Apple (AAPL) suffered a legal setback in the United Kingdom on Thursday. The Competition Appeal Tribunal (CAT) has ruled that the tech giant exploited its dominant position by charging app developers an unfair 30% commission through its App Store. The class-action lawsuit, brought on behalf of roughly 20 million UK iPhone and iPad users, could cost AAPL up to £1.5 billion ($2 billion) in damages.
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The CAT found that Apple used its market dominance to stifle competition in the app distribution market by charging “excessive and unfair” commissions on App Store transactions and excluding alternative purchasing methods.
Also, the tribunal ruled that affected users are entitled to damages, with the exact amount to be determined at a hearing next month.
It must be noted that the ruling marks the first mass lawsuit against a tech company to reach trial under the UK’s new class-action-style legal framework.
Meanwhile, Apple plans to appeal the decision. The iPhone maker called the ruling “flawed” and defended its App Store as a safe and trusted platform that supports developers and consumers alike.
AAPL’s Growing Legal Troubles
Importantly, the ruling comes just a day after the UK’s Competition and Markets Authority designated AAPL and Google (GOOGL) as having “strategic market status” in mobile phone platforms. This label could make both companies open up their platforms to rival app stores and place them under increased scrutiny.
At the same time, Apple is facing a growing list of legal and regulatory challenges. In the U.S., Apple is being probed to determine whether its business practices unfairly limit competition.
Also, in Europe, the Digital Markets Act (DMA) is pushing tech giants to reduce anti-competitive behavior. Two civil rights groups, Article 19 and Germany’s Society for Civil Rights, have reportedly filed a formal antitrust complaint with the European Commission, accusing Apple of violating the DMA.
These moves are part of a broader effort to increase competition and reduce the control of big tech companies over their ecosystems.
Is Apple a Buy, Sell, or Hold?
Turning to Wall Street, Apple stock has a Moderate Buy consensus rating based on 20 Buys, 12 Holds, and three Sells assigned in the last three months. At $260.40, the average AAPL stock price target implies an upside potential of 0.13%.
