Developers sue Apple over $99 annual fee, mandatory pricing increments of $0.99

Posted:
in General Discussion edited June 4
Two iOS developers have filed a class-action suit claiming that Apple abuses its position as the owner of the App Store by dictating pricing tiers, and that its mandatory annual fee for all developers is "profit-killing."




A group of iOS developers have filed a class action suit against Apple, arguing that the company "knowingly used its monopoly" to charge a "profit-killing" fee for developers who want to make apps. The suit, filed in the US District Court for the Northern District of California, claims that Apple is in violation of the Sherman Act and California's Unfair Competition Law. It seeks trial by jury and for Apple to be required to reimburse developers.

The attorneys representing the plaintiffs, Hagens Berman, previously won a 2016 suit against Apple and other book publishing firms over alleged price-fixing.

"This isn't the first time we've taken Apple to task over anticompetitive behavior," said Steve Berman, managing partner of Hagens Berman. "We have successfully held Apple to the law in the past, and we intend to fight hard for the rights of iOS developers who bring their hard work and creativity to the iOS App Store with the hope of fairly monetizing their creations."

"Between Apple's 30 percent cut of all App Store sales, the annual fee of $99 and pricing mandates, Apple blatantly abuses its market power to the detriment of developers, who are forced to use the only platform available to them to sell their iOS app," he continued. "In a competitive landscape, this simply would not happen."

Central to the case is an argument that Apple has an unfair monopoly on what apps can be used on its devices and that the company's claims this is is for security reasons is "overblown pretense" designed to keep people paying its fees. "There is no reason to believe that other reputable vendors, including Amazon, for example, could not host an app store and provide a trustworthy app-distribution system if Apple were to open up its system to other providers," claims the suit.

Hagens Berman is also involved in a 2018 case accusing Apple of intentionally slowing down iPhones.

App Store screenshots from Lil' Baby Names, an app by one of the plaintiffs
App Store screenshots from Lil' Baby Names, an app by one of the plaintiffs


While the suit intends to represent all developers who have been charged by Apple, it is specifically brought by two plaintiffs. Donald R. Cameron of California, is co-developer of an app that helps you name your baby.

"Throughout its availability in the App Store, Mr. Cameron has priced his app at $2.99," says the suit. "If, however, Mr. Cameron could have priced his app at above zero but below $.99, he might well have done so, in order to attempt to capture volume sales."

The second plaintiff is an Illinois company named Pure Sweat Basketball, which produces a workout app. "[As] Pure Sweat Basketball charges a monthly subscription of $4.99, Pure Sweat Basketball has paid Apple's 30% commission on each sale," continues the suit.

Apple has not yet commented on the suit. The suit is case 5:19-cv-03074, and was filed in the Northern district of California on Tuesday.
wlym
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Comments

