Apple must face UK complaint that its App Store commission is unfair

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Apple will face a full trial in the U.K. over claims that it violated competition regulations by overcharging people on the App Store through its commission rate.

Credit: Unsplash
Credit: Unsplash


The London-based Competition Appeal Tribunal refused an attempt by Apple to limit or toss out a class-action complaint that was filed in 2021. Dr. Rachael Kent, a digital economy specialist and lecturer, is leading the action.

Kent praised the decision in a statement to The Daily Mail.

"I applaud the Competition Appeal Tribunal for this clear and well-thought-out decision," she said. A claim of this magnitude is always going to be heavily defended. The anti-competitive practices that we are alleging against Apple go to the heart of Apple's business strategy, and with its almost unlimited resources, it will always make this a challenging fight."

According to Dr. Kent's complaint, Apple's 30% commission on app and in-app purchases is unfair. Additionally, she argues that Apple's cut has forced developers to raise prices and push the cost to consumers.

At a court hearing in May, Apple attempted to argue against Kent's claim that the 30% cut is unfair and excessive on the basis that she had applied the wrong legal test. The tribunal, however, dismissed all of Apple's arguments.

"We do not accept Apple's argument that the pleadings disclose a legal error or defective approach, either in relation to the correct legal test for the abuse or for the consideration of economic value in that exercise," Tribunal chairman Ben Tidswell said.

This is not the first time that Apple has faced criticism for its 30% cut of App Store purchases. The company's commission rate, which was a standard among most app stores, has attracted opposition from lawmakers, developers, and others. Most famously, Epic Games launched a full-scale campaign and lawsuit against Apple because of it.

Apple has since offered alternative commission rates, including a reduced 15% commission for developers making less than $1 million in sales from the App Store.

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Comments

  • Reply 1 of 44
    rob53rob53 Posts: 2,986member
    Found some articles about the English court not allowing Apple, or Google, to see who's funding the PCR group. This means it could be all kinds of competitors. As for this unfair commission, 30% is not that uncommon for all sorts of businesses. 
    Anilu_777watto_cobraFileMakerFeller
  • Reply 2 of 44
    Anilu_777Anilu_777 Posts: 338member
    I wonder how many developers actually pay 30% and is Google also under the microscope for its 30% fee? 🤔 
    watto_cobraFileMakerFeller
  • Reply 3 of 44
    davidwdavidw Posts: 1,606member
    Anilu_777 said:
    I wonder how many developers actually pay 30% and is Google also under the microscope for its 30% fee? 🤔 
    The developers for over 90% of the apps in both app stores, pays 0% commission because their apps are free. This would not be the case if Apple or Google charged a set fee per downloaded app, rather than a commission. 

    3% of the biggest developers are responsible for over 95% of app stores revenues. Most from IAP from games that are a free app in the app stores. Consumers are not forced to spend any money on IAP, in order to play the games. And for the most part, these game developers are not complaining about the 30% commission they also have to pay Microsoft, Sony, Nintendo or Steam, to be in their stores. And they are not flocking in masses to be in the Epic Game Store, where they would only pay a 12% commission.    
    watto_cobraqwerty52aderutterdewmeFileMakerFeller
  • Reply 4 of 44
    docbburkdocbburk Posts: 90member
    It's funny how apple's commission is the industry standard, yet, the ilk of Epic and I'm sure Samsung and other competitors are behind most of the push to make Apple charge less.  They were right when they said congress should have to wear fire suits like mascara drivers with all their "sponsors" listed on their suits. 
    watto_cobraFileMakerFeller
  • Reply 5 of 44
    kimberlykimberly Posts: 402member
    davidw said:
    Anilu_777 said:
    I wonder how many developers actually pay 30% and is Google also under the microscope for its 30% fee? 🤔 
    The developers for over 90% of the apps in both app stores, pays 0% commission because their apps are free. This would not be the case if Apple or Google charged a set fee per downloaded app, rather than a commission. 

