Apple lawsuit filed by UK developers

A leading competition law expert pursuing a class action lawsuit against Apple on behalf of UK app developers has been told his case can go ahead, with the UK’s Competition Appeal Tribunal (CAT) certifying his claim for £785m (just over one billion US dollars) on behalf of UK app developers. Today, the CAT made the collective proceedings order, confirming its earlier decision to certify Dr Ennis’s claim. The order sets out the full scope of the class of claimants that Dr Ennis represents.

Apple lawsuit filed by UK developers

Sean Ennis, a Professor of Competition Policy who has held positions at the OECD, US Department of Justice and European Commission, says that since 2008 Apple has abused its dominant market position by charging an excessive “commission” - of up to 30 percent - on all digital content apps and in-app purchases (e.g., games, news apps, streaming apps, etc.).

Dr Ennis’s claim states that Apple’s charges to app developers are excessive and only possible due to its monopoly on the distribution of apps onto iPhones and iPads. These charges, he contends, are inherently unfair and amount to abusive pricing, causing harm to app developers.

In a resounding victory for app developers in the UK’s growing digital economy, Dr Ennis has been certified as the appropriate person to represent the interests of this class. Apple’s preliminary arguments that Dr Ennis should not be allowed to bring his claim were unanimously rejected by the CAT in its judgment made in October this year. Dr Ennis established his claim had an identifiable class, and common issues suitable for a collective rather than individual action. With today’s granting of the collective proceedings order, the CAT has confirmed Dr Ennis’s status as class representative and set out the next steps in the claims, with the timetable for trial to be set out soon.

A class action is needed in this case because individual UK app developers would not have the means to bring claims against Apple individually. The UK’s opt-out class action regime in the CAT provides a mechanism by which these app developers can legitimately seek damages for the harm they have suffered as a result of Apple’s conduct.

The class comprises UK-domiciled third-party app developers during the period from 25 July 2017 onwards who sold their apps via the App Store or made sales to iOS device users within their apps, where a commission was charged by Apple on the sale. There are an estimated 13,000 such developers at least in the UK.

Dr Ennis said: “Apple’s App Store is currently the only means by which app developers can distribute their apps on iOS devices. Apple exploits this fact by charging excessive commission fees that do not reflect the significant value that third-party apps contribute to the success of iOS devices. Apple’s exploitation of its monopoly on iOS app distribution deprives developers of fair compensation and funds that could be better spent on research and development.”

Founding Partner of Geradin Partners, Damien Geradin, said: “This is extremely positive news. The fact that the CAT entirely dismissed Apple’s arguments against certification indicates that there are important issues to be tried here. The Creator Tax on the UK digital economy may finally be on the way to being dismantled.”

A copy of the certification judgment can be found here. A copy of the collective proceedings order can be found here.

Further information for claimants

Dr Ennis’s claim applies to any sale of a Third-Party App via the App Store and any sale to an iOS Device user within a Third-Party App, on which a commission is charged. It includes the sale of Third- Party Apps, one-time sales within Third-Party Apps, and recurring sales within Third-Party Apps (i.e. subscriptions). It does not apply to apps providing “physical goods or services that will be consumed outside of the app” as Apple does not require these apps, such as Uber, to use Apple’s payments system or pay Apple any commission.

The Class Representative, Dr Ennis, has obtained funding for the claim from a third-party litigation funder, Harbour Litigation Funding. In addition, the Class Representative has obtained an indemnity from being ordered to pay the Defendants’ costs in the event that the claim is ultimately unsuccessful. The funding arrangements in place mean that app developers will not need to pay anything to be part of the claim. These funding arrangements also mean that class members will not be liable for any financial risk should the claim be unsuccessful.