  • Reply 1 of 57
    larryjwlarryjw Posts: 375member
    If you can't afford $99 developer fee, you're not in the business of making a profit. At best, you have a hobby not a profession.
    n2itivguytmaypscooter63zoetmbchaickamwhitedavebarnesmike1darren mccoystompy
  • Reply 2 of 57
    sdw2001sdw2001 Posts: 17,038member
    A $99 fee?  Seriously?  And it's not like you have to develop for iOS.  There is an alternative.  
    davebarnesjbdragonlolliverwlymwatto_cobra
  • Reply 3 of 57
    deminsddeminsd Posts: 143member
    larryjw said:
    If you can't afford $99 developer fee, you're not in the business of making a profit. At best, you have a hobby not a profession.
    Not the point.  Apple has a monopoly over app distribution and the 30% piece of the pie is what is the "profit killer".  Not many businesses can take a 30% cut on profit.
    spice-boychemengin1
  • Reply 4 of 57
    nasseraenasserae Posts: 3,157member
    I remember the days when Apple announced these policies and rates more than 10 years ago. Developers couldn’t believe that they only pay 30% fee to sell apps vs 50% to 60% others were charging. 
    genovellechaickatmaydhawkins541darren mccoybeowulfschmidtjbdragonuraharalolliverrevenant
  • Reply 5 of 57
    BunkBunk Posts: 1member
    My first post here after reading many comments over the years. Look at any business; they spend 30% on advertising, marketing, etc. Apple brings this to the table and makes it easy for developers. I've been in the software business a long time...remember the Microsoft days of anti-trust and was asked to participate telephonically in the 90's. A developer today has it much easier than older days in many ways yet it isn't enough. They want more - every one desires to be a millionaire rather than focus on the customer. I agree with the poster who stated if you cannot afford $99.00 for a developer fee it IS a hobby. Let's get real people in this unreal world spinning around.
    cincyteechaickamwhitefotoformatcharlesgresjbdragonlolliversupadav03watto_cobra
  • Reply 6 of 57
    talexytalexy Posts: 59member
    deminsd said:
    larryjw said:
    If you can't afford $99 developer fee, you're not in the business of making a profit. At best, you have a hobby not a profession.
    Not the point.  Apple has a monopoly over app distribution and the 30% piece of the pie is what is the "profit killer".  Not many businesses can take a 30% cut on profit.
    Well, think the other way round: Develop an product and try to sell it.
    - first think about advertising to make your product visible to your potential consumers. How you gonna do it? Google Adwords ($$), Facebook Advertising ($$)? Billboards ($$$)?
    - o yeah you have to built a website ($$) were the product can be purchased from.
    - or you put your product into a self developed packaging ($$) and then develop relationships to resellers ($$) and make them want to display your product ($$$)

    In short, in no way a 1 man developer could have had the resources to distribute an App on his own before the App Store came along. It worked and it still works.
    edited June 4 genovellechaickamwhitecharlesgresjbdragonlolliverwlymwatto_cobra
  • Reply 7 of 57
    sflocalsflocal Posts: 4,652member
    Oh man... where are these bottom dwellers coming from?  If you can’t afford $99, you’re in the wrong field.  That’s the price to play in Apple’s PROPRIETARY ecosystem.

    It’s so laughable that it’s not even worth commenting in further.

    The plaintiffs are classic examples of participation trophy recipients.
    dhawkins541davebarnesentropysjbdragonlolliverwlymwatto_cobra
  • Reply 8 of 57
    genovellegenovelle Posts: 967member
    Bunk said:
    My first post here after reading many comments over the years. Look at any business; they spend 30% on advertising, marketing, etc. Apple brings this to the table and makes it easy for developers. I've been in the software business a long time...remember the Microsoft days of anti-trust and was asked to participate telephonically in the 90's. A developer today has it much easier than older days in many ways yet it isn't enough. They want more - every one desires to be a millionaire rather than focus on the customer. I agree with the poster who stated if you cannot afford $99.00 for a developer fee it IS a hobby. Let's get real people in this unreal world spinning around.
    Can’t afford $99 but can pay a lawyer. How  ridiculous! Did he complain about his lawyer’s 33% plus expenses if he wins anything?
    mwhitewonkothesanelolliverrandominternetpersonFileMakerFellerwlymwatto_cobra
  • Reply 9 of 57
    mknelsonmknelson Posts: 358member
    deminsd said:
    larryjw said:
    If you can't afford $99 developer fee, you're not in the business of making a profit. At best, you have a hobby not a profession.
    Not the point.  Apple has a monopoly over app distribution and the 30% piece of the pie is what is the "profit killer".  Not many businesses can take a 30% cut on profit.
    How is that a 30% cut on profit? Even if they sell directly they will incur costs for their sales site, upload bandwidth, etc. Any competing App store will also need to take a cut to stay in business.