    3% of the biggest developers are responsible for over 95% of app stores revenues. Most from IAP from games that are a free app in the app stores. Consumers are not forced to spend any money on IAP, in order to play the games. And for the most part, these game developers are not complaining about the 30% commission they also have to pay Microsoft, Sony, Nintendo or Steam, to be in their stores. And they are not flocking in masses to be in the Epic Game Store, where they would only pay a 12% commission.    
    If you make a statement e.g. "3% of the biggest developers are responsible for over 95% of app stores revenues." to support an argument, then a reference is required.
    FileMakerFeller
  • Reply 6 of 44
    davidwdavidw Posts: 1,606member
    kimberly said:
    davidw said:
    Anilu_777 said:
    I wonder how many developers actually pay 30% and is Google also under the microscope for its 30% fee? 🤔 
    The developers for over 90% of the apps in both app stores, pays 0% commission because their apps are free. This would not be the case if Apple or Google charged a set fee per downloaded app, rather than a commission. 

    3% of the biggest developers are responsible for over 95% of app stores revenues. Most from IAP from games that are a free app in the app stores. Consumers are not forced to spend any money on IAP, in order to play the games. And for the most part, these game developers are not complaining about the 30% commission they also have to pay Microsoft, Sony, Nintendo or Steam, to be in their stores. And they are not flocking in masses to be in the Epic Game Store, where they would only pay a 12% commission.    
    If you make a statement e.g. "3% of the biggest developers are responsible for over 95% of app stores revenues." to support an argument, then a reference is required.
    It' pretty common knowledge and have been cited in several more articles. 
     
    https://www.thehindu.com/sci-tech/technology/app-store-gets-2-revenue-from-small-developers/article33330964.ece

    Just 25 game developers account for over 50% of app store revenue. 25 game developers is not close to 3% of the developers in either app stores.

    https://www.canalys.com/newsroom/top-25-us-developers-account-half-app-revenue

    98% of the developers accounts for 7% of the revenue.

    https://www.cnbc.com/2020/11/18/apple-will-cut-app-store-fees-by-half-to-15percent-for-small-developers.html#:~:text=Cramer-,Apple will cut App Store commissions by,15% for small app makers&text=Apple said it will cut,net sales on its platform.

    The top 1% publishers generated 93% of app revenue 
    get seriouselijahgteejay2012watto_cobraqwerty52applguymuthuk_vanalingamdewmeFileMakerFeller
  • Reply 7 of 44
    bloggerblogbloggerblog Posts: 2,238member
    That percentage is tagged to the price, everyone is tagging it. So if they drop it to 10%, the average price for an app will drop for the user, a developer will still make the same money. 
    watto_cobra
  • Reply 8 of 44
    tc10tc10 Posts: 2member
    It is excellent value to reach a vast world-wide customer base thru a user-friendly, controlled, secure, trusted, privacy-protected interface. 
    ✅✅✅✅✅
    get seriousgenovellewatto_cobradewme
  • Reply 9 of 44
    S12S12 Posts: 19member
    I used to be a low-level exec with a national retailer. Thirty percent is not much, they should go after jewelers if they really are concerned about price hikes and gouging customers. If you ever saw the actual cost of a piece of jewelry compared to retail you'd probably be upset. Markups of 125% are not uncommon.
    appleinsideruserget seriousrob53watto_cobradewme
  • Reply 10 of 44
    This is just more nonsense from the UK government in the guise of protecting the public. It’s not that at all. It’s also very simple: if developers don’t want to pay then they can market their product by other means. If the public thinks something is too expensive then they won’t buy it.
    watto_cobraMBearaderutterFileMakerFeller
  • Reply 11 of 44
    Commission rates for e-books are the same or worse than for apps in the App Store and e-books are unquestionably stagnant from a technological point of view. The e-book that you buy in 2022 is no different than the e-book you could buy in 2012. You're not going to "wow" anyone by showing them an e-book on your new phone. There is no constant push to improve e-books technologically like there is with apps.
    watto_cobradewme
  • Reply 12 of 44
    geekmeegeekmee Posts: 572member
    I didn’t know that under capitalism you had to set price that is fair?
    I thought the market would decide if it is fair or not??
    teejay2012genovellewatto_cobraMBearqwerty52dewmeFileMakerFeller
  • Reply 13 of 44
    kkqd1337kkqd1337 Posts: 379member
    geekmee said:
    I didn’t know that under capitalism you had to set price that is fair?
    I thought the market would decide if it is fair or not??
    I think the issue is that there are no competitive app stores on iOS - so i think the monopolies laws and regulations apply - abusive of market dominance 

