Apple Loses UK Lawsuit Over Unfair 30% App Store Commissions

Listen to This Article

Court rules against tech giant in landmark case challenging its mandatory commission fees charged to app developers on the iOS platform.

Apple faces a potential £1.5 billion payout after the UK's Competition Appeal Tribunal ruled Thursday that the tech giant abused its dominant market position by imposing "excessive and unfair" App Store commissions, marking a landmark victory for consumer rights in the digital marketplace.

The tribunal found that Apple wielded "near absolute market power" in iOS app distribution and in-app payment services, systematically overcharging 36 million UK consumers between October 2015 and December 2020. The decision represents the first successful collective action claim under the UK's consumer protection regime against a major tech company.

Monopolistic Practices Exposed

The Competition Appeal Tribunal delivered a scathing assessment of Apple's business practices, determining that the company's standard 30% commission rate was both excessive and unfair compared to the actual costs of providing services. The court established that fair commission rates would have been 17.5% for app distribution and just 10% for payment processing—significantly lower than Apple's blanket 30% charge.

"This is a landmark victory — not only for App Store users, but for anyone who has ever felt powerless against a global tech giant," said Dr. Rachael Kent, the King's College London academic who brought the case. "The Tribunal has confirmed that Apple has been unlawfully overcharging users for more than ten years."

The tribunal systematically dismantled Apple's defense arguments, rejecting claims that its restrictions were necessary for user safety, security, and privacy. The court found these justifications "neither necessary nor proportionate" and concluded that Apple had effectively eliminated all competition in the relevant markets through contractual restrictions that created "insurmountable barriers to entry for potential competitors."

Financial Impact and Consumer Compensation

The ruling opens the door for significant compensation payments to millions of UK consumers and businesses. According to law firm Hausfeld & Co. LLP, which represented Dr. Kent, any UK user who purchased paid apps, subscriptions, or made in-app purchases on iPhone or iPad devices since October 1, 2015, is potentially eligible for compensation.

Individual payments are expected to range between £27 and £75 per consumer, though exact amounts will be determined at a damages hearing scheduled for November. The total damages could reach £1.5 billion ($2 billion), representing one of the largest consumer payouts in UK antitrust history.

Lesley Hannah, a partner at Hausfeld, emphasized the significance of the collective action regime: "No individual could have taken on a company as powerful as Apple alone. We need this system, and representatives like Dr Kent, to protect UK consumers and businesses from illegal, anti-competitive conduct."

Apple's Response and Appeal Plans

Apple strongly contested the ruling, maintaining its position that the App Store operates in a competitive environment. "We strongly disagree with this ruling, which takes a flawed view of the thriving and competitive app economy," Apple stated. "The App Store faces vigorous competition from many other platforms — often with far fewer privacy and security protections — giving developers and consumers many options in how they build, share, and download apps."

The company confirmed it will appeal the decision, arguing that the ruling "overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to discover apps and securely make payments."

Thursday's ruling sends a clear message that even the world's most valuable companies must operate within the bounds of competition law, ensuring fair treatment for both developers and consumers in the app ecosystem.