Long-running App Store monopoly lawsuit gains class-action status
An ongoing antitrust lawsuit has finally been granted class-action status, one accusing Apple of using its App Store monopoly to keep prices high.
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An antitrust case against Apple that has rolled along in various forms for 12 years has been given a break by a federal judge, who allowed it to be granted class-action status. Judge Yvonne Gonzalez Rogers refused to certify the suit as a class action in 2022, but after it was narrowed in scope, it has since been granted.
The lawsuit centers around Apple's alleged monopoly on iPhone apps, and its rules preventing both the existence of third-party App Stores and the ability for purchases to be made outside of the App Store itself. It is claimed that the rules allowed Apple to control a monopoly, limiting consumer choice and, in turn, allowing prices to creep upward.
The change to the lawsuit that allowed Gonzalez Rogers to accept it as class-action in nature was the number of Apple account holders that would've been affected by it, reports Reuters. The class now represents account holders who have spent $10 or more on apps and in-app content.
The judge was still concerned that the new narrower class may have more than 10 million accounts that didn't suffer any harm. However, Rogers added that the number of accounts could be further reduced, and there wasn't a specific "cutoff" for denying certification at all.
During the same session, Gonzalez rejected Apple's request to block testimony from two expert witnesses over the potential harm to customers. The testimony, which includes comments from Nobel Prize-winning economist Daniel McFadden, was alluded by Apple to be unreliable.
Mark Rifkin, a lawyer on behalf of the consumers, was "extremely pleased" by the decision and the start of the next phase of the 12-year-old legal ordeal. Rifkin believes that Apple could be on the hook for "billions of dollars in damages."
Regardless of how the case eventually plays out, Apple's rules attacked by the lawsuit are already being changed elsewhere in the world. With the introduction of the EU Digital Markets Act, Apple is forced to make changes to allow third-party app storefronts to exist, as well as third-party payment processing.
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https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.courthousenews.com/wp-content/uploads/2021/11/Apple-iPhone-motion-for-class-cert.pdf&ved=2ahUKEwi007HX44-EAxVQgP0HHT_kB2A4FBAWegQICBAB&usg=AOvVaw0XWOmus6tWTw53K-NTONpN
And this was part of that:
"First, Prof. McFadden investigated what app store commission rates Apple would have charged in a competitive but-for world (“BFW”). But for Apple’s anticompetitive conduct, there
I wonder what he thinks about Apple’s EU proposals?
It is going to be interesting to eventually see what Apple is not revealing here.
Curiously, while searching for that I saw some sites saying his testimony had been rejected.
Apps are not expensive and most people really aren't complaining that "app prices from Apple are so high!" All I hear about are developers who want more profits and governments who capitulate to their demands, trying to attack Apple only because Apple is a successful company. Basically, if you are successful, you ultimately will be charged for having experienced too much success.
Only the names have been changed....
Apple core software plus 5,000 apps coming up within the EU USA why they will not stop, get ready would you pay for core Apple ecosystem plus a choice of choosing from 5,000 highly curated (like Sony or Nintendo) apps that work without problems? Would you pay for Apple hardware, how many worthwhile pieces of software are there within each genre not counting games and a few utilities. Each genre other than games/utilities has maybe a dozen good apps at the most. I currently have 89 apps (includes iPad software) half are Apple core apps the others are name brand apps who due to their quality would pass any Apple job interview (Sony like curation) with Apple, and a few utilities. Look at what you have installed how many beyond the Apple core set of software do you have installed and use?
The very existence of the online Apple App Store is a courtesy not a right most of the software on the App Store is filler after the first 5,000 apps, not counting games and I like Apple products. Anyone claiming they have one million apps on their App Store doesn't mean they have one million good or even necessary apps for the survival of the platform.
Also, Steam operates on a platform with more than one store and still manages to charge 30% commission. Amazon sells e-books on a platform with more than one store and takes 65% commission on e-books sold below $2.99 or above $9.99. They take 30% commission on e-books sold between $2.99 and $9.99. Both of those refute the idea that more than one store = super low commission rates.
I still feel if you don‘t like the product, get another brand.
Just purchased Day One Premium entirely outside the App Store and Agenda was the same. This lawsuit has no merit there are plenty of scenarios in where mobile apps are not restricted to Apple's payment processing and fees.
What do I need another app store for/ What applications are people clamoring for that Apple has put a blockade on? The lack of detail and specificity here is alarming. We all new .99 cent applications were unsustainable. If my groceries have gone up then so have the groceries for the men and women programming these apps. We are all affected by inflation.
The 'blockade' is on competition. On choice. That should be clear from almost all the complaints, investigations and regulations.
Inflation has nothing to do with anything.
It's about choice.
However, on the subject of inflation and subsequent price increases (often concealed through 'reduflation' techniques) you may be aware of the current spat between a major EU distributor (Carrefour) and Pepsico.
Carrefour has removed all Pepsico products from its huge distribution channels because it claims Pepsico is abusing customers with overly high price increases and providing less content without informing customers of the resulting price increases.
Pepsico is lucky that Carrefour stores aren't the only distribution channels to choose from.
iDevice users only have the App Store to choose from and most regulators seem to be frowning on that as anti competitive and harming consumers.
The many member states of the EU believe that to be the case.
This class action suit has got the go ahead and the DoJ is looking at the App Store situation.
Most of Apple's 'concessions' over the years have only arrived through the threat of investigation. That didn't bode well from the outset when competition would likely served the same purpose.