    am no expert 
  • Reply 14 of 44
    avon b7avon b7 Posts: 6,290member
    kkqd1337 said:
    geekmee said:
    I didn’t know that under capitalism you had to set price that is fair?
    I thought the market would decide if it is fair or not??
    I think the issue is that there are no competitive app stores on iOS - so i think the monopolies laws and regulations apply - abusive of market dominance 

    am no expert 
    That is definitely one of the key elements and the OP wasn't very fortunate with the comment anyway. 

    Just look at the F in FRAND and the fact that governments often take measures when 'abusive' pricing becomes a problem. 

    As the article touches on, if you are a de facto gatekeeper you have monopoly control over price structuring, commissions end up being passed onto consumers who can end up paying more through the lack of competition. 
    elijahg
  • Reply 15 of 44
    avon b7 said: As the article touches on, if you are a de facto gatekeeper you have monopoly control over price structuring, commissions end up being passed onto consumers who can end up paying more through the lack of competition. 
    Apple doesn't control pricing of apps. It's not like WalMart where the manufacturer has to individually negotiate a price to sell the product to WalMart and then WalMart charges whatever price they want for the product in stores. Apple sets the commission rate based on revenue and the developer sets the price.

    The EU attempted to trot out Spotify as an example of the commission rate being anti-competitive versus 1st party Apple Music (which isn't subject to commission), but that blew up in their face when it turned out 99% of Spotify's iOS subscribers were paying via the internet (which isn't subject to commission either). 

    edited July 3 dewmeFileMakerFeller
  • Reply 16 of 44
    avon b7avon b7 Posts: 6,290member
    avon b7 said: As the article touches on, if you are a de facto gatekeeper you have monopoly control over price structuring, commissions end up being passed onto consumers who can end up paying more through the lack of competition. 
    Apple doesn't control pricing of apps. It's not like WalMart where the manufacturer has to individually negotiate a price to sell the product to WalMart and then WalMart charges whatever price they want for the product in stores. Apple sets the commission rate based on revenue and the developer sets the price.

    The EU attempted to trot out Spotify as an example of the commission rate being anti-competitive versus 1st party Apple Music (which isn't subject to commission), but that blew up in their face when it turned out 99% of Spotify's iOS subscribers were paying via the internet (which isn't subject to commission either). 

    I deliberately avoided stating that Apple controlled the pricing of apps. 

    It has control over price 'structuring'. This is referenced in the article where it is stated that developers pass on those extra costs to consumers. 

    The lack of competition and gatekeeper status is what will probably be key here. 

    Spotify isn't comparable in this case as it doesn't have platform-wide control over anything. 
    gatorguy
  • Reply 17 of 44
    avon b7 said: It has control over price 'structuring'. This is referenced in the article where it is stated that developers pass on those extra costs to consumers. 
    Costs are passed on to consumers in virtually every retail environment. That's not an example of abuse. The EU was attempting to use Spotify as an example of abuse ($9.99 minus 30% commission versus $9.99 without commission for Apple Music) but 99% of Spotify's revenue from iOS wasn't subject to a commission at all due to users paying on the internet. 
    FileMakerFeller
  • Reply 18 of 44
    avon b7avon b7 Posts: 6,290member
    avon b7 said: It has control over price 'structuring'. This is referenced in the article where it is stated that developers pass on those extra costs to consumers. 
    Costs are passed on to consumers in virtually every retail environment. That's not an example of abuse. The EU was attempting to use Spotify as an example of abuse ($9.99 minus 30% commission versus $9.99 without commission for Apple Music) but 99% of Spotify's revenue from iOS wasn't subject to a commission at all due to users paying on the internet. 
    iOS and Google Android are not your typical retail environments. If they were, they would not be in the situations they find themselves in now.

