Developers sue Apple over ‘excessive’ App Store fees

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More than 1,500 developers in the UK have banded together to sue Apple, alleging that the tech giant’s App Store fees are “excessive” and harmful to both developers and consumers. 

The class-action lawsuit, led by Sean Ennis, a professor at the University of East Anglia Centre for Competition Policy and a former OECD economist, is seeking £785 million (€912 million) in compensation for the affected app creators.

At the core of the legal challenge is Apple’s policy of charging commissions of up to 30 percent for in-app payments. Critics argue that this practice effectively constitutes a monopoly, diverting substantial earnings away from developers who put in significant efforts to create innovative applications.

Apple’s services business – including the App Store – witnessed a 5.5 percent growth to reach $20.9 billion in the first fiscal quarter of the current year, further fueling accusations of monopolistic practices.

Ennis maintains that these fees not only harm developers but also have negative consequences for consumers, as the financial burden could otherwise be directed towards enhancing app quality and user experience. He asserts that the charges amount to abusive pricing and are only possible due to Apple’s stranglehold on the distribution of apps onto iPhones and iPads.

Apple has consistently defended its commission structure, stating that the vast majority of developers, around 85 percent, do not pay any commission at all. Moreover, the company contends that the App Store provides developers with unparalleled access to a global market and enables them to reach customers in 175 countries.

This legal action marks yet another challenge for Apple in the UK, as it is already embroiled in a separate dispute over proposed surveillance laws. If these laws are enforced, tech firms could be compelled to withdraw certain security features.

In response to the proposed laws, Apple has threatened to remove popular services like FaceTime and iMessage from the UK.

Under the EU’s upcoming Digital Markets Act, Apple will be forced to allow third-party app stores to be “sideloaded” on its devices. Microsoft is already making preparations to launch its own third-party mobile app store on iOS and Android after the EU’s law comes into effect.

Apple has previously resisted calls to allow sideloading over claims that it endangers users.

In a letter to lawmakers last year, cybersecurity expert Bruce Schneier said that Apple’s concerns about sideloading were “unfounded” and that it’s “simply not true” that legislation such as the EU’s puts user privacy and security at risk.

“It’s fairer to say that this legislation puts those companies’ extractive business models at risk. Their claims about risks to privacy and security are both false and disingenuous and motivated by their own self-interest and not the public interest,” wrote Schneier.

The outcome of this latest class-action lawsuit by UK developers could have far-reaching implications for the entire tech industry, potentially leading to changes in app store policies and the treatment of developers worldwide.

As the case unfolds, it is likely to spark discussions on fair competition practices, the power of tech giants, and the balance of interests between platform owners, developers, and consumers.

Developers around the world will closely watch how this legal battle unfolds and whether it influences future policies and regulations governing app marketplaces.

(Photo by Julian Hochgesang on Unsplash)

Related: Japan sets its sights on mobile app store monopolies

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