Copy of MS Excel ? $795
Copy of MS Word ? $795
Copy of dBASE ? $795
You would have to buy it from a reseller or computer store and they of course include shipping fee and the retail mark-up plus local tax, and there was stuff all you could do about it.
Gimme a break, the App Store dropped the prices of software like a stone but created a global market for small software developers to concentrate on their products rather of having to pay huge amounts on finding a publisher or advertising in computer magazines. This platform has allowed creative people to make a living without having to worry about finding someone to carry their product and pay for advertising,
Apple created this market from scratch under intense competition, no-one helped them, no-one said here's a billion dollars build a safe, reliable distribution & delivery system that we can all use.
Don't like paying the fee to use the App Store for global delivery to millions and millions of potential customers?
It's very simple, there is another platform for you, it's called Android, build for it and go away, we don't need you.
Why this is so hard for you I have no idea.
Is your position that Nintendo has no grounds to restrict what games it wants for its own platform? That they should be forced to sell Doom or whatever and Playstation customers should be free to install Mario Bros? Why or why not?
"Gatekeepers! Gatekeepers! Gatekeepers!"
These other companies should create their own platform and then open it up for everyone just like they want. It's they platform, they can do what they want. Instead they want to force things onto Apple.
Most of the things in the app store these days are FREE anyway. Why does anyone think costs will drop? I wish I could just spend a few dollars and buy a program outright. Freemium content I think stinks. These 3rd party companies make more money giving the app out for free and then charging you for whatever virtual crap so you can actually play the game. 3rd party app stores won't change that. I doubt prices will drop much at all. Apple's 30% cut of FREE is $0!!!
It seems people don't understand what games USED TO COST!!!! It's was selling apps for cheap like $.99 cents but in huge volumes around the world were you could make money instead of selling at $59.99 to far fewer people.
This lawsuit should be tossed. Even though I think Apple should allow some apps that they ban. Network type apps for example are very limited because of Apple.
Android phones in China where there is no Google, all there are is 3rd party stores and they're infested by viruses.
What a pile of BS. Why did this Nobel prize-winning economist need to calculate theoretically how much Apple would need to reduce their commission by, if third party app stores were allowed on iOS. Why didn't this idiot just look into Android? Not only are there dozens of third party stores on Android, Android allows sideloading an app just by downloading off a developer's website. And yet, Google manage to operate a very successful Google Play app store that have over 90% market share of installed apps (on Android). And guess what, Google charges just about the same commission as Apple. So where's the 10-12% commission range in the Google Play Store, that Google should only be able to charge because of competition?
Sure, if there had been competition in the iOS app distribution market then the rate charged by Apple (and others) just for app distribution (and directly related) services might have been meaningfully lower than it has been. But that really only means that Apple would have broken out the charges - e.g., 10% of certain revenues for reviewing, hosting, and distributing apps and another 20% of those revenues for using Apple's IP.
As it has been Apple hasn't really been charging 30% (or 15%) for distribution related services. It's largely been charging for the use of its IP. When it comes to that Apple IP use there's no such thing as a competitive market; there isn't supposed to be a competitive market. Apple has a legal monopoly on such use. And the irony is, the more such IP use is untied from other services the more Apple is free to charge whatever it wants for such use without the potential for antitrust recourse. The only limit on what Apple can charge for the use of its IP - to the extent the licensing of such use is a stand alone transaction - is what the market will bear. And it's pretty clear at this point that a lot of developers are willing to pay a lot for such use. The use of that IP - and the resulting ability to make functioning iOS apps - is very highly valued.
So, yeah, if alternate app stores had always been allowed, then the commission (on certain revenues) for the use of Apple's App Store would likely have been lower - perhaps 10 or 12%. But there likely would have been a separate commission owed to Apple regardless of whether a developer used Apple's App Store for distribution. The cumulative costs to developers for iOS use and app distribution - and thus the to-consumer prices in general - wouldn't necessarily have been lower.
As has been pointed out many times, the key issue here is the use of Apple's IP. Developers highly value that IP use, and they have no inherent right to it, so it's reasonable that they pay a substantial commission (and/or other fees) for it. If, e.g., the commission was too high then that would be obvious from a broad unwillingness on behalf of developers to pay it.
You can't credibly argue that the use of that IP isn't valuable enough to justify a 15 or 30% commission, but yet at the same time it's so valuable that developers have no choice but to agree to Apple's terms so that they can use it (i.e. so that they can make apps which work on iOS). That is, in effect, what critics of Apple's commissions are arguing. Hidden within the dissonant argument is the assertion that developers have some inherent right to use Apple's IP. Such an assertion runs contrary to the concept of property rights which is one of the cornerstones of societal organization.
That said, the plaintiffs still have quite an uphill climb in this case. They're making Sherman Act Section 2 claims which require a showing of monopoly power. In order to show such monopoly power for Apple they need a favorable relevant market definition. Effectively, they need a single-brand relevant aftermarket - e.g., iOS App distribution.
Establishing such a single-brand market in Apple's case will be difficult in light of what the Ninth Circuit said about such markets in Epic v Apple (2023). At best someone might be able to credibly argue that such a market existed in the early days of iOS. But at this point I think the majority of people buying iPhones and iPads know how the Apple App Store works (and that you generally can't download apps through other app stores) and such general consumer knowledge blows up the first element which an antitrust claimant needs to demonstrate to get to a single-brand relevant market definition.