New Delhi:- A class action lawsuit has been filed against Apple on behalf of UK-based developers. The lawsuit, which seeks damages of up to £800 million (more than $1 billion), accuses the tech giant of abusing its dominant position by charging an "anti-competitive" 30% on in-app sales from app makers on the iOS App Store. It also argues that British consumers are missing an opportunity as developers are deprived of funding to spend on research and development to drive innovation in their apps.

Sean Ennis, a professor of competition policy at the University of East Anglia who has held positions at the OECD, the US Department of Justice and the European Commission, has filed a class action lawsuit on behalf of more than 1,500 UK-based developers.

“I have been working on competition issues for decades, and digital competition for quite some time.I wrote about this not only in economics papers, but also in less specialized papers. And I truly believe that the kind of conduct we are talking about in this matter is very problematic. So I was interested in playing a role and ensuring relief for those believed to have been harmed by the conduct," he told TechCrunch, explaining his motivation for filing the lawsuit, which is funded by British litigation funder Harbour.

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The lawsuit is an opt-out class action, meaning UK-based developers don't have to register to participate in the potential benefits. If plaintiffs win against Apple, the amount of damages per developer would be calculated on the basis of their iOS app business, so the payouts could fluctuate wildly and reach into the millions of pounds.

The central arguments of those involved in this process are well known. Companies like Spotify and Epic have long lashed out at Apple's unfair "taxes" and filed their own major complaints against app store policies and fees with regulators and courts on both sides of the Atlantic, with varying degrees of success.

Even Elon Musk has argued that Apple's in-app purchase fees are effectively a global tax on the internet. Apple regularly denies accusations of profiting at the expense of developers, arguing that its fees allow it to offer iOS users a premium experience.

Managing the store includes, among other quality controls, reviewing apps for security and privacy issues (although fraud—the subject of a previous App Store-related lawsuit against developers that Apple settled last year) remains rampant.

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Still, many developers continue to push the downside. I argue that Apple's fees are unfair because they're applied inconsistently (some apps and content types charge and others don't), and also because of the scale of the reductions being made (in 2020 Apple lowered the fees to 15% on the first $1 million in revenue, but even after that much revenue, developers still typically switch to the "normal" 30% reduction).

This UK suit aims to test the arguments in a bid to get developers compensation for what the litigants argue is abusive, anticompetitive behavior by Apple. The law firm supporting Ennis to bring the suit is Geradin Partners.

Discussing the argument they intend to make on developers' behalf in an interview with TechCrunch, partner Damien Geradin highlighted a couple of elements he suggested will be points of focus for the suit — firstly pointing to Apple's fee being non-uniformly applied, with just 16% of apps subject to it as a consequence of how (inconsistently) Apple applies its rule charging the commission on apps that provide digital content, with apps like games, news and streaming services tending to bear the brunt of the charge while other apps slip under the radar.

He also flagged the fact that Apple also charges developers an annual ($99) program fee. And suggested developers increasingly need to pay Apple to buy search ads in order to have a chance of their software being discovered by iOS users.

As a matter of fact, Apple has several ways to monetize its store. "Another important factor is that you get access to the same App Store even with zero fees, because Apple couldn't sell a single device without valuable apps like Tinder, Spotify, Netflix, news apps, games apps," he suggested.

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“The only way they can collect this extraordinary fee is because they have created a sales monopoly.

The details (and fairness) of the App Store's terms of service have been questioned by many competition regulators, including the UK's Competition and Markets Authority (CMA), which launched an investigation in March 2021.

In some markets, including Europe and Asia, we've also seen enforcement action from regulators focusing on the terms of Apple's App Store payments service forcing it to allow third parties to use alternative payment processors, with (limited) impact on the fees they charge. But it's fair to say that the company is yet to face a major regulatory settlement over the 30% charge.

However, damages lawsuits can move the behavioral needle. While it can take years, it's for cases like this that a verdict is reached (and any successful payments to developers). In suing their case now, the plaintiffs say they hope their action can be joined to an existing App Store lawsuit (which focuses on consumer damage) - aka Dr Rachael Kent.

Apple - was filed in 2021 and is seeking £1.5 billion in damages on behalf of UK consumers. This case has been confirmed and is awaiting trial in the Court of Competition Appeal. When asked about when to sue and specifically why they didn't decide to wait for the CMA's App Store investigation to take place before taking legal action, they suggested that they don't need to wait for competition regulators to provide more evidence of harm.

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“If you look at CMA’s mobile ecosystem market research, released a few months ago, you will see exactly the same findings,” Geradin argues. “You see that App Store returns are between 75% and 100%. It's actually an ATM. It's a money printing machine, and we dispute that.

And so we don't argue that they provide a service but not up to 30% of the commission is collected in a discriminatory manner. The plaintiffs also point to economic analysis they commissioned from Compass Lexecon - which they say shows that Apple's market dominance has provided it with "extraordinary and excessive profits relative to the value delivered by app developers", as they put it.