While big legal tech clashes are commonplace in the US, it’s much less ordinary to attempt and take on Silicon Valley’s biggest names from the UK. Yet that’s exactly what Dr Rachael Kent is doing by leading a legal challenge against Apple on behalf of millions of UK consumers.
Dr Kent examines the influence of technology upon our mental and physical health in her day job as a lecturer in digital economy and society education at King’s College London, which led her to become concerned about society’s dependence upon apps.
“I’ve become increasingly concerned about our dependence on apps, and the increasing use of apps just to manage everyday life,” she told i. “It drew my attention towards the tech providers, and I started to understand how much Apple was monopolising not only access to apps via the App Store, but also the pricing.”
She is leading a class action legal claim against Apple filed with the UK’s Competition Appeal Tribunal (CAT), accusing the tech firm of charging “excessive and unlawful” 30 per cent fees on all paid app revenue and in-app purchases via its App Store.
Backed by law firm Hausfeld & Co and commercial litigation funder Vannin Capital, Dr Kent is arguing that Apple has breached competition law and is seeking damages up to £1.5bn on behalf of the estimated 19.6 million people who have purchased an app, service or subscription within an app from the UK version of the App Store on an iPhone or iPad since October 2015. If she is successful, those affected will be able to apply for as-yet-unknown share of the damages.
Apple has dismissed the case as “meritless”, saying it welcomed 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”.
“The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces,” an Apple spokesperson said. “In fact, 84 per cent of apps on the App Store are free and developers pay Apple 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 per cent.”
While Apple confirmed that app developers earning less than $1m in annual sales from all their apps would qualify for a reduced 15 per cent fee in November, Lesley Hannah, partner at Hausfeld who is leading the litigation, maintains that the portion of the market that represents is “very small” for how much revenue is actually generated.
“Apple earns most of its money from bigger app developers like Epic Games, so dropping to 15 per cent doesn’t actually hit its revenues very hard because they are a very small share of the market,” she says. Apple has not disclosed the percentage of its 28 million registered developers who would qualify for the 15 per cent cut, but said last year the “vast majority” of its developers would benefit from it.
Apple is currently staring down several legal challenges and investigations into its App Store: the European Commission has claimed the Store violates EU competition rules and the UK’s Competition and Markets Authority (CMA) opened its own investigation into complaints the company was abusing its dominant market position to narrow consumer choice and charge higher prices in March. Senior Apple executives have also testified in its ongoing legal battle with Epic Games, the makers of wildly popular game Fortnite, recently after Epic sued the tech company over its “unfair and anti-competitive” actions to maintain what it claims is a monopoly over both its iOS app distribution and in-app payment processing market.
The case is being reviewed by the CAT, and if its application for a collective proceedings order is successful, the claim will continue to trial – unless it’s settled beforehand.
Ms Hannah believes the case has a good prospect of success. “It’s not normal for a company to be able to reserve its entire market to itself, and that’s essentially what Apple does what it says that nobody else can operate [another App Store] on these devices.”
Dr Kent is keen to disabuse any notion she’s acting out of malice towards Apple, emphasising her legal case is part of a shift in consumers recognising the power of the digital economy and failures in its ethical management or regulation.
“I’ve got nothing against Apple – I’m an iPhone user myself and I use lots of Apple products, but my focus is on consumer welfare and rights and the lack of ethical practices that are going on,” Dr Kent says.
“We’re not arguing that they’re not great innovators, but fundamentally, we’ve identified that they’ve broken the law.”