According to Reuters, Apple lost its case in a lawsuit involving 36 million British iPhone and iPad users (including consumers and businesses) in the United Kingdom, where the court found that apples abused their market position, charged consumers excessive fees and could be forced to pay damages amounting to Pound1.5 billion.
This landmark lawsuit was initiated by the scholar Rachel Kent, who accused apples of “excessive profits” through the commission of 30 per cent to consumers, developers and businesses. The court decision stated that apples set “excessive and unfair” prices for services purchased in applications for distribution and application. The plaintiff argued that this action resulted in an overcharge to consumers for the purchase of applications, application of subscription services and application of digital content. Apple is strongly opposed to this and will appeal. Rachel Kent ‘ s counsel noted that this was the first successful such claim under the British class action system. Dr. Kent called the verdict “a landmark victory — not only for App Store users, but also for all those who had felt powerless before the technology giant. The ruling today sends a clear message that no enterprise, regardless of its wealth and power, is above the law.” One day before the decision was issued, the British Competition and Markets Authority had jointly designated apples and Google as having a “strategic market position” and substantially designated two companies as having significant control over mobile platforms. This means that regulators may force apples to allow competitors to operate their own app stores on iPhone in the United Kingdom, which would significantly change the “closed system” that apples are currently only allowed to download through official App Store. Apple stressed that, as commissions were charged only for the sale of fee-based applications and for in-service purchases, 85 per cent of the App Store applications did not have to pay any commissions, and noted that a small-scale enterprise-specific scheme had been introduced to halve the commission rate from 30 to 15 per cent.
Apple Speaker, speaking in an interview with BBC, said that the ruling had a cognitive flaw in the “booming competitive application economy,” emphasizing that App Store benefited all British businesses and consumers, creating a dynamic market in which developers were fully competitive and users enjoyed millions of innovative applications. “The decision ignored the important role of App Store in helping developers succeed and in providing a safe and credible platform for consumers to discover and pay for applications. App Store faces intense competition from many other platforms, which are often far worse than we in terms of privacy and security protection.” Xsolla Managing Director Chris Hessević stated to the Game Industry that the ruling “marked a major turn for the mobile game industry”. He noted that “the court found that the 30 per cent commission for apples was too high, which created the possibility of an understanding for developers who had long been constrained by high costs. If the judgement is upheld, it is expected that the share of apples will be reduced to a more competitive level, which would release more revenues for the development of the studio and possibly even lower the price of intra-application purchases.” He added: “The decision also reinforced calls for alternative payment systems and distribution channels, which would weaken apple control over iOS ecosystems. Despite Apple’s appeal, this decision has heightened global regulatory pressure and has the potential to accelerate the formation of a more equitable revenue-sharing model, allowing mobile game developers to invest more resources in content creation, marketing and innovation, rather than paying platform commissions.”
In response to the issue of consumer compensation, Hausfeld & Co. LLP, Rachel Kent, represented law firm, stated that any iPhone/iPad user who purchased a fee application, subscription service or digital content in the UK App Store front office from 1 October 2015 may be entitled to compensation.
