By: Molly Codeanne
Since the iPhone hit the market in 2007, Apple has had an unprecedented effect on the lives of countless individuals throughout the world. To date, there are upwards of 1.5 billion iPhone users worldwide. We all use App Store purchases whether it be to get our daily news, keep up with our favorite sports teams, or to download the newest social media app. Depending on the country in which you live, you may have access to different apps or content. However, you may also be subject to the various practices or additional charges associated with that country’s version of the App Store.
The UK lawsuit revolves around Apple’s 30 percent commission fee on third party app purchases made on iPhones and iPads in the UK App Store. Dr. Rachel Kent, who is the representative of the class action, stated that “Apple had no right to charge 30% rent for transactions on phones.” The claimants state that this practice breaches competition rules and that Apple has abused its power and dominant position in the app market. More specifically, the proceedings brought against Apple cite violations of Article 102 of the Treaty on the Functioning of the European Union and Section 18 of the Competition Act of 1998. Article 102 expressly forbids “abusive conduct by companies that have a dominant position on a particular market.” Furthermore, Section 18 prohibits companies from abusing their dominant market power in any one area when it may affect trade within the UK.
According to the claim, users have been over-charged by approximately five billion euros for their purchases in the app store and the lawsuit demands damages of almost 1.5 billion pounds. Successful litigation of this claim will mean that any Apple user who bought apps or paid for subscriptions in the UK App Store is entitled to compensation. Effected UK users will be included in the suit by default unless they choose not to be involved as this action was brought on an “opt-out basis.”
Apple is attempting put a stop to the claim by asserting that the commission at issue is similar to charges made by other digital marketplaces. The company reiterates its “unwavering commitment to consumers” and its “many benefits” to the UK economy. Apple compares the commission fee to charges in various other digital industries. Furthermore, it argues that the commission is a result of app providers who are “selling a digital good or service” and such providers are eligible for a lower rate.
It is important to highlight how big tech companies operate in countries outside of the United States, and how their practices may have an adverse effect on users in those countries. Not only do different versions of the App Store affect iPhone users, but they also influence app developers. The App Store and the slew of Apple devices that have emerged over the years have undoubtedly created a space for individuals to exhibit their creative and innovative apps and have allowed users to find something that sparks their interest. However, as Apple has become the dominant power in the App Store industry, it has effectively narrowed the marketplace for apps, and become the “only gateway for millions of consumers.” Thus, Apple has imposed unjustified fees and, as a result, is has become extremely difficult, especially for small developers, to get new ideas and creative apps on the market.
The UK suit does not introduce a novel issue and similar suits have been filed in the U.S. The creators of Fortnite brought an action in an attempt to require Apple to allow developers of certain types of games to use their own pay systems or allow users to download their games from other sources. In connection with the present lawsuit, Apple was quoted as saying it “welcomes the opportunity to discuss with the court [its] unwavering commitment to consumers and the many benefits the App Store has delivered to the UK’s economy.” However, it is impossible to ignore the fact that Apple’s market dominance has made it difficult for independent developers to promote their apps on the App Store and has not allowed the flexibility for users to download apps from other sources. Effectively, Apple has blocked many developers’ creative ideas from ever reaching their intended audiences.
While Apple’s in-store practices may vary from country to country, they seem to be disproportionately affecting users and small developers across the board. Apple has undoubtably changed our everyday lives in many valuable ways by providing a variety of apps that have an expansive impact on daily life from allowing us to play games with friends to staying connected with daily events. While this lawsuit is a valiant attempt at holding the tech giant accountable, only time will tell whether, and to that extent, Apple will embody its “unwavering commitment to consumers” and will amend its practices.
Student Bio: Molly Codeanne is a second-year day student at Suffolk University Law School. She is a staff writer on the Journal of High Technology Law. Molly received a Bachelor of Arts Degree in Political Science at The College of the Holy Cross
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
