Another class-action lawsuit targeting App Store prices and accusing Apple of overcharging iPhone owners for apps and in-app purchases goes to trial.
Apple’s finance chief Kevan Parekh is excepted to testify. This isn’t the first time Apple executives were summoned to testify in court, but what makes this case potentially damaging to the company is the amount of damages sought and the potential changes to the App Store business model.
The class action lawsuit could include nearly 20 million iPhone owners in the United Kingdom. The claimants challenge Apple’s 30 percent commission on in-app purchases made within apps and games, with the Cupertino company potentially on the hook for up to 1.5 billion pounds, or about $1.83 billion.
The main argument in the case is that Apple has abused its monopoly position as the exclusive purveyor of apps for iPhone and iPad. Its unique dominant position has in turn enabled the company to charge a high commission fee on App Store sales.
Apple again accused of overcharging for App Store apps
BBC News reports that the case, set to begin on Monday, January 13, before the United Kingdom’s Competition Appeal Tribunal, could last several weeks.
The filing argues Apple’s fee is too high, forcing developers to pass the cost to customers who are then faced with inflated prices for apps and in-app purchases. The company is accused of blocking access to platforms and developers that could offer iPhone and iPad owners “much better deals” in terms of app prices.
The filing claims Apple’s 2021 App Store revenue of $15 billion wouldn’t have been possible without “slapping unjustified charges” on users. The company would not be able to “impose these exorbitant charges if competitor platforms and payment systems were allowed to compete on its devices,” it reads.
“Apple guards access to the world of apps jealously,” it reads. “This is the behavior of a monopolist, and is unacceptable.” Apple argues the App Store commission is in line with what other digital marketplaces typically charge, saying 84 percent of apps hosted on the App Store are free, and developers pay Apple nothing.
The company also underscored that the vast majority of developers selling digital goods or services are eligible for a lower commission rate of 15 percent.
Similar lawsuits in the US and EU
This isn’t the only lawsuit accusing Apple of overcharging for iPhone apps. Similar cases are ongoing in the United States and the European Union.
For example, the United States government sued Apple over the lock-in and other illegal practices, alleging monopolistic behavior in the US smartphone market. Apple said it planned to “vigorously defend” itself against those accusations.
It’s hard to predict the outcomes of those lawsuits, but with governments around thew world targeting Big Tech and Apple’s App Store fees increasingly in the crosshairs, it’s quite possible the company might be forced into making substantial changes to the App Store’s business model.