20 million U.K. iPhone, iPad users could get compensation in £1.5B lawsuit

App Store
App Store (Image credit: iMore)

What you need to know

  • Millions of U.K. Apple users could get a slice of a £1.5 billion App Store lawsuit in the UK.
  • Apple will face a trial in the U.K.'s Competition Appeal Tribunal over claims it has used its dominant market position in iOS App Distribution to overcharge customers.
  • That's because of the 30% fee it takes on purchases, and because developers must use the App Store and Apple's payment system.

20 million UK iPhone and iPad users could receive a payout if a new £1.5 billion legal claim against Apple is successful.

A Competition Appeal Tribunal this week has refused to grant Apple's attempt to limit the consumer claim, which is being led by Dr. Rachael Kent. In a ruling three judges refused Apple's bid to get the claim turned around, and the case will now proceed to a full trial in the specialist court. In a press release, Kent's legal team Hausfeld & Co LLP stated:

The UK lawsuit has been brought in the Competition Appeal Tribunal, a specialist court. It alleges that 19.6 million iPhone and iPad users in the UK may have been overcharged as a result of breaches by Apple of British and European competition laws. Dr Kent – an expert in the digital economy and lecturer at King's College London – seeks compensation on a collective basis on behalf of affected consumers and businesses.

The suit is founded on the same gripes as the Epic Games 'Free Fortnite' campaign and lawsuit, and anticompetitive rumblings in the E.U. and places like South Korea. Dr. Kent, an expert in the digital economy, alleges that Apple has overcharged users for buying apps and making in-app purchases on popular services like Tinder, Fortnite, and any other app on your iPhone or iPad that accepts purchases. That's because Apple charges commission of up to 30% on these purchases, however, developers must use the App Store to distribute their apps and Apple's in-app payment system to make payments. Dr. Kent argues that "this practice is unlawful, and that Apple would be unable to charge customers such an excessive mark-up if its devices were open to competitors."

"This is excellent news for App Store users in the U.K.", said Dr. Kent. " applaud the Competition Appeal Tribunal for this clear and well-thought-out decision, which demonstrates that the major reforms of the UK's class action procedures since 2015 are working and that consumers and businesses can now be empowered to uphold their collective rights against abuses of competition law."

As for compensation, anyone who has used an iPhone or iPad to buy apps, subscriptions, or in-app purchases since October 1 2015 is potentially entitled to compensation according to the claim and will be automatically included.

The issue of commission on Apple's App Store is a tricky one legally. Even though Apple is being forced to open up its store to alternative payment methods it is still charging commission of around 26% on purchases. This includes South Korea, where the company announced alternative payment systems would be available to developers in order to comply with new laws in the country.

Stephen Warwick
News Editor

Stephen Warwick has written about Apple for five years at iMore and previously elsewhere. He covers all of iMore's latest breaking news regarding all of Apple's products and services, both hardware and software. Stephen has interviewed industry experts in a range of fields including finance, litigation, security, and more. He also specializes in curating and reviewing audio hardware and has experience beyond journalism in sound engineering, production, and design. Before becoming a writer Stephen studied Ancient History at University and also worked at Apple for more than two years. Stephen is also a host on the iMore show, a weekly podcast recorded live that discusses the latest in breaking Apple news, as well as featuring fun trivia about all things Apple. Follow him on Twitter @stephenwarwick9