Apple’s attempt to get the UK Competition Appeal Tribunal (CAT) to toss a lawsuit over its 30 percent App Store tax has failed, meaning the iMaker could eventually be forced to fork over £785 million ($980 million) in compensation to developers.
In an order published today, a trio of CAT judges denied Apple’s proposal to strike the case or issue a summary judgment. The tribunal decided unanimously that the claims that Apple was locking out competitors are actionable.
The case, which was filed last year by competition policy professor and economist Sean Ennis on behalf of 1,566 UK-based iOS developers, accuses Apple of locking coders into its ecosystem and overcharging them for the right to sell apps. Apple, Ennis alleged last year, was “a 100 percent monopolist” for iOS apps.
In Apple’s appeal and request for dismissal, Cook & Co argued the competition law Ennis was referencing didn’t apply in Britain because many of the UK developers party to the case were charged the 30 percent fee for transactions occurring outside the UK (or EU prior to Brexit).
The tribunal disagreed, saying that it has the authority to hear the matter, even though some charges were assessed outside the UK App Store, and that Ennis’ allegations have at least some probable degree of succeeding at trial.
“In the Tribunal’s view, [Ennis] has a realistic prospect of establishing that the UK market for app distribution services supplied by Apple to app developers is … ‘directly and substantially affected’ by the restriction of competition resulting from the charging of commission pursuant to the [Developer Program Licensing Agreement],” the CAT said in its decision.
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Apple has faced a number of similar lawsuits around the world in recent years, and has taken steps onto appease developers, though they’ve varied by region.
In the EU, where the Digital Markets Act has forced Apple’s hand, the fee schedule has been changed so that developers with less than $1 million in annual revenue need only pay a 15 percent tax, while larger developers have to continue paying the 30 percent fee.
Of course, Apple isn’t one to let a good source of revenue vanish, and has added a new Core Technology Fee of €0.50 per app install per user annually, once someone surpasses one million app installs in a year – a fee that can quickly add up to be more expensive than the 30 percent cut of sales.
None of that applies in the UK, however, which isn’t included in Apple’s list of eligible countries for some of its many EU-mandated changes.
The Ennis case isn’t the only App Store monopoly lawsuit Apple is facing in the UK, either. An even costlier case (the Ennis case could cost Apple the aforementioned near-billion dollars) was given permission to proceed by the CAT in 2022. That case, which could end up costing Apple as much as £1.5 billion ($1.8 billion), claims Cupertino’s 30 percent App Store tax was monopolistic and unfair.
That case, however, isn’t seeking recompense for developers – it’s trying to get Apple to pay back nearly 20 million iOS users, whose lawyers argue have been overcharged thanks to the fees. That case is ongoing. ®
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