Apple has lost a landmark lawsuit over fees in the App Store, which could benefit around 36 million iPhone and iPad users in the UK.
The Competition Appeal Tribunal (CAT) has ruled that the US tech company abused its dominant position by “charging excessive and unfair prices in the form of the commission which it charges developers”.
Lawyers for Dr Rachael Kent, the academic who brought the case, claim Apple had made “exorbitant profits” by excluding all competition for the distribution of apps and in-app purchases.
It is argued Apple should pay around £1.5bn in damages for purchases made over the last 10 years.
Apple – which has faced mounting pressure from regulators in the US and Europe over the fees it charges developers – says it will appeal.
Developers are typically charged 30% commission and are blocked from routing payments through any platform other than Apple’s App Store.
The tribunal said calculations about compensation will be argued at a hearing next month.
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According to legal firm Hausfeld & Co LLP, the ruling will mean potential compensation for many Apple users in the UK. It says people must have:
• made a purchase on an iPhone or iPad since 1 October 2015
• used the UK storefront of the App Store
• spent money for paid-for apps, subscriptions or in-app purchases of digital content
Apple users can check their eligibility for compensation by logging into their App Store account and checking their “Purchase History”.
Hausfeld says the “sums will be significant” for users who have app subscriptions or make regular in-app purchases.
Example 1: Strava subscription at £8.99 a month/£107.88 a year – users would be entitled to £21.58 for each year.
Regular gamers are also likely to receive large sums in compensation.
Example 2: Clash of Clans, a sack of gems is £19.99 – users would get £4.00 back
Example 3: Minecraft, 960 Minecoins are £5.99 – compensation would be £1.20
Any compensation is also likely to be delayed while Apple attempts to appeal the ruling, which could still be overturned by a higher court.
“This ruling overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to
discover apps and securely make payments,” an Apple spokesperson said.
In a statement, Dr Kent, an academic and senior lecturer at King’s College, London, said: “Those unfair fees have added up to billions for the world’s richest company, and less choice and innovation for everyone else.”
She added that the ruling shows the UK’s collective action regime is working and “sends a clear message: no company, however wealthy or powerful, is above the law”.
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Lesley Hannah, partner at Hausfeld & Co LLP, who represents Dr Kent, said: “The whole purpose of competition law is to ensure fairness and to prevent companies exploiting their market power.”
“Apple illegally kept rivals out of the market in order to prevent their customers being able to use rival app stores and save money,” she added.
Ms Hannah told Sky News that Apple will need to convince the court that there is “an error of law” in the judgment and any appeal could take a year to 18 months, potentially delaying any compensation.
Fellow tech giants, including Amazon and Microsoft, are also facing sizeable claims at the CAT, while Google is being challenged over the commission it charges app developers for access to its Play Store.
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Meanwhile, on Wednesday, the Competition and Markets Authority (CMA) targeted Google and Apple for their “strategic” roles in mobile ecosystems, opening the door for regulators to impose changes to their business practices to improve competition.
The CMA escalated scrutiny of the two US tech companies by labelling them with “strategic market status”.
Google called that decision “disappointing, disproportionate and unwarranted” while Apple said the move could pose increased risks for users and jeopardise the UK’s “developer economy”.
