Apple Loses Landmark UK Lawsuit Over App Store Commissions (reuters.com) 14
A UK tribunal ruled that Apple abused its dominant position by charging app developers unfair commissions through its App Store, potentially costing the company hundreds of millions in damages. It marks the first major tech "class action" victory under the UK's collective lawsuit regime. Reuters reports: The Competition Appeal Tribunal (CAT) ruled against Apple after a trial of the lawsuit, which was brought on behalf of millions of iPhone and iPad users in the United Kingdom. The CAT ruled that Apple had abused its dominant position from October 2015 until the end of 2020 by shutting out competition in the app distribution market and by "charging excessive and unfair prices" as commission to developers.
Apple -- which has faced mounting pressure from regulators in the U.S. and Europe over the fees it charges developers -- said it would appeal against the ruling, which it said "takes a flawed view of the thriving and competitive app economy." The case had been valued at around $2 billion by those who brought it. A hearing next month will decide how damages are calculated and Apple's application for permission to appeal. "This ruling overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to discover apps and securely make payments," an Apple spokesperson said.
Apple -- which has faced mounting pressure from regulators in the U.S. and Europe over the fees it charges developers -- said it would appeal against the ruling, which it said "takes a flawed view of the thriving and competitive app economy." The case had been valued at around $2 billion by those who brought it. A hearing next month will decide how damages are calculated and Apple's application for permission to appeal. "This ruling overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to discover apps and securely make payments," an Apple spokesperson said.
Only after 2015? (Score:4, Interesting)
Seems like they've been doing it since 2008. Is there a ten year statute of limitations or something?
Re:Only after 2015? (Score:5, Informative)
There's two things here:
a) yes a statute of limitations of 10 years from the people bringing the case, and
b) the market conditions in 2008 being such that the same action wasn't in any way anti-competitive.
It's not illegal to set a commission to any price you want, until you have market power that can unfairly bias the market. The CAT specifically called out in their ruling that the "Claim Period" starting in 2015 is fundamentally different from the 7 years prior. They determined that the size of the user base locked specifically into the Apple ecosystem constituted a significant market power by Apple in 2015 at which point they could be in breach of antitrust law but that didn't exist in 2008.
"By the beginning of the Claim Period in 2015, the competitive
position had changed very materially so that Apple had not only
captured a substantial market share, but had also created an access
market for iOS device users which it could control through the
restrictions."
They also had this tidbit:
"For example, the question of whether or not Apple was committing an abuse
prior to 1 October 2015 is a highly contentious one, with Apple saying the
Tribunal has no basis on which to make such an order, and the Class
Representative inviting us at least to infer such a state of affairs. It seems
unrealistic and unduly burdensome to expect either party to address questions
of dominance and abuse for an undefined period prior to the commencement of
the Claim Period (which is after all driven by the limitation period to which
class members’ claims are subject). In order to ensure that class members have
an effective remedy, and in the interests of fairness for both parties, it seems to
us to be highly undesirable to be undertaking this type of exercise. "
Re: (Score:2)
This seems fair enough to me. Apple was able to make a lot of money off their investment, which is not unreasonable: rolling out a product like the iPhone was a huge risk and some rewards are due if and when it works.
Once they started using it to strategically carve their market share in stone it became another matter.
B.S. Positioning (Score:4, Informative)
[Apple's propaganda spokeperson says] "This ruling overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to discover apps and securely make payments,"
Which is irrelevant - the fact Apple doesn't allow developers to 'raise' the appstore prices to cover their extortion fees, or allow them to actually display the fact apple has extortion fees, and (IIRC) doesn't allow (or perhaps 'has not allowed in the past') devs to set different (discounted) prices outside the appstore(*) for when users can make purchases outside the appstore (SaaS services come to mind) is what makes their practices illegal (ie. "charging excessive and unfair prices" as commission to developers")
But I'm sure the Apple apologist fanboys here will claim different.
* or what that only the a$$hole$ at Amazon that did that?
PF (Score:1)
But if I don't have to pay extra for apps, how will I justify calling other brands "poverty phones"?!?
Re: PF (Score:1)
Re: PF (Score:1)
What about Sony, Steam, Nintendo who did the same? (Score:3)
Sony, Steam, Nintendo, Microsoft, and Google all charged the same 30% commission on apps sold through their non-competitive storefronts. We can assume that Epic will do likewise. It's stupid for a judge to pick out Apple when the problem is more widespread -- and accepted.
Re: (Score:1)
Apple has the biggest money bags of all of them though. So from the state's perspective, this is the smart move.
No judge is "picking out" Apple (Score:2)
The case wasn't brought by a judge. The tribunal is ruling on the case presented by the claimants against Apple. If you were harmed by Sony exploting a monopoly then you can bring your own case against Sony.
Re:What about Sony, Steam, Nintendo who did the sa (Score:4)
No, it's stupid to comment on a headline instead of reading the full judgement when criticizing a judge. If you read the judgement you'll note that the 30% commission rate isn't actually the contentious thing. You'll also note that the ruling is limited in scope and time to when Apple had undue market influence.
Nintendo has no market influence beyond their app store. They have effectively a closed off private ecosystem and operate in a significantly different competitive space from Xbox, PS, and Computer, not just with different rules, without any price parity requirements, but also often with completely different content***
Epic has no market power whatsoever in the app store space, they can set their prices as they want without falling afoul of antitrust law.
Microsoft has no market power whatsoever in the app store space, they can set their prices as they want without falling afoul of antitrust law.
Now to the other two***
Google: Google isn't subject to the lawsuit. No one is picking on Apple other than the fact that the claimants were Apple developers. There's no reason to believe that Google won't be viewed in the same way should someone sue Google. And in fact Google's app store practices are already under investigation in other juristictions.
Wait I said two? Oh right ... Nintendo.
The Switch world is changing things. Nintendo used to live in a world of different content (their devices were fundamentally different enough to warrant being their own market category, but that is becoming less so now that the Switch and Switch 2 has had enough power to start to run games from other consoles. Market power is key. The ruling here was clear that Apple can't be held liable for their app store practices prior to 2015, not just because of a statute of limitations, but because of the fundamentally different market conditions that existed when they were selling devices in the single digit millions, compared to the 3 digit millions.
Market influence is the key part here. Nintendo historically wouldn't have been seen as having any, going forward I'm not so sure. The subject of whether something is anticompetitive is so much more complicated than the 30% figure.
There's a reason the judgement is 396 pages. We can debate whether it's fair after you've done some bedtime reading.
https://www.catribunal.org.uk/... [catribunal.org.uk]
Sony, Microsoft, Nintendo, Google, Steam (Score:2)
Sony, Microsoft, Nintendo, Google, Steam had same 30% rate on software sold in their stores by 3rd parties. It's ridiculous to focus on Apple for this.