    Most traditional retailers look for a 40% gross margin over the year. Then distribution wants a cut. That means manufacturers may only get 30-50% of the retail price.


    chaickajbdragonlolliverFileMakerFellerwlymwatto_cobra
  • Reply 10 of 57
    LenardHLenardH Posts: 12member
    Everything for nothing, the cost of doing business, god forbid developers had to pay rent for a brick building......$99/year and free advertising in the App Store...
    lolliverFileMakerFellerwatto_cobra
  • Reply 11 of 57
    gutengelgutengel Posts: 290member
    deminsd said:
    larryjw said:
    If you can't afford $99 developer fee, you're not in the business of making a profit. At best, you have a hobby not a profession.
    Not the point.  Apple has a monopoly over app distribution and the 30% piece of the pie is what is the "profit killer".  Not many businesses can take a 30% cut on profit.
    You know that when you sell your product on a store they usually take at least 50%, right? Like that how stores have worked for the last 100 years. If you're starting a business you have to account for the profits cuts on the business plant, if you don't guess what? You don't have a sustainable business. It's not that hard to understand dude.
    entropyslolliverwatto_cobra
  • Reply 12 of 57
    chadbagchadbag Posts: 1,096member
    deminsd said:
    larryjw said:
    If you can't afford $99 developer fee, you're not in the business of making a profit. At best, you have a hobby not a profession.
    Not the point.  Apple has a monopoly over app distribution and the 30% piece of the pie is what is the "profit killer".  Not many businesses can take a 30% cut on profit.

    They are not.   That 30% is a bargain compared to what they would be paying of they had to set up their own distribution and fulfillment.   As well as their own “app discovery “.   Especially when you consider that they’d pay a lot of those expenses every month whether or not they sold any apps if they were doing it themselves. 

    The 30% is a cost of doing business, and a reasonable cost for all the benefits it gives you.  

    People who files this sort of suit are ignorant.  Ignorant of what it takes to run a business. 
    edited June 4 entropyslolliverFileMakerFellerwatto_cobra
  • Reply 13 of 57
    Don’t forget all the tools and APIs that Apple provides for that $99. Without the tools Apple offers, who would this person even develop for? This .99 thing is just silly. The developer claims he want to be able to charge < .99 but is currently charging $2.99 for the baby naming app. I can’t see the logic here. 
    lolliverFileMakerFellerwatto_cobra
  • Reply 14 of 57
    chadbagchadbag Posts: 1,096member

    talexy said:
    deminsd said:
    larryjw said:
    If you can't afford $99 developer fee, you're not in the business of making a profit. At best, you have a hobby not a profession.
    Not the point.  Apple has a monopoly over app distribution and the 30% piece of the pie is what is the "profit killer".  Not many businesses can take a 30% cut on profit.
    Well, think the other way round: Develop an product and try to sell it.
    - first think about advertising to make your product visible to your potential consumers. How you gonna do it? Google Adwords ($$), Facebook Advertising ($$)? Billboards ($$$)?
    - o yeah you have to built a website ($$) were the product can be purchased from.
    - or you put your product into a self developed packaging ($$) and then develop relationships to resellers ($$) and make them want to display your product ($$$)

    In short, in no way a 1 man developer could have had the resources to distribute an App on his own before the App Store came along. It worked and it still works.
    You forgot the bandwidth to distribute it and any updates you make.  Website needs to be developed like you said and maintained over time.   But the bandwidth will kill you on a popular app. 
    lolliverFileMakerFellerwatto_cobra
  • Reply 15 of 57
    spice-boyspice-boy Posts: 837member
    You guys are really too much. Always seeing every story through Apple's eyes and never considering in this case a small developer trying to get their business off the ground. 
    Let me turn this around, "What's $99 to a corporation valued at 1 Trillion dollars?"
    chemengin1
  • Reply 16 of 57
    larryjwlarryjw Posts: 375member
    deminsd said:
    larryjw said:
    If you can't afford $99 developer fee, you're not in the business of making a profit. At best, you have a hobby not a profession.
    Not the point.  Apple has a monopoly over app distribution and the 30% piece of the pie is what is the "profit killer".  Not many businesses can take a 30% cut on profit.
    Everybody can afford Apple taking a 30% cut -- just raise your price to cover your costs + profit. I think those calculations are taught in 5th grade.
    gutengeldanhlolliverwatto_cobra
  • Reply 17 of 57
    chaickachaicka Posts: 120member
    Any supermarket takes a fixed rental of shelf space and a % cut of all sales proceedings. Why is 'App Store' being bashed (class actions after class actions) so badly nowadays, esp in the US?

