Apple’s $1 Billion Headache: Tech giant to get sued by app developers over App Store fees in UK

Over 1,500 developers in the UK have initiated a class action lawsuit against Apple, claiming that the company’s App Store fee is excessive and a consequence of its monopoly in the app distribution market.

Apple charges app developers up to a 30 per cent commission on transactions conducted through its platform, which has been a subject of scrutiny from both governments and developers worldwide, but has managed to withstand such scrutiny thus far.

The lawsuit, led by 1,566 app developers, argues that Apple’s charges are unreasonably high due to the company’s dominant position in distributing apps to iPhones and iPads.

Sean Ennis, a professor at the Centre for Competition Policy at the University of East Anglia and a former economist at the OECD, is spearheading the legal action with the support of the law firm Geradin Partners. He claims that the fees are unjust and constitutes abusive pricing, negatively impacting app developers and consumers.

“Apple’s charges to app developers are excessive, and only possible due to its monopoly on the distribution of apps onto iPhones and iPads,” said Ennis.

Apple had previously addressed its 30 per cent fee during the Epic Games trial and stated that 85 per cent of developers on the App Store do not pay any commission. The company also asserts that its platform enables European developers to reach customers in 175 countries.

Various organizations and governments have opposed Apple’s fee structure, which typically entails developers paying 30 per cent of any transaction that occurs on their platform (reduced to 15 per cent for subscriptions lasting over one year). Apple’s Small Business Program offers a 15 per cent fee for developers earning less than $1 million annually, while the 30 per cent fee applies once the threshold is surpassed.

Facebook and other companies have joined the fight, arguing that Apple’s 30 per cent fee disproportionately impacts small businesses. Previous legal battles have shown that Apple can be influenced by higher courts, as seen in a $100 million lawsuit lost in 2022, where allegations focused on the $100 developer fee and $0.99 increments that purportedly harmed developers.

In response, Apple removed the $100 fee requirement and introduced a free developer account tier, as well as more granular pricing options.

Despite these challenges, it is important to note that a class action lawsuit does not guarantee immediate changes in Apple’s fee policy.