A case has been filed with the UK Competition Appeal Tribunal (CAT) against Apple, alleging that the tech giant's 30% commission on app sales is unlawful.
According to the BBC, Apple has labelled the action as "meritless" but Dr Rachael Kent (King's College London digital-economy lecturer) is pursuing a collective action (on behalf of all those affected), on the basis that Apple "charges entry and usage fees that are completely unjustified". Dr Kent's view is that Apple is not permitted to charge users a 30% rent for use of apps which we have become reliant on, particularly as Apple restricts users' access to platforms and developers that are able to offer more competitive pricing.
It is alleged that Apple deliberately shuts out potential competition and forces ordinary users to use Apple’s own payment processing system, generating illegally excessive levels of profit for the company. The team behind the claim intend to seek damages of up to £1.5bn.
The case is in the the early stages and, before proceeding, it needs to be approved by the tribunal. If approved, the claim is intended to include any UK Apple users who purchased apps or other paid subscriptions on an iPhone or iPad since October 2015 - around 20 million UK individuals.
This case is particularly topical, as we have seen growing concerns in recent months about Apple’s dominant position within the market.
In the autumn, a committee of the US Congress concluded that Apple's monopoly over app distribution was used to exclude competitors and charge unreasonable commission for App Store purchases. Further, the Competition and Markets Authority in the UK is investigating complaints that Apple's T&Cs imposed on app developers are unfair and anti-competitive, with similar concerns circulated by the European Commission.
It will be interesting to see how this develops and whether Apple is forced to change it's business model. How would such changes affect it's position in the market? And how would this impact on its biggest competitor, Google, who also adopts a 30% fee structure? This could lead to fundamental changes in the way digital platforms operate.