 "Apple may have to pay $1.83 billion in fines if found guilt in UK trial App Store trial")
Apple is facing a significant legal battle in the UK as a four-year-old class action lawsuit against its App Store fees finally heads to trial. The lawsuit, which kicks off on January 13, could result in Apple being hit with damages of up to £1.5 billion British pounds (around $1.83 billion).
The case, led by Dr Rachael Kent, a digital economy expert from King’s College, challenges the 30 per cent commission Apple charges developers for in-app purchases (IAP). The claimants argue that this fee makes Apple’s App Store an illegal monopoly, accusing the company of unfairly inflating app prices by passing these costs onto consumers.
The allegations against Apple
Dr Kent and the other claimants in the case argue that Apple forces developers to charge higher prices for apps and in-app purchases to cover the hefty 30 per cent commission. According to Kent, Apple’s practices are monopolistic and unjust. She claims that Apple is blocking developers from offering better deals on other platforms, preventing competition.
With global App Store revenues reportedly exceeding $15 billion in 2021, Kent’s filing stresses that Apple would not be able to enforce such high fees if competing platforms were allowed to operate on its devices. The case is believed to be the first of its kind targeting a Big Tech firm in the UK, and its outcome could have wide-reaching implications for Apple’s business model.
Apple’s defence
In response, Apple has argued that its App Store fees are in line with those of other digital marketplaces. The company pointed out that 84 per cent of apps on its platform are free, meaning most developers don’t pay any commission.
For those who do, Apple has a lower commission rate of 15 per cent for developers earning less than $1 million annually, a policy introduced in 2021. Apple insists that the fees are justified as they cover the costs of running the App Store, including security, marketing, and the development of digital tools that help developers reach consumers.
A legal battle with high stakes
The case is being heard by the UK’s Competition Appeal Tribunal and is expected to last around seven weeks. Key witnesses, including Apple’s CFO Kevan Parekh, are set to testify.
This trial is reminiscent of Apple’s ongoing legal battle with Epic Games, which has been in limbo for months awaiting a ruling on Apple’s appeal. If Kent’s case succeeds, it could reshape how Apple, and possibly other tech giants, operate their app marketplaces, particularly when it comes to pricing and competition.
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