UK court loss could cost Apple £1.5bn

Apple could be forced to pay up to £1.5 billion in compensation after losing a class action lawsuit brought on behalf of 36 million UK iPhone and iPad users, both consumers and businesses.

The Competition Appeal Tribunal found that Apple abused its dominant position by charging “excessive and unfair” prices in the form of the 30% commission it typically charges on both app sales and in-app payments.

The plaintiffs argued that this meant that consumers were overcharged for apps, app subscriptions, and in-app purchases of digital content.

Apple said it strongly disagrees with the decision and will appeal.

The case was led by academic Dr Rachel Kent.

Her lawyers say it is the first such claim brought under the UK's class action regime to succeed.

Dr Kent called the decision “a landmark victory not only for App Store users, but for anyone who has ever felt powerless before a global technology giant.”

“Today’s decision sends a clear message: no company, no matter how rich or powerful, is above the law.”

The tribunal's decision comes a day after the Competition and Markets Authority (CMA) declared Apple and Google to have “strategic market status”, effectively declaring them to have greater power over mobile platforms.

This means competition watchdogs could force Apple to allow rivals to run their own iPhone app stores in the UK.

This would be a significant change to Apple's “closed system” where apps can only be downloaded from its own App Store.

Apple claims that because commissions are only charged on paid app sales and in-app purchases, 85% of apps in the App Store pay no commission at all.

And this points to the introduction of a program for small businesses, where the usual commission rate of 30% is halved.

In a statement sent to the BBC, Apple said it strongly disagrees with the decision, which reflects a flawed vision of a “thriving and competitive app economy.”

He said the App Store had benefited businesses and consumers across the UK and created a vibrant marketplace where developers compete and users can choose from millions of innovative apps.

“This ruling ignores how the App Store helps developers succeed and provides consumers with a safe and secure place to discover apps and make secure payments,” Apple said.

Adding: “The App Store faces stiff competition from many other platforms – often with far fewer privacy and security protections.”

Apple said it intends to appeal.

According to lawyers at Hausfeld & Co. LLP, who represented Dr Kent, “any iPhone or iPad user in the UK who has purchased paid apps, subscriptions or made in-app purchases of digital content from the UK App Store at any time since 1 October 2015 is potentially entitled to compensation from Apple.”

Purchases must be made on iPhone and/or iPad devices, they add.

But it has not yet been determined exactly how much individual consumers or businesses can claim, the BBC reported.