App developers have long criticized Apple and Google for the restrictions they impose on accessing their app stores. All payments must go through Apple or Google’s systems, and they charge commissions of up to 30 percent on payments. Developers have to accept that, because otherwise they cannot get into the app store and therefore cannot reach users.
‘I was already angry about it in my Blendle time’, says Klöpping to the Financial Newspaper about what he calls the “Apple Tax.” ‘If you order a washing machine from Coolblue, you can pay with iDeal. But the duopoly of Apple and Google determines that no other payment method may be used and then charges a 30 percent commission. Completely arbitrary. That is why as a consumer you pay far too much.’
According to the foundation, the tech giants have an “economic dominant position” with which they exclude competition and charge “excessive commissions”. According to the foundation, the damage incurred by Dutch app store users can amount to 1 billion euros. The foundation wants to recover that damage on behalf of all users from the tech giants by means of a collective action procedure.
Compensation
Smartphone users who have ever purchased apps from Apple’s App Store or Google’s Play Store, or made in-app purchases, can apply to the foundation to join the claim. If the claim is successful, they share in the compensation.
According to the App Stores Claims Foundation, the co-claimants themselves do not have to make a financial contribution. The American litigation financier Fortress Investment is paying for the procedure. A litigation financier is an investor who reimburses litigation costs in exchange for a commission if the case succeeds. The foundation will try to recover the legal costs from Apple and Google. If that fails, up to a quarter of the damages will go to Fortress to cover the costs of the lawsuit.
App Stores Claims does not immediately go to court: it first enters into discussions with Google and Apple to find a joint solution. If that is not possible, legal proceedings will follow. According to the foundation, this could take years.
epic
Apple has been the target of claims about the terms of the App Store in recent years. An American judge ruled last year in a case between the Californian tech giant and game developer Epic, the developer of the popular game Fortnite. The court has ordered Apple to allow alternative payment methods, but the rates it charges are not illegal. In response to a complaint from streaming platform Spotify, the European Commission also announced that it is disturbed by the way in which Apple is monetizing its market power.
Similar cases are pending in the United Kingdom against Apple and Google for alleged infringement of competition law. These are run by the same law firm that also hired Klöpping’s foundation.
In December 2021, the Dutch Authority for Consumers and Markets already ruled that Apple imposed ‘unreasonable conditions’ on access to the App Store for developers of dating apps. “Some app providers are dependent on Apple’s App Store and Apple is taking advantage of that. Apple has special responsibilities because of its dominant position. That is why Apple must also take the interests of app providers seriously and work with reasonable conditions. We are now enforcing that,” said ACM chairman of the board Martijn Snoep at the time.
The ACM forced Apple to allow alternative payment methods in the App Store, but that ruling only applied to dating apps. In addition, the ACM made no statement about the commissions charged by Apple.
In Brussels, legislation is currently being finalized that should put an end to the practices of Apple and Google. The Digital Markets Act, designed to curb the near-monopoly power of Big Tech, was passed by the European Parliament last December. Since the beginning of this year, negotiations have been taking place between Parliament and the Member States on the final legal text.