Apple’s Chief Financial Officer, Kevan Parekh, testified at a trial in the UK, disputing claims that Apple has a 75 percent profit margin on its App Store for iPhone and iPad. The trial, taking place in London, is part of a series of attacks on Big Tech companies and their paid services or app stores. The UK’s Competition Appeal Tribunal is overseeing the case.
Antitrust and consumer advocates argue that the iPhone and iPad app stores constitute a monopoly because they are the only authorized outlets for obtaining apps and services on those platforms. This monopoly allegedly allows Apple to charge a standard 30 percent commission, leading to higher costs for consumers. Apple, on the other hand, defends its pricing structure by highlighting that 84 percent of the apps in the App Store are free, meaning developers do not pay any commission to Apple. These apps typically sustain their costs through in-app advertising.
Paid apps and in-app purchases are subject to a 30 percent fee, while recurring subscription apps pay a 15 percent commission after the first year. Apple introduced a rule change in late 2020, capping the commission at 15 percent for developers with less than $1 million in annual revenue.
In response to the prosecution’s claim of a 75 percent profit margin, Parekh argued that such a figure was inaccurate and difficult to separate from Apple’s integrated services. The case in the UK, led by Dr. Rachael Kent from King’s College, seeks 1.5 billion pounds in damages on behalf of App Store customers. Kent believes that Apple’s commission fees are unjustified, especially since the company restricts access to competitor platforms offering better deals.
The EU has taken a different approach to addressing the issue by passing legislation mandating alternative app stores on Apple devices. Despite Apple’s safeguards to protect EU users, challenges remain, such as malware, scams, and functional app requirements. Several alternative app stores are operating in the EU, including Riley Testut’s AltStore and the Epic Games Store. These stores must comply with Apple’s safety rules and pay a Core Technology Fee for paid apps.
The UK trial is expected to last seven weeks, with similar cases against other tech giants anticipated in the US and UK in 2025.