Report from Financial Times
In Brief – The UK’s Competition Appeal Tribunal (CAT) has ruled that Apple violated competition law by imposing excessive App Store commissions on developers, leading to overcharges being passed on to consumers. The decision requires Apple to pay damages to about 20 million iPhone and iPad users in the country and could total £1.5 billion. The CAT ruled that Apple held “near absolute market power” in iOS app distribution and in-app payment services and said that its 30% commission on in-app purchases were “excessive and unfair” and should have been 10%, with half the overcharges being passed to consumers. Apple defended its App Store and said the decision “overlooks how the App Store helps developers succeed and gives consumers a safe, trusted place to discover apps and securely make payments.”
Context – Apple largely won the first major legal battle against big app developers who were trying to force it and Google to drastically lower their fees, prevailing over Epic Games on all its federal antitrust charges in 2021. That court appeared to back its “walled garden” business model that appealed to customers on security, privacy, and user experience. But things have gone downhill for the two mobile ecosystem giants since. Google lost to Epic in US court despite a much more open regime. And while Epic failed on all their federal antirust complaints against Apple, they prevailed on a single complaint involving California’s Unfair Competition Law, and the same judge that defended the legality of the Apple regime indicated that Apple’s fees were unfairly high. She eventually ordered Apple to open its US App Store to apps allowing purchases outside the Apple ecosystem without any fees, a demand that Apple continues to appeal. The EU Digital Markets Act effectively banned Apple’s walled garden model and the Commission continues to battle Apple over the fees it charges. The iPhone giant is facing similar demands in Japan, South Korea and Australia. Nearly everywhere, robust competition between Apple and Android has proven nearly meaningless, as has the fact that fees on many digital platforms are similar to those from Apple and Google.