What's Up With Apple: Another UK Lawsuit, 5G Chips and More

A class-action lawsuit seeking up to £1.5 billion has been filed in the United Kingdom alleging that Apple Inc. (NASDAQ: AAPL) has been overcharging people since 2015 for apps purchased at the App Store. According to a report at 9to5Mac, “that Apple’s dominance in the app market enabled it to charge ‘excessive’ fees, citing Apple’s typical 30% commission of paid apps and in-app purchases.”

The charges are similar to those being argued right now in a U.S. lawsuit filed by Epic Games, claiming that Apple operates its App Store as a monopoly that harms developers and consumers. In an emailed statement to Bloomberg, Apple commented on the latest lawsuit:

We believe this lawsuit is meritless and welcome the opportunity to discuss with the court our unwavering commitment to consumers and the many benefits the App Store has delivered to the U.K.’s innovation economy.

The commission charged by the App Store is very much in the mainstream of those charged by all other digital marketplaces. In fact, 84% of apps on the App Store are free and developers pay Apple nothing. And for the vast majority of developers who do pay Apple a commission because they are selling a digital good or service, they are eligible for a commission rate of 15%.

Apple in January lowered its commission to 15% for developers who earn less than $1 million.

While Apple fights anti-competitive lawsuits in court, the company may be hedging its bets by beefing up its own advertising business. A report published Monday by Business Insider revealed that Apple hired a former ad manager at Facebook, adding to speculation that the company plans to expand its ad business. According to AppleInsider, Apple has about 50 open job listings for positions related to advertising platforms.

Apple also may be preparing to switch to manufacturing its own 5G modem chips, according to a research note from long-time Apple analyst Ming-Chi Kuo. The iPhone 12 series uses 5G modem chips made by Qualcomm, and Kuo believes that the soonest Apple could switch to its own chips would be 2023.

In 2019, Apple acquired Intel’s modem chip business for $1 billion, a necessary step to developing its own 5G modems. The acquisition gave Apple the necessary intellectual property, patent portfolio and engineering talent to develop its own modem that could be integrated into the company’s system-on-a-chip (SoC).