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Apple users ‒ are you in line for compensation?

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12/05/2021
Millions of iPhone and iPad users may be in line for compensation payouts as Apple faces a legal claim for overcharging for apps on its app store.

A claim is being brought to the Competition Appeal Tribunal by Dr Rachael Kent, a lecturer at King’s College, and legal firm Hausfield, alleging that Apple has violated section 18 of the UK Competition Act. 

And if successful, it could mean damages of a whopping £1.5bn are distributed among the millions of iPhone and iPad users in the UK.

What is Apple accused of?

According to the claimants, Apple has abused its “dominant position” by imposing restrictive terms on app developers, including by forcing them to use its own payment system for purchases through their apps. These purchases tend to include a 30% commission payment to Apple, a practice which has been accused of being “monopolistic and unlawful” with the suggestion it would be unable to charge such a high fee if its devices were open to competitors.

And the claimants argue that while it is the developers that are directly suffering here, it’s actually users of the Apple app store that suffer, as they end up footing the bill for those fees.

It’s worth noting that Apple is facing a similar legal battle in the US, which has been launched by Epic Games, the maker’s of the wildly popular Fortnite game. Interestingly, while Epic attempted to take both Apple and Google to the Competition Appeal Tribunal in the UK earlier this year, its claim against Apple was rejected, though it has been allowed to pursue Google.

What would I get?

The claimants argue that any UK users who have made purchases within the UK version of the app store, whether to purchase an app itself, pay for a subscription or make an in-app purchase, since 1 October could be entitled to compensation if the claim is successful.

They suggest that there are around 19.6m eligible iPhone and iPad users, so that would work out at around £75 each.

Excessive fees

Lesley Hannah, partner at Hausfield, said: “Apple has created a captive market where people who own Apple devices are reliant on it for the provision of both apps and payment processing services for digital purchases. 

“It has been exploiting that market for years, by charging excessive fees that in no way reflect the actual cost of providing those services and making sure no one else can compete. App purchasers have been paying the price and this action seeks fair redress for those purchasers.”

However, Apple dismissed the lawsuit as “meritless”, arguing that the commission charged in the store is “very much in the mainstream of those charged by all other digital marketplaces”.

In a statement, the firm added: “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%.”

Last month, the Competition & Markets Authority launched its own probe into Apple over what it termed “suspected anti-competitive behaviour”, which centres on these commission charges.

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