A proposed class action alleges Apple has engaged in an anticompetitive scheme to monopolize the aftermarket for iOS apps since it launched the first iPhone in 2007, effectively ensuring iPhone, iPad and iPod Touch users have no other choice but to buy apps from only the tech giant.
The 24-page case claims Apple’s competition-suppressing conduct extends beyond just iOS apps, and applies also to purchases made within apps. The complaint alleges Apple has unlawfully succeeded in cornering 100 percent of the multi-billion-dollar worldwide distribution market for iOS applications, having totally eliminated any and all competition.
“Apple’s App Store is the only store in the entire world—online or off-line—where the tens of millions of U.S.-based iOS Device owners (and the many tens of millions of iOS Device owners worldwide) can buy an iOS app, and Apple’s unlawful monopolization of the apps market has enabled Apple to charge and collect a supracompetitive 30% fee from iOS Device consumers for each and every one of the billions of iOS apps they have bought since the iPhone’s launch thirteen years ago,” the lawsuit states.
Per the filing, iPhone, iPad and iPod Touch users have since December 2007 paid hundreds of millions more for iOS apps than they would have had there existed a competitive market.
The lawsuit characterizes Apple’s alleged conduct as “perfectly consistent with [its] attitude toward antitrust compliance generally,” citing a federal district court judge’s observation in a 2013 trial that Apple simply “does not want to engage in retail price competition.” As the suit tells it, Apple has exploited its relationships with customers who purchased its highly desirable iOS devices by locking them into a monopolized market without their knowledge or consent.
Apple’s alleged monopolization of the iOS application aftermarket is, according to the complaint, a “direct reflection” of both the company’s goal to eliminate any and all retail price competition and its “culture of disdaining antitrust compliance in order to increase the prices its customers pay.”
“Through its actions, Apple has unlawfully stifled competition by erecting impenetrable barriers to entry to would-be distributors of iOS apps, reduced consumer choice in what would otherwise be a robust and competitive iOS software applications marketplace, and artificially increased prices for iOS software applications to supracompetitive levels,” the suit summarizes, arguing that Apple’s allegedly monopolistic conduct “should be enjoined and dismantled.”
The complaint alleges Apple has violated Section 2 of the Sherman Act and California’s Unfair Competition Law, which prohibits any unlawful, unfair or fraudulent business practice. Per the suit, Apple introduced its Small Business Program in late 2020 in an effort to reduce the commission developers must pay to the company for app sales to 15 percent. Apple’s implementation of this program was sparked, in part, by the COVID-19 pandemic and litigation and regulatory pressure, the case says.
The lawsuit looks to cover all persons in the United States (excluding Apple employees, agents, affiliates, and the Court and its employees) who’ve bought an iOS application or application license from Apple, or who made an in-app purchase, including but not limited to, a subscription purchase, through such an application and for use on an iOS device at any time from December 29, 2007 through the present.
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