Last week it was announced that the App Stores Claims foundation wants to reclaim 1 billion euros from Apple and Google on behalf of Dutch consumers. With former cuddly hoody Alexander Klöpping as the figurehead, the foundation wants compensation on behalf of the consumer for the vulgar tying of the two tech giants. As an entrepreneur, Klöpping was annoyed by the high commissions (30 percent), but could not avoid them in any way. After all, anyone who protests against abuse of market power risks retaliation from Apple and Google, and is no longer promoted in their app store, with disastrous consequences for turnover.
It is an exciting development that collective actions are now being taken against abuse of market power. Would collective action succeed where governments continue to fail? After all, the monopolistic dominance of tech companies isn’t news, and governments seem less and less resilient to lobbying dollars over the past two decades, with Microsoft’s never-executed split and Facebook’s approved takeover of Instagram as low points. A renaissance of US competition law has been announced for some time, but for now skepticism is in order. The lobby and war chest of big companies is bigger than ever, while the calls for protectionism and world champions have not died down in the least.
But now there is a third power: the consumer. And the Netherlands actually has the opportunity to once again be a guide country, because the Act on the Settlement of Mass Damages in Collective Action (WAMCA) came into effect here in January 2020, in anticipation of comparable European directives. The fact that many large companies have a branch here for tax reasons is an additional reason to first start such a claim in the Netherlands.
Obviously, the counter lobbying of large companies, and the law firms that represent their interests, is already in full swing. In NRC Some Zuidas offices complained about the lack of transparency in claim foundations and the overload of the legal system due to this ‘bump’ of cases. Those concerns are of course feigned, because it is wonderful to spend hours writing in long-drawn-out competition cases.
The revenue model is at least as interesting as the legal aspect of these cases. Investors finance the damage case, and if they make a profit, they can get their investment back multiple times. But the multiplier is unknown; the Dutch court not only determines the amount of compensation, but also what part of it may go to the investors. Internationally, this is somewhere between three and five times the investment, but it is to be expected that the Dutch judge will value risk lower than the American one. During an earlier collective case, a Dutch judge already said that he found a ‘BMW acceptable, but not a Bentley’.
Collective action has previously driven behavioral change in the financial world, just as it recently forced companies and governments to act on climate policy. The next battle lies in competition law. I don’t think it is insurmountable that investors are rewarded for their risk when they make a profit, especially when governments ignore it.
In short, I see a great opportunity for our country, which seems to want to get rid of its reputation as a tax haven. Set up a Consumers’ Rights Court as soon as possible, and work on improving our image! Use the Dutch tax offices and their ‘substance tricks’ against the (tech) giants to make the world fairer: go out with a bang† The Netherlands as a precedent country for a boom in collective cases across Europe, with the consumer as the big winner; we can also be proud of something.