    iOS is a closed retail environment and Apple is both the gatekeeper and middleman. That makes it radically different to most other retail environments. 
    edited July 3 FileMakerFeller
  • Reply 19 of 44
    davidwdavidw Posts: 1,606member
    avon b7 said:
    kkqd1337 said:
    geekmee said:
    I didn’t know that under capitalism you had to set price that is fair?
    I thought the market would decide if it is fair or not??
    I think the issue is that there are no competitive app stores on iOS - so i think the monopolies laws and regulations apply - abusive of market dominance 

    am no expert 
    That is definitely one of the key elements and the OP wasn't very fortunate with the comment anyway. 

    Just look at the F in FRAND and the fact that governments often take measures when 'abusive' pricing becomes a problem. 

    As the article touches on, if you are a de facto gatekeeper you have monopoly control over price structuring, commissions end up being passed onto consumers who can end up paying more through the lack of competition. 
    That is a complete misunderstanding of why FRAND exist for SEP's. When the government regulatory agency (for an industry) establish certain patents to be "Standard Essential Patent", the government eliminated the competition for the company that owns those patents. This because everyone in the industry must use those patents in order to be compatible with each other. Thus the government must ensure that the owners of SEP's do not abuse the "monopoly" that they were handed. This is not the case with Apple App Store on iOS. Not the case with Google Play on Android. Not the case with Microsoft Store for an Xbox. Not the case with Sony Store on a PlayStation. And yet they all charge about the same 15/30% commission. How it it that Apple is abusing their "monopoly control" when the others are not? And you can't even claim that Google has "monopoly control', when there's no way that the Google Play store is a "monopoly", by any account, on Android.

    It's no different that when a municipality grants a company to be the only company to offer cable in their city. Or garbage service. Or gas and electricity. The city can regulate the prices they charge because the government handed them a "monopoly" (in their cities.). So the government regulates a price that is "fair" for consumers AND  the company. Not just what's "fair" for the consumers. ATT could not charge any price they wanted for their services, even though they practically had 100% of the market. ATT was handed their monopoly when the US government deemed that it was more important to have one telecommunication standard where everyone can connect to each other at an affordable rate, than to have many telecommunication competing with different services. Thus ATT had to go through a government regulatory agency in order to raise their prices. Rates went up for consumers when the the government broke up ATT. 

    And then you have this. 

    https://9to5mac.com/2020/11/30/report-98-of-devs-15-percent-commission/

    How is charging a 15% commission to 98% of the developers in the Apple App Store, not "fair" for consumers?  

    Let us be real, both you, me and a lot of people here know that the 30% commission mainly affects the profits of 2% of the biggest developers that are making billions in profit from being in the Apple App Store. And most through games IAP, that consumers are not forced to spend any money on. Remember, for every $3 Apple makes from the 2% of the most profitable developers, the developer made $7. 

    Do some research. Most of these 2% top developers have their own websites where their subscribers can pay for their subscriptions, without having to go through their apps and having to pay a commission. And yet there's no 30% or 15% savings for most of those consumers paying on their websites. Why not, if consumers are the one paying the commission? The commission for paid subscribers drops from 30% to 15% after a year. Have to ever gotten a 15% discount from any developers, after subscribing to their services for over a year? Why not, if you are the one paying the commission? I never saw a 30% or 15% saving on my Netflix subscription in over 12 years of paying for it with auto payment on my CC, instead of through their app on iOS. And this would be true for nearly all streaming services. 

    In CA, the top 1% pays about 50% of the State income tax collected. And there are plenty of people, politicians and maybe even you, that would say they are paying their "fair share". So why shouldn't the most profitable developers be paying their "fair share", so that Apple can pay for RD and maintain iOS to their best interest, keep commission low for 98% of their smaller developers and offer their users an app store where 90% of the apps are free? While still making a reasonable profit. 

    https://lao.ca.gov/LAOEconTax/Article/Detail/7



    dewmeFileMakerFeller
  • Reply 20 of 44
    avon b7avon b7 Posts: 6,290member
    davidw said:
    avon b7 said:
    kkqd1337 said:
    geekmee said:
    I didn’t know that under capitalism you had to set price that is fair?
    I thought the market would decide if it is fair or not??
    I think the issue is that there are no competitive app stores on iOS - so i think the monopolies laws and regulations apply - abusive of market dominance 

    am no expert 
    That is definitely one of the key elements and the OP wasn't very fortunate with the comment anyway. 

