Apple Is Being Sued for Overcharging Customers on the App Store – Compensation Includes $2 Billion in Damages


A new legal case against Apple has been filed in the U.K. as the Cupertino tech giant is being sued for allegedly overcharging customers on its App Store. Here are more details on the matter.

Case Alleges That Apple’s 30 Percent Commission on App Sales Generates ‘Unlawfully Excessive Levels of Profit’

According to the lawsuit’s details, Apple is being called out to compensate 20 million iPhone and iPad users in the U.K. for years of overcharging. If the lawsuit concludes with Apple found guilty, the iPhone maker will have to pay damages of up to $2 billion, and that is no pocket change. The case was brought forward by Dr. Rachel Kent, who is an expert in the digital economy and a lecturer at King’s College London.

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Kent claims that the App Store is the only way to get apps on an iPad or iPhone, and as such, the platform acts like a monopoly.

“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.”

Apple, on the other hand, disagrees with the lawsuit, as the company states the following.

“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%.”

The lawsuit is similar to the one Epic Games filed against Apple, while also stating that the company’s commission rates as anti-competitive. As for who is included in the damages claim, any U.K. 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. However, earlier this year, Apple reduced its fee from 30 percent to 15 percent for developers who make as much as $1 million in revenue from apps, and those that are new to the App Store.

The lawsuit did not highlight the aforementioned detail, so we will see how this plays out in court hearings.

News Source: Business-standard