iOS developers hit Apple with App Store fees lawsuit

Read time 4min 30sec

iOS developers have hit Apple with a class-action lawsuit claiming the tech giant has cornered the iOS app market with its App Store.

The developers allege the US company knowingly used its monopoly to implement “profit-killing” commissions and fees on the very developers who bring Apple’s products to life.

They have hired attorneys at Hagens Berman, one of the most successful consumer litigation law firms in the US, which has achieved more than $260 billion in settlements in lawsuits against anti-competitive behaviour at technology corporations, big banks and other entities.

“Every day, app developers bring their hard work and creativity to the iOS App Store with the hope of fairly monetising their creation,” the iOS developers say.

“But developers may face difficult challenges in using the App Store in a fair manner. We want to help ensure Apple is playing by the rules and giving iOS app developers every chance to succeed, and not taking advantage of them.”

The lawsuit filed in the US District Court for the Northern District of California in San Jose regards Apple’s allegedly anti-competitive practices in mandating only one app store for iOS devices, which sets the stage for Apple to abuse its market power.

High commission charges

The iOS developers say for 11 years, Apple has instated a 30% commission rate on all app paid sales conducted through the App Store and on any in-app purchases made in iOS apps. They add that Apple charges high commissions on subscriptions purchased in-app.

“If you are an iOS app developer who sold an app or in-app digital product through Apple’s App Store, you may have rights to reimbursement for the charges and fees imposed by Apple,” they note.

“We believe that developers who work hard to design, build, and sell their own apps and in-app digital products in app stores should not be harmed by unfair or anti-competitive behaviour from big tech companies.”

The developers point out that in addition to the 30% cut taken from all app sales and in-app purchases, Apple sets an artificial minimum pricing mandate of $0.99 for paid apps or in-app products. It also dictates that all App Store paid purchases end in $0.99, they allege.

Apple also forces developers selling products through