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Apple loses bid to throw out UK lawsuit over App Store fees

Published 12/04/2024, 12:19
Updated 12/04/2024, 13:56
© Reuters. An Apple store flag is pictured on Regent Street in London, Britain, April 15, 2020. REUTERS/John Sibley/File Photo

By Sam Tobin and Martin Coulter

LONDON (Reuters) -Apple's bid to dismiss a lawsuit valued at nearly $1 billion was rejected on Friday, with a judge ruling it must face allegations it charged more than 1,500 UK-based developers unfair commission fees on purchases of apps and other content.

Sean Ennis, a competition law professor and economist, is spearheading the case, which was filed at London's Competition Appeal Tribunal (CAT) last year and alleges Apple (NASDAQ:AAPL) charged developers unfair commissions of up to 30%.

Lawyers for Ennis say the U.S. tech giant abused its dominant position in the market for the distribution of apps on iPhones and other Apple devices and are seeking damages.

Apple has faced mounting pressure from regulators in the U.S. and Europe over the fees it charges third-party developers distributing apps via the App Store. The company says 85% of developers on its App Store do not pay any commission at all.

In the European Union, new laws have forced Apple to allow users to download apps from rival sources, including websites and alternative app stores. Meanwhile in the U.S., it made changes to its App Store following a long-running legal battle with Epic Games, the company behind "Fortnite".

Apple's lawyer Daniel Piccinin argued at a hearing in January that developers cannot have a claim in the UK unless they were charged on purchases made through the UK App Store.

But Apple's bid to throw out that part of the case was rejected by Judge Andrew Lenon in a written ruling on Friday.

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Lenon said that Ennis' lawyers had a realistic prospect of establishing that "Apple's overcharging of commission to app developers based in the UK in relation to commerce transacted on non-UK storefronts did amount to conduct implemented in the UK".

Apple is also facing a separate case over allegedly defective iPhone batteries on behalf of around 24 million iPhone users, which was certified last year.

The company is contesting both cases, which are not expected to come to trial before 2025.

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