Program, developer fees, and more. The company asserts that it has never increased fees in the fifteen years of the App Store but has, in fact, reduced fees and added exemptions.

The statement shared that Apple has created 440,000 UK jobs, and UK developers have generated $49 billion in earnings in 2022.

Update July 25: Added information about a statement from Apple.

Read on AppleInsider

JMaille

Time to start piloting the new program of charging all developers for the use of the API based on number of apps distributed.  I'm sure that those 1500 developers will find that a much more fair way of charging for the use of Apple's intellectual property.

jimh2

These oppressed people purchased and downloaded the application development kit knowing when they deploy they are going to be charged a fee for doing so. The decision was a part of their business plan whether they knew it or not. No different from the people forming a class action lawsuit against their government for collecting taxes. You know you owe taxes just after you are hired and have to give them your SSN for them to start sending payroll tax. You knew up front so why did you go to work?

I have had it with a nation and world of freeloaders wanting everything for free expect for the fees they charge for their products (in this case apps).

Apple could probably block UK apps and no one would miss them though there probably are one or two that are useful  

aross99

I know this has been discussed in depth, but isn’t 30% the same rate that Google, and Microsoft charged originally?  Isn’t it also LESS than the console manufacturers charge their developers?

Feels like it’s become fashionable to sue Apple and other large companies just because they are successful.

No one is forcing anyone to develop apps
for the App Store, and the rate hasn’t increased, in fact it’s DECREASED if you earn less than $1M as I recall.

igorsky

Coming up next:

• Class action lawsuit by renters against landlords who charge rent for apartments
• Class action lawsuit by lease holders against banks who charge for driving the bank’s car 
• Class action lawsuit against supermarkets for charging a stocking fee to sell goods in their stores


What a bonkers world we live in where people expect to profit off of others intellectual property at whatever rate they feel like paying.

robin huber

Perhaps the time has come for Apple to allow some form of side loading with the understanding that it limits Apple’s liability for any damages suffered by those who choose that avenue. I wish it would be possible for that Avenue to be one-way. That if you distribute your app outside the App Store that you can’t also distribute within it. In the long run, most users will continue to take advantage of the convenience and security of the App Store. Developers will lose in volume whatever they save in fees. 

lordjohnwhorfin

igorsky said:

Coming up next:

• Class action lawsuit by renters against landlords who charge rent for apartments
• Class action lawsuit by lease holders against banks who charge for driving the bank’s car 
• Class action lawsuit against supermarkets for charging a stocking fee to sell goods in their stores


What a bonkers world we live in where people expect to profit off of others intellectual property at whatever rate they feel like paying.

Actually it’s not so far fetched in the sense that smartphones are ubiquitous. They would have a very valid case if Apple had a monopoly on smartphones. They don’t. Actually in the UK iOS commands far less than half of this market. How can you speak of a monopoly then? Don’t like Apple’s fees, make your app Android only.

BirderGuy

So I guess we better launch a class action lawsuit of every business in the UK and abroad.  If you’ve ever sold your artwork in a gallery, guess what?  30% fee to cover their cost of operating the store.  And of course better shut down all those mom and pop shops that apply at least 30% to what they pay the wholesalers so they can pay for, oh right, operating the store.  What these developers, and I am one too, want is for the store owner too allow them to make money,(in some cases millions, if not billions of dollars), while the operator is the store provides them with a free storefront. I produced my app and had to do virtually nothing but hit enter and the entire world knows about my app. Yeah, I shouldn’t have to pay for that?  Give me a break!

narwhal

Are there really 1500 UK developers making >$1M from app sales? And don’t the remaining developers pay 15%? Anyway I think it would be fine for Apple to reduce the commission to 15% for everybody, but the change might result in Apple platforms becoming more dominant. And decrease competition among app stores. How could a new competing platform become profitable if the commission was just 15% on Apple platforms?

radarthekat

These folks must be too young to recall the 55% distributors took back in the shrink wrap software days.  It must be nice to live in the era of entitlement, unaware that you’re occupying a golden age.  

22july2013

narwhal said:

And don’t the remaining developers pay 15%? 

Most UK developers pay 0% because most apps on the Apple App store are free. Some pay 15% and the rich ones pay 30%. The average is probably 3%.

22july2013

radarthekat said:

These folks must be too young to recall the 55% distributors took back in the shrink wrap software days.  It must be nice to live in the era of entitlement, unaware that you’re occupying a golden age.  

And those distributors charged 55% without provide free services like Xcode for the developers. The last time I checked, Apple provided about 20-30 free services for that 30% fee.

mikethemartian

radarthekat said:

These folks must be too young to recall the 55% distributors took back in the shrink wrap software days.  It must be nice to live in the era of entitlement, unaware that you’re occupying a golden age.  

Those distributors were wholesalers or retailers that bought 100s or 1000s of units at a time and took the risk of not being able to sell all their inventory.

radarthekat

mikethemartian said:

radarthekat said:

These folks must be too young to recall the 55% distributors took back in the shrink wrap software days.  It must be nice to live in the era of entitlement, unaware that you’re occupying a golden age.  

Those distributors were wholesalers or retailers that bought 100s or 1000s of units at a time and took the risk of not being able to sell all their inventory.

