Apple Inc. (NASDAQ:AAPL) lost a major class action lawsuit in the U.K. that accused the U.S. tech giant of "abusing its dominant position by charging app developers an unfair 30% commission through its app store."
‘Exorbitant Profits’
The U.K.’s Competition Appeal Tribunal (CAT) ruled against Apple on Thursday, after a trial of the lawsuit, brought on behalf of around 20 million iPhone and iPad users in the country, and valued at up to £1.5 billion (roughly $2 billion), earlier this year.
Rachael Kent, a lecturer at King’s College London, brought the case, arguing that Apple had made “exorbitant profits” by excluding all competition for the distribution of apps and in-app purchases.
The company may have to pay as much as £75 ($100) per customer, as per estimates. The tribunal said calculations about compensation will be argued at a hearing next month.
Apple did not immediately respond to Benzinga‘s request for comment.
App Store Fees Under Fire Amid Other Issues
For years, Apple has been criticized by app developers, such as Spotify (NASDAQ:SPOT) and Epic Games, for charging a hefty commission. The company says it helps developers market and distribute their apps and charges a lower commission to small businesses.
Thursday's ruling marked the first mass lawsuit against a tech giant to reach trial under the U.K.'s class action-style regime. The system has seen several multibillion-pound cases approved for trial, though consumers have achieved limited success until now.
It also comes amid an ongoing fight between the U.K. government and Apple over whether the state should have a backdoor to cloud storage used by Apple customers. Officials asked to break the end-to-end encryption that protects Apple’s iCloud service in the UK. The company refused, opting to withdraw its advanced data protection rather than create a flawed encryption system.
Consumer group Which? also filed a £3 billion legal claim against Apple last November, alleging that the company has abused its market dominance by steering customers towards its integrated iCloud service without clearly presenting alternative cloud storage options.
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