Tech giant Apple accused of ripping off 20 million UK customers in £1.5 billion legal claim

Apple is facing trial for overcharging 20m UK customers in its popular App Store. The consumer legal claims aims to compensate overcharged iPhone and iPad owners.

Apple is facing trial for overcharging 19.6 million UK customers in its popular App Store. The consumer legal claim aims to compensate iPhone and iPad owners for years of overcharging for apps and in-app digital content. Sign up to stay updated.

Leading the claim is Dr Rachael Kent, who said:

‘Last year’s US Congress inquiry estimated that Apple’s annual global revenue from the App Store is at least $15 billion a year, but the company’s costs for running the platform are just $100m. Apple achieves this by slapping unjustified charges on its users. It would not be able to impose these exorbitant charges if competitor platforms and payment systems were allowed to compete on its devices. It is a clear abuse by Apple of the law and its own customers.’

About the Apple App Store claim

Apple is facing a claim of up to £1.5 billion in consumer compensation for overcharging customers who bought apps or in-app digital content, services or subscriptions on their iPhones or iPads since 1 October 2015. These charges were levied on a range of digital services provided by popular apps like Fortnite, YouTube and Tinder.

Apple is accused of breaching UK competition law by excluding competition and charging an unfair and excessive level of commission – as much as 30% – on apps and in-app digital content. Dr Kent, who is a digital economy and society lecturer at King’s College London, argues that this practice is unlawful, and that Apple would not be able to levy such excessive charges if its devices were open to competition.

All App Store purchases are routed through Apple’s own payment processing system, which is where high commission charges are added. Apple is accused of blocking developers’ ability to enable customers to pay through alternative payment systems, forcing them to hike up their prices by up to 30%.

Legal team behind the claim

Dr Kent has instructed the law firm Hausfeld & Co. LLP to represent her in this claim. Lesley Hannah from Hausfeld said:

‘Apple has created a captive market where people who own Apple devices are reliant on it for the provision of both apps and payment processing services for digital purchases. It has been exploiting that market for years, by charging excessive fees that in no way reflect the actual cost of providing those services and making sure no one else can compete.’

Hausfeld & Co. LLP has instructed barristers Ronit Kreisberger KC, Michael Armitage and Antonia Fitzpatrick from Monckton Chambers, Mark Hoskins KC, Jennifer MacLeod and Matthew Kennedy from Brick Court Chambers, and George McDonald from 4 New Square. Vannin Capital is funding this claim. 

Dr Kent’s application for a Collective Proceedings Order was granted by the specialist competition court – the Competition Appeal Tribunal – in May 2022. The claim will be going to trial on 13 January 2025, unless it is settled beforehand.

Who is eligible for compensation?

Anyone who owns an iPhone or iPad who has bought apps, paid subscriptions or made other in-app purchases within the UK App Store since 1 October 2015 and up to the date of the final judgement or settlement is potentially eligible for compensation. All purchases can be found in the App Store Purchase History.

The claim applies to apps on iPhones and iPads that require download, subscription payments or in-app purchases. It does not apply to Apple apps or apps that provide physical goods or services – like Deliveroo or Uber – which are not required to use Apple’s payment system.

Sign up to Consumer Voice to stay updated as the claim progresses. 

Apple dismisses the claim

Apple responded to the claim by saying:

‘We believe this lawsuit is meritless and welcome the opportunity to discuss with the court our unwavering commitment to consumers and the many benefits the App Store has delivered to the UK’s innovation economy.’

It defended its charges:

‘The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces. In fact, 84% of apps on the App Store are free and developers pay nothing. And for the vast majority of developers who do pay Apple a commission because they are selling a digital good or service, they are eligible for a commission rate of 15%.’

Investigations into Apple

Apple has been under mounting pressure around the world for alleged anti competitive practices. The UK Competition and Markets Authority and the European Commission are investigating Apple’s App Store conduct. The company is also facing regulatory action in the Netherlands, Australia, South Korea and India.

A similar claim is being pursued by Liz Coll regarding Google’s alleged excessive Play Store charges.