I was in the business, and Ingram/MicroD, Egghead and others all would force us to take back unsold inventory, lest they not agree to take on our next offerings.  Plus there were many backdoor stocking fees (bribes) being provided by the software publishers to the distributors.  It was the Wild West.  

jdw

Guess who pays for this legal lunacy?  That's right... YOU & ME!  Every Apple product consumer pays for the madness, which is why I for one demand that end it be ended swiftly by a judge who does the right thing and throws it out.  No freebies!  Seriously.  "FREE" is their ultimate goal.  Until the App Store charges ZERO fees, there will be a group of developer nuts who get together and do this over and over again.

davidw

>"Apple's charges to app developers are excessive, and only possible due to its monopoly on the distribution of apps onto iPhones and iPads," Sean Ennis, a professor at the Centre for Competition Policy at the University of East Anglia and a former economist at the OECD, said in a statement. "The charges are unfair in their own right, and constitute abusive pricing.<

Is this guy really a "professor"? In what field? if he is, then they must have really low academic standards at the Centre for Competition Policy at the University of East Anglia. When it comes to "competition", this guy sounds as ignorant as Tim Sweeney. Did this "professor' do any research before making such an idiotic statement?  

Microsoft charges 30% commission to Xbox game developers and their Microsoft Store in the Xbox is not a monopoly. Xbox users can load games from physical  media.

Sony charges 30% commission to PlayStation game developers and their Playstation Store is not a monopoly. Playstation users can load games from physical media.

Nintendo charges 30% commission to Nintendo Switch developers and their Nintendo app store is not a monopoly as Switch users can load games from physical media.

Amazon charges 30% commission to Amazon Fire device developers and their Amazon App Store is not a monopoly on their Fire devices. Amazon Fire device users can choose to install many other app stores, including the Google Play Store.  

Steam charges a 30% commission to Steam developers and Steam is not a monopoly as there are other ways to play games on a computer. 

Google charges 30% commission in their Google Play Store and not only is the Google Play Store not the only app store on Android, developers don't even have to use an app store to get their apps on to Android devices. 

So how is it that Apple charges to developers are excessive and "only possible"  because of its "monopoly", when all the other app stores that aren't a  monopoly, are able to charge the same "excessive" rate? One don't need to be a "professor" to logically think out that if app stores can still change a 30% commission (to their developers) when they are not a "monopoly", then being able to charge 30% commission has nothing to do with being a "monopoly". If Tim Sweeney (CEO of Epic Games) wants to charge 12% commission and lose money running their app store, that's his choice. It doesn't mean that any of the other app stores have to do the same. 

Kierkegaarden

Curious to know who these 1,500 developers are.  My guess is that a majority of them haven’t even released an app.  Whatever the case, I’m guessing these developers won’t have much of a future in the App Store.

BlueLightning

Back before the internet, it was common to pay a vendor/store a 40-50% markup to buy appliances, and more than that for jewelry.  The manufactures accepted this markup, since they did not have the overhead of maintaining an end-user sales force and brick and mortar stores.  I'd be interested to know what the markup is for a copy of Windows or other software at a store like Best Buy (or for that matter, on Amazon, eBay, or one of the China based internet retailers).  

An automobile still decreases in value by thousands when you drive it off the dealer's lot.  (Except for units in short supply.)  This is in part to compensate for the cost to the dealership for salaries, rent, materials, interest.  There is also a holdback amount that the auto manufacturer pays back to the dealership after the car is sold.  So getting the car at list price, or even dealer cost is not that great a deal in normal times.  Dealer cost does not take into consideration the holdback paid to the dealership (and any other deals not normally revealed to mere mortals).  Normally, a dealership makes more money selling a used car than a new car, and expects to make a good amount on service and repairs.  

At one time, I worked for a business owner who thought he should be able to copy software and resell it, regardless of the copyright.  He reasoned that the cost to the software provider per incremental unit was essentially the cost of the floppy disks used for distribution at the time.  He could not be convinced that the software developers should have an incremental profit per unit.  

AppleZulu

“Target Slammed by $1B Lawsuit Over Selling Products Fee.”

mac_dog

JMaille said:

Time to start piloting the new program of charging all developers for the use of the API based on number of apps distributed.  I'm sure that those 1500 developers will find that a much more fair way of charging for the use of Apple's intellectual property.

Except they have to do it in such a way as to not appear punitive to those developers, otherwise there will be another lawsuit. Apple needs to separate their developer software and include a pricing structure for “participation” on their App Store. Up to now, Apple doesn’t charge for their software. Perhaps they should. Furthermore, Apple could easily create some sort of membership that could include benefits such as advertising/marketing/and store placement. I’m planning to learn to code and eventually put something up on the App Store. Passive income. 30% seems fair. If we’re going to start chipping away at this, let make it a fair deal and spread it across all sectors. Utter bullshit.

phillyfanatic09

It’s interesting that these litigants are calling the fee excessive but clearly want access to Apple’s customers. They want Apple to host their content, handle updates, payment processing, taxes and maintain the App Store at little to no cost to them.

How is this different than going to a large retail chain and demanding you be allowed to place products on their shelves, use their cashiers and warehouses but the retailer keeps 3% of the sales? No retailer would take that offer and no court would make them.

The argument that consumers have to use the App Store soon won’t even be valid as side loading becomes available. And kudos to AppleInsider for not calling Apple’s fees a “tax”.