    Just look at the F in FRAND and the fact that governments often take measures when 'abusive' pricing becomes a problem. 

    As the article touches on, if you are a de facto gatekeeper you have monopoly control over price structuring, commissions end up being passed onto consumers who can end up paying more through the lack of competition. 
    That is a complete misunderstanding of why FRAND exist for SEP's. When the government regulatory agency (for an industry) establish certain patents to be "Standard Essential Patent", the government eliminated the competition for the company that owns those patents. This because everyone in the industry must use those patents in order to be compatible with each other. Thus the government must ensure that the owners of SEP's do not abuse the "monopoly" that they were handed. This is not the case with Apple App Store on iOS. Not the case with Google Play on Android. Not the case with Microsoft Store for an Xbox. Not the case with Sony Store on a PlayStation. And yet they all charge about the same 15/30% commission. How it it that Apple is abusing their "monopoly control" when the others are not? And you can't even claim that Google has "monopoly control', when there's no way that the Google Play store is a "monopoly", by any account, on Android.

    It's no different that when a municipality grants a company to be the only company to offer cable in their city. Or garbage service. Or gas and electricity. The city can regulate the prices they charge because the government handed them a "monopoly" (in their cities.). So the government regulates a price that is "fair" for consumers AND  the company. Not just what's "fair" for the consumers. ATT could not charge any price they wanted for their services, even though they practically had 100% of the market. ATT was handed their monopoly when the US government deemed that it was more important to have one telecommunication standard where everyone can connect to each other at an affordable rate, than to have many telecommunication competing with different services. Thus ATT had to go through a government regulatory agency in order to raise their prices. Rates went up for consumers when the the government broke up ATT. 

    And then you have this. 

    https://9to5mac.com/2020/11/30/report-98-of-devs-15-percent-commission/

    How is charging a 15% commission to 98% of the developers in the Apple App Store, not "fair" for consumers?  

    Let us be real, both you, me and a lot of people here know that the 30% commission mainly affects the profits of 2% of the biggest developers that are making billions in profit from being in the Apple App Store. And most through games IAP, that consumers are not forced to spend any money on. Remember, for every $3 Apple makes from the 2% of the most profitable developers, the developer made $7. 

    Do some research. Most of these 2% top developers have their own websites where their subscribers can pay for their subscriptions, without having to go through their apps and having to pay a commission. And yet there's no 30% or 15% savings for most of those consumers paying on their websites. Why not, if consumers are the one paying the commission? The commission for paid subscribers drops from 30% to 15% after a year. Have to ever gotten a 15% discount from any developers, after subscribing to their services for over a year? Why not, if you are the one paying the commission? I never saw a 30% or 15% saving on my Netflix subscription in over 12 years of paying for it with auto payment on my CC, instead of through their app on iOS. And this would be true for nearly all streaming services. 

    In CA, the top 1% pays about 50% of the State income tax collected. And there are plenty of people, politicians and maybe even you, that would say they are paying their "fair share". So why shouldn't the most profitable developers be paying their "fair share", so that Apple can pay for RD and maintain iOS to their best interest, keep commission low for 98% of their smaller developers and offer their users an app store where 90% of the apps are free? While still making a reasonable profit. 

    https://lao.ca.gov/LAOEconTax/Article/Detail/7



    It seems the reference to 'capitalism' pegged onto 'fair', went over your head. There was no need to dig into the reasoning behind FRAND, just to understand that capitalism would make it irrelevant. But then of course 'fair' still holds its own weight in the context of my reply. Fair, in FRAND, still means 'fair' independently of context.

    As for the 30%, it is irrelevant the percentage developers it affects. The issue remains the same and that is why it is being looked at virtually everywhere. 
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