Apple faces $1 billion lawsuit over app store fees

Apple encountered a significant legal challenge on Tuesday as it became the subject of a class action lawsuit amounting to $1 billion.

The lawsuit, filed in the UK, involves more than 1,500 app developers who are contesting the company's App Store fees.

Apple's services business, which prominently features the App Store, has demonstrated remarkable revenue growth over the past few years, currently standing at approximately $20 billion per quarter.

However, the 15 per cent to 30 per cent commissions that Apple imposes on certain app makers for using its in-app payment system have faced severe criticism from developers and drawn the attention of antitrust regulators in multiple countries. In response, Apple has asserted that 85 per cent of developers on the App Store do not incur any commission charges. The company also claims that the platform facilitates European developers in reaching markets and customers across 175 countries.

The Competition Appeal Tribunal in the UK is hosting the lawsuit, and it is spearheaded by Sean Ennis, a distinguished professor at the Centre for Competition Policy at the University of East Anglia and a former economist at the OECD. Ennis represents a group of 1,566 app developers, with legal advice provided by the Geradin Partners law firm.

In a statement, Ennis expressed concern over what he perceives as excessive charges levied on app developers by Apple. He further contended that these charges are only viable due to the tech giant's dominant position in controlling the distribution of apps to iPhones and iPads. According to Ennis, such practices constitute abusive pricing, unfairly impacting both app developers and consumers.