Apple Sued For $2 Billion for Overcharging Customers on App Store

Apple has just been served with a new legal case in the United Kingdom for allegedly overcharging customers on its App Store.

The case alleges that Apple’s 30% commission from app sales on its App Store generates “unlawfully excessive levels of profit.” According to the details of the suit, Apple is being demanded to compensate 20 million iPhone and iPad users in the United Kingdom for years of overcharging. If Apple is found guilty in this case, the manufacturer will have to pay damages of up to a whopping $2 billion. The case was brought forwards by Dr. Rachel Kent, an expert in the digital economy and a lecturer at King’s College London.

Kent has claimed that since the App Store is the only legal way to get apps onto the iPhone or iPad, the platform functions as a monopoly, forcing customers to pay the demanded price, no matter how skewed it may be from other markets.

The ‌App Store‌ was a brilliant gateway for a range of interesting and innovative services that millions of us find useful, myself included. But 13 years after its launch, it has become the only gateway for millions of consumers. Apple guards access to the world of apps jealously, and charges entry and usage fees that are completely unjustified. This is the behavior of a monopolist and is unacceptable.

Dr. Rachel Kent

Apple disagrees with the lawsuit, and the company has been reported to have said,

We believe this lawsuit is meritless and welcome the opportunity to discuss with the court our unwavering commitment to consumers and the many benefits the ‌App Store‌ has delivered to the UK’s innovation economy. The commission charged by the ‌App Store‌ is very much in the mainstream of those charged by all other digital marketplaces. 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%.

Apple

This lawsuit is similar to the one Epic Games has filed against Apple, the trial for which begin sometime this month. They have stated the company’s commission rates are anti-competitive.

Any United Kingdom individual who has bought paid apps, subscriptions, or in-app purchases on the App Store using their iPhone or iPad since October 2015 would be included in the claim brought forward by Dr. Kent.

It should be noted that earlier this year, Apple reduced its fees from 30% to 15% for developers who make $1 million or more in revenue from their apps, and for those who are new to the app store.

Dr. Kent’s lawsuit did not mention this detail, so it remains to be seen how this will play out in court.

About Apple

Apple Inc. is an American multinational technology company based in Cupertino, California. The company was founded in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne.

Apple is considered one of the “Big Five” companies in the U.S. information technology industry, along with Amazon, Google, Microsoft and Facebook. They design and develop consumer electronics, computer software, and online services.

Best know for their Mac range of laptop and desktop computers, the iPhone and iPad, Apple is one of the largest market shareholders in the consumer electronics space.