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Accused of ‘unfair’ practices, Apple faces App Store court battle in UK

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Depending how you look at it, Apple is gaining a fresh opportunity to explain why the charges it levies at the App Store are fair, or regulators are getting the chance to decide what the future shape of online business will be by defining what constitutes an acceptable profit margin in digital sales.

In either case, these decisions set precedents which can, presumably, be applied against other forms of business and retail. After all, if regulators define acceptable profit margins for one line of business, then they must adopt a consistent approach that can be applied across all industries. Right now, Apple seems to believe that for most transactions, the fair figure is zero or 15%, with those with the broadest shoulders paying more to support others.

Two sides to every story

What’s happening is that the UK’s Competition Appeal Tribunal has decided to permit a Collective Proceedings Order (CPO, basically equivalent to a class action) to go to trial.

The action was brought in May 2021 by Dr. Rachael Kent, a lecturer in Digital Economy and Society Education at King’s College, London. It argues that Apple is engaged in unfair business practices by forcing developers to use its own payment systems and taking up to 30% commission. If the case succeeds, approximately 19.6 million UK customers who have purchased apps from the App Store will get a share of up to £1.5 billion compensation. More information concerning the background to this case is available at the UK Apple App Store Claim site.

At its simplest, the allegations are that the company breached the law by excluding competition and charging an unlawful level of commission on digital purchases in the App Store. These allegations boil down to a combination of three charges:

  • Unfair pricing (the 30% commission)
  • Unfair tying (by requiring app purchases use Apple’s own payment systems)
  • Exclusive dealing (by only supporting App Store purchases on its platforms)

Apple had attempted to get part of the claim that alleged unfair pricing withdrawn but was prepared to challenge allegations of exclusive dealing and tying in the court.

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