Apple has lost a landmark antitrust case in the UK over its App Store fees, with a tribunal ruling that the company's 30% commission is both excessive and unfair. The decision from the Competition Appeal Tribunal finds that Apple illegally abused its dominant market position and could leave the company facing a damages bill in the hundreds of millions of pounds. The case was brought on behalf of around 36 million UK users.
The ruling found that Apple holds a monopoly in two distinct markets: one for distributing iOS apps and another for its in-app payment system. It's a position, the tribunal said, that's protected by the very rules Apple created, which form high barriers to entry for any potential rivals. The tribunal wasn't convinced by Apple's claims that it faced competitive pressure from the broader device market or from big-name developers.
The ruling took aim at two of Apple's core rules, which it called abusive. The first is forcing developers to distribute apps exclusively through the App Store. The second is requiring them to use Apple's payment system for all digital purchases. Apple had argued it was simply protecting its intellectual property, but the tribunal rejected that defense.
The judgment also took direct aim at the 30% commission itself, finding it to be both excessive when compared to Apple's costs and unfair when compared to other platforms like Steam, the Microsoft Store, and the Epic Games Store, which operate with lower commission rates. Apple's justifications for its conduct -- arguing the restrictions were necessary for security, privacy, and performance -- were also dismissed. The tribunal concluded the rules were not necessary or proportionate to achieve those benefits.
To determine damages, the tribunal established what a "fair" commission would have been: 17.5% for the app distribution market and 10% for the in-app payment market. It also found that developers passed on 50% of this overcharge to consumers. Class members are now entitled to damages based on that pass-on rate, with interest set at 8%.
The UK ruling is the latest and one of the most significant in a series of regulatory challenges Apple has faced over its App Store model, a fight that has been waged for years by companies like Spotify. The company is also in a protracted battle with the European Union over the Digital Markets Act, which Apple recently called a 'hugely onerous' burden.
Apple has already indicated it will appeal the tribunal's ruling. A future hearing will address consequential matters, including the complex process of calculating the final damages owed to the millions of class members.
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