Apple loses £1.5bn UK class action over 'excessive' App Store fees

36 million consumers could be entitled to damages

Apple has suffered a major legal defeat in the UK after the Competition Appeal Tribunal (CAT) ruled that the company abused its dominant position in the mobile app market by imposing "excessive and unfair" charges on developers through its App Store.

The decision could see the US technology giant paying out around £1.5 billion in damages to an estimated 36 million UK consumers.

In its 396-page judgment, delivered on Thursday, the tribunal found that Apple holds near absolute market power over iOS app distribution and in-app payment systems.

It concluded that the company's 30% commission on app purchases and subscriptions constituted an abuse of dominance.

The class action, first filed in 2021, was brought by Dr Rachael Kent, a lecturer in digital economy and society at King's College London, acting as the class representative for UK consumers.

"This is a landmark victory - not only for App Store users, but for anyone who has ever felt powerless against a global tech giant," Dr Kent said.

"Every in-app purchase, subscription and paid download was inflated by Apple's anti-competitive practices."

During the proceedings, Apple's chief financial officer Kevan Parekh defended the company's business model, arguing that the App Store provides a safe and trusted platform for developers and consumers alike.

However, the tribunal dismissed Apple's defence, ruling that the company's commissions were not justified by any legitimate economic rationale and that its control over iOS app distribution stifles competition and innovation.

Apple called the ruling flawed, claiming it "overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to discover apps and securely make payments."

The company plans to appeal the decision.

The CAT said a follow-up hearing will take place next month to determine the process for calculating and distributing damages to affected consumers.

Global scrutiny of Apple

The ruling adds to Apple's mounting legal and regulatory challenges around the world.

Earlier this year, Germany's Federal Court of Justice upheld a decision by the country's Federal Cartel Office (FCO) to designate Apple as a company of paramount significance for competition, subjecting it to stricter oversight under the German Competition Act.

In the EU, Apple is facing continuing pressure from the Digital Markets Act (DMA), which forces major tech platforms to open up their services to competitors.

The company has been required to make significant changes to its App Store policies, though regulators have warned that Apple's compliance measures may still fall short of the law's intent.

In the UK, the Competition and Markets Authority (CMA) announced in July that it intends to classify Apple and Google as having "strategic market status" (SMS) under the country's new Digital Markets, Competition and Consumers Act.

The SMS designation empowers the CMA to impose legally binding rules and structural remedies on firms deemed to have disproportionate control over digital markets.

Meanwhile, Apple continues to battle antitrust accusations in the US, where the Department of Justice (DoJ) filed a landmark lawsuit last year alleging the company maintains a smartphone monopoly by restricting competition and locking consumers into its ecosystem.

Apple's services division, which includes App Store revenue, Apple Music, iCloud and other subscriptions, has become a crucial profit engine for the company. Analysts expect it to generate over $100 billion in annual revenue for the first time this year – nearly a quarter of Apple's total income.