A UK tribunal has ruled that Apple abused its dominant position in the markets for iOS app distribution and in-app payment services, finding that the company imposed excessive commission rates on app developers and restricted competition.

The period in contention was from October 2015 until the end of 2020.

The Competition Appeal Tribunal (CAT) delivered its decision following a trial earlier this year, relating to a collective lawsuit brought on behalf of approximately 20 million UK-based iPhone and iPad users, with claims of up to £1.5bn ($1.74bn) at stake.

According to the panel, Apple’s commission, which had set at a headline rate of 30% for both app distribution and in-app payment services, was significantly above what would be expected in a competitive market.

The tribunal found there were no suitable alternatives available to developers within the iOS ecosystem.

The CAT supported arguments from claimant Rachael Kent, who contended that Apple had excluded all competition in iOS app distribution and in-app payments, thereby generating substantial profits. It identified two distinct markets, including iOS app distribution services and iOS in-app payment services.

The tribunal found Apple holds near absolute market power in both, with high barriers to entry reinforced by contractual restrictions and limited licensing for third parties.

It rejected Apple’s position that device market competition and the influence of high-value users and developers acted as sufficient competitive constraints.

The panel also disagreed with Apple’s claim that its conduct amounted to competition on the merits.

Apple’s practices, which require exclusive distribution of iOS apps via the App Store and mandating the use of its own payment system for in-app purchases, were found to restrict competition unlawfully.

The tribunal also determined that Apple’s tying of payment services to the App Store met all conditions for an illegal tie-in under competition law.

Apple’s assertion that it was protected from compulsory licencing of its intellectual property was found not to apply in these circumstances.

The tribunal applied the United Brands test to Apple’s commission structure and determined that there was a persistent and significant disparity between the iPhone maker’s charges and the actual cost of services.

Comparisons to Steam, Microsoft Store, and Epic Games Store supported the tribunal’s finding that Apple’s commission was both excessive and unfair.

The CAT rejected Apple’s arguments that its restrictions were necessary for legitimate objectives such as user safety, security, or efficient fee collection, concluding these measures were not proportionate and did not deliver claimed benefits.

For damages, the tribunal established the overcharge as the gap between Apple’s commission and a benchmark of 17.5% for app distribution and 10% for in-app payments.

It determined that 50% of this overcharge was passed through to iOS device users. The class is entitled to claim damages and interest on the overcharge, with the final calculation to be addressed at a hearing next month.