UK Court Rules Apple Abused App Store Dominance, Faces £1.5B Class Action

Apple lost a major legal battle in the United Kingdom on Thursday, after the Competition Appeal Tribunal ruled that the company had abused its dominant position through its App Store practices.

 

The tribunal found that Apple shut out competition in the app distribution market and charged developers “excessive and unfair” commissions, paving the way for a class action seeking more than £1.5 billion ($2 billion) in damages.

 

Apple said it “strongly disagrees” with the ruling and intends to appeal.

 

The decision marks the second setback in two days for the US tech giant. On Wednesday, the UK’s Competition and Markets Authority (CMA) said both Apple and Google hold “strategic market status” in smartphones and tablets due to their dominant positions, and will face tougher regulation to prevent practices that “limit innovation and competition.”

 

The new measures echo the European Union’s Digital Markets Act, which carries significant financial penalties and could force major tech firms to open up their platforms.

 

The lawsuit was brought by Rachael Kent, an academic at King’s College London, and the law firm Hausfeld & Co, on behalf of millions of iPhone and iPad users in the UK.

 

Under UK class action law, all potentially affected individuals are automatically included and may benefit from any compensation unless they choose to opt out.

 

During hearings that began in January, the claimants argued that Apple’s ban on rival app stores allowed it to impose a 30 per cent surcharge on purchases made through the App Store — a cost ultimately borne by consumers.

 

The tribunal concluded that Apple’s restrictions “cannot sensibly be justified as being necessary or proportionate” and ruled that users are entitled to refunds with interest where developers were overcharged.

 

Hausfeld hailed the judgment as “a great outcome for UK consumers and businesses”, noting that the refund could apply to widely used apps such as Candy Crush and YouTube.

 

Apple, which had called the case “baseless”, maintained that its App Store “faces vigorous competition from many other platforms” and that 85 per cent of apps on it are free.

 

Regulators worldwide have intensified scrutiny of Apple’s App Store practices in recent years. The company is also facing another £785 million lawsuit in the UK over developer fees and, in April, was fined €500 million (£436 million) by the European Union for preventing developers from steering customers to cheaper alternatives outside the App Store -- a decision it has also appealed.

 

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