Judgment

Judgment of the Tribunal further to Dr Kent's claim brought on behalf of approximately 36 million class members that Apple infringed Chapter II of the Competition Act 1998 and Article 102 of the Treaty on the Functioning of the EU by imposing exclusionary practices - exclusive dealing and tying - on app developers in relation to two alleged markets: one of “iOS app distribution services” and one of “iOS in-app payment services”, and by charging developers a headline rate of commission (the "Commission") of 30% for those services, which is said to be an excessive and unfair price. Following a 28-day trial in January and February 2025, the Tribunal concluded as follows:

(1) The relevant markets were those alleged by the Class Representative: one of iOS app distribution services, and one of iOS in-app payment services. The Tribunal concluded that there is an iOS app distribution services market, following a determination that iOS app distribution services constitute the focal product for the purposes of the market definition analysis. The Tribunal carried out a notional SSNIP test in relation to Apple's Commission and considered that the current level of Commission is materially above competitive market level and that there are no obvious substitution options for that focal product. The Tribunal then considered that the iOS in-app payment services market, concerning the focal product of iOS in-app payment services, is a distinct market, refusing to accept Apple's argument that there is a systems market for both focal products.

(2) Apple is dominant in the iOS app distribution services and the iOS in-app payment services markets, having near absolute market power in both. The Tribunal considered that Apple's monopoly position in both markets as well as its contractual restrictions, which result in very high barriers to entry, are strongly indicative of dominance. Apple argued that there were competitive constraints on it which were indicative of a lack of dominance; these constraints included competition in the devices market and the market power of high value users and developers. The Tribunal was not convinced that these constraints, along with other arguments by Apple as to, for example, the fall in the effective Commission rate over time, were sufficient to displace its finding of dominance in both markets.

(3) Apple has infringed Chapter II and Article 102 through foreclosing competition on both relevant markets by means of restrictions placed on both of those markets. These restrictions include requiring that iOS apps can only be distributed through the App Store, and requiring that iOS app and in-app purchases must use Apple's payment systems. The Tribunal concluded that Apple's argument that its conduct represents it competing on the merits in the devices market was unsustainable as a matter of principle. Moreover, Apple's conduct could not be justified as competition on the merits in this context because Apple is not competing at all. Apple has also infringed Chapter II and Article 102 by tying its payment services in the context of the iOS in-app payment services market to the App Store; the Tribunal determined that all four conditions necessary to establish a tie were satisfied. In the context of the exclusionary abuse allegations, Apple argued that it currently grants developers a limited licence to use its intellectual property ("IP"), and reserves the activities of iOS app distribution and iOS in-app payment services to itself. Because competition law only requires the compulsory licensing of IP rights in exceptional circumstances (per C-242/91 P RTE v Commission ECLI:EU:C:1995:98, [1995] 4 CMLR 718 ("Magill")), Apple argued that it cannot be obliged to license its IP rights to developers. The Tribunal concluded that Apple could not be able to enjoy the protections from scrutiny established in Magill, because Magill and that line of case law concerned a different set of circumstances in which the property subject to copyright was itself the subject of an exclusive reservation, which is not the case for Apple in both relevant markets.

(4) Apple has abused its dominant position by charging excessive and unfair prices in the form of its Commission which it charges developers for iOS app distribution services and iOS in-app payment services. The Tribunal approached the Class Representative's allegation in this regard by way of the test set out in Case 27/76 United Brands Company & or v European Commission ECLI:EU:C:1978:22. As to Limb 1 of the test, the Tribunal concluded that a significant and persistent difference between the price of the services in the App Store and the costs of those services existed over the Claim Period, demonstrating the price of the Commission to be excessive. As to Limb 2 of the test, the Tribunal concluded that the price of the Commission was unfair in itself and by reference to suitable comparators, those being Steam, the Microsoft Store and the Epic Games Store.

(5) Apple sought to justify its conduct by arguing that: (a) it is objectively necessary to the achievement of a legitimate objective and is proportionate to that objective; and (b) the exclusionary effect produced by the conduct is outweighed by efficiency gains that also benefit consumers. Apple's stated legitimate objectives were: (i) benefitting users in terms of safety, security and privacy; (ii) benefitting users in terms of enhanced performance; (iii) differentiating iOS devices and services and promoting competition on the merits; and (iv) operating an efficient system for the collection of Commission. The efficiencies argument at (b) was rejected on the basis that the impugned conduct eliminates effective competition on the relevant markets. The objective necessity argument at (a) was rejected on the basis that the relevant restrictions were not considered necessary to provide the argued benefits to users and moreover were not considered proportionate to the objective of delivering those benefits. As such, Apple failed in both its arguments seeking to justify its conduct.

(6) The level of overcharge suffered by developers as a result of the Tribunal's conclusions at (3) and (4) in respect of the iOS app distribution services is the difference between a Commission set at 17.5% and the Commission actually charged by Apple. The level of overcharge suffered by developers as a result of the conclusions at (3) and (4) in respect of the iOS in-app payment services is the difference between a Commission set at 10% and the Commission actually charged by Apple. The rate of incidence at which developers have passed on the overcharge to iOS device users is 50%. The Class Representative is entitled to damages for the total amount of both of these overcharges which has been passed on, and is entitled to interest on those damages at a simple rate of 8%.