    If one day this ecosystem is to collapse, it will be mainly thanks to all these 'nuisance' of not willing to pay for this and that, and the regulators trying to poke here and there just for a show. Why can't these developers just go to Android and Google Play Store instead. It's supposedly free there isn't it? But then, wonder if they can make any decent profit there.
    lolliverwatto_cobra
  • Reply 18 of 57
    Not the point.  Apple has a monopoly over app distribution and the 30% piece of the pie is what is the "profit killer".  Not many businesses can take a 30% cut on profit. They do not have a monopoly over app distribution. There are plenty of places to distribute your apps. Maybe you mean they have a “monopoly’ over distribution in their own App Store? But that’s the case for every store out there. Walmart, Target, your local grocery store. They all get to decide what they will and won’t sell in the store, and they are far more restrictive than Apple at allowing companies to sell products and set prices in their stores. I’d also wager that the markups are greater than 30%.
    lolliver
  • Reply 19 of 57
    nasseraenasserae Posts: 3,157member
    spice-boy said:
    You guys are really too much. Always seeing every story through Apple's eyes and never considering in this case a small developer trying to get their business off the ground. 
    Let me turn this around, "What's $99 to a corporation valued at 1 Trillion dollars?"
    At least $100 million a year?! (Assuming 1 million of the 20 million registered developers account are paying). 
    edited June 4 mwhitelolliver
  • Reply 20 of 57
    zoetmbzoetmb Posts: 2,453member
    deminsd said:
    larryjw said:
    If you can't afford $99 developer fee, you're not in the business of making a profit. At best, you have a hobby not a profession.
    Not the point.  Apple has a monopoly over app distribution and the 30% piece of the pie is what is the "profit killer".  Not many businesses can take a 30% cut on profit.
    What was the financial model before online distribution?    You sold your software at retail and unless you were a giant like Microsoft (or Apple), you had to go through a distributor, like Ingram Micro-D.   Do you know what you had to sell to Ingram Micro-D for?   Usually 52%-55% off of list, they kept about 5% and retailers worked on about a 50% margin at list which gave them room to discount.    And that didn't give you a platform or promotion.  It just got you onto dealer shelves if the dealer decided they wanted to sell your product.    But that was in the days when a "cheap app" sold for $200.

    The 30% isn't out of profit.  it's off the list price.   All a developer has to do is raise the price a bit.    Is someone not going to buy an app because it's $4 instead of $3 or $18 instead of $14?  Believing you can have a viable business model selling applications for less than what a Starbucks coffee costs is ridiculous.   It's amazing that it worked for anyone at all.    And let's not forget that the 30% includes all the credit card fulfillment fees and the risk.    If Apple cut the fee for small developers to 20%, it wouldn't make any difference to most of them.   The problem isn't the 30%:   the problem is the ubiquity of competitive applications resulting in a cycle where only the top apps continue to sell because those are the ones end-users see on the store (because they're the top sellers) and the fact that most people already have a ton of apps on their phone that they don't use and they don't need any additional.  (An exception might be games where players are always looking for something new.)

    IMO, the developers complaining don't understand anything about business.  

    Unfortunately,  an idiot judge might cause Apple to lose this case just as they lost the e-book pricing case.   But the last thing we need is Apple forced to let users sell apps outside the store that don't go through Apple's technical approval process.   Then we'll wind up with all the security issues that Android apps have. 

    And I agree with Larryjw:   if the $99 fee is a burden (when did Apple start charging this - I seem to remember it being free), you're not really in business and how could you afford a phone or iPad to test the apps you just developed on?   IIRC, the original version of Inside Macintosh cost more than that and when the iPhone was first released, I probably spent more than $99 on reference books that had information on how to code for it. 


    larryjwcharlesgreslolliverFileMakerFellerwatto_cobra
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