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Apple CFO responds to UK trial claim, denies 75% profit on App Store

Published

Jan 22, 2025

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Credit: Outlever (edited)

TL;DR

  • Apple faces a first-of-its-kind class action suit in the UK over "excessive and unlawful" App Store fees.
  • The lawsuit seeks up to £1.5 billion in damages for around 20 million users.
  • Apple's CFO, Kevan Parekh, denies claims of 75% profit margins.
Author

Paddle News Desk

On trial:Apple is on trial in the UK as the first major tech company to undergo a class action lawsuit over imposing "excessive and unlawful" fees through its App Store.

Some background:The lawsuit, initiated in 2021, seeks up to £1.5 billion in damages on behalf of approximately 20 million Apple users. It argues that Apple's requirement for customers to use its proprietary payment processing service, along with a 30% commission on transactions and additional fees for in-app purchases, stifles competition and allows the company to earn unlawfully high profits.

The response: Apple dismisses the claims as "meritless" and cites the positive impact of the App Store on the UK's innovation sector. More specifically, Apple’s newly appointed CFO, Kevan Parekh, disputed claims that the company sees a 75% profit margin on its App Store. Parekh argued that it is impossible to accurately determine the standalone profitability due to the difficulty in allocating indirect costs to specific products or services.

What's at stake: This case could set a precedent for other class actions against major tech companies like Google and Meta, which are facing similar lawsuits in the UK.

What we're watching: Not atypical of the top names in Big Tech, but this case adds to Apple's global legal scrutiny – including a US Department of Justice case and a previous legal battle with Epic Games over App Store rules. To further complicate the situation, the incoming Trump Administration is actively driving drastic de-regulation, while also trying to keep Big Tech in check.