Apple and Google hit with class actions by Australian app users

A Melbourne-base law firm is suing Google and Apple on behalf of Australian consumers over allegedly unethical operating practices.

A Melbourne-base law firm is suing Google and Apple on behalf of Australian consumers over allegedly unethical operating practices.

Apple and Google are facing accusations they used market power to force phone application developers into using their payment systems in what drove up prices for consumers.

The California-based technology companies are being sued in separate lawsuits spearheaded by Melbourne business Phi Finney McDonald, financed by litigation funder Vannin Capital.

The identical lawsuits have alleged Apple and Google held “a substantial degree of power” where the purchasing of apps via the App Store and Google Play Store were concerned, as well as in-app purchases, the Australian Financial Review reported.

The legal firm, which is representing Australian consumers, alleged Apple and Google charged commissions of 30 per cent, and in a few cases 15 per cent, to developers, who had no choice but to use their services due to their market power.

Apple has been accused of unfairly using its market power. Picture: Johannes EISELE/AFP

Apple and Google are accused of using their respective bargaining positions with app developers to take advantage of their position and breach consumer law, require developers to enter into non-negotiable standard contracts the tech companies would unilaterally amend, and do so in a way that was not necessary to protect their business interests.

Such factors resulted in hugely reduced competition in the distribution of apps and how purchases of and within them were made, the lawsuit alleged.

“This conduct resulted in higher prices for users who purchased apps and in-app digital content through the Australian App Store and Google Play Store,” Phi Finney McDonald said.

Google has defended itself against the accusations, claiming it competed “vigorously and fairly” for developers and consumers.

Apple and Google allegedly took advantage of their bargaining positions and breached consumer law. Picture: Lionel BONAVENTURE/AFP

“Android gives people more choice than any other mobile platform in deciding which apps and app stores they use – most Android phones come pre-loaded with more than one app store. We compete vigorously and fairly for developers and consumers,” a spokesperson told the publication.

“Google Play is the first major platform to move away from one-size-fits-all pricing to meet developers’ different needs and our fees are the lowest among major app stores. Today, just around 3 per cent of developers are subject to a service fee and 99 per cent of those developers qualify for a service fee of 15 per cent or less.”

Users with iPhone, iPad and Android tablet and smartphone users who purchased apps in the App Store or Google Play between November 6, 2017 and June 20, 2022, are covered by the class actions.

Google denied any wrongdoing and claimed it had operated fairly. Picture: Supplied

Phi Finney McDonald alleged that of the 20.6 million smartphones in Australia, 55 per cent were iPhones and 45 per cent were Androids.

Apple has not commented, while Phi Finney McDonald has been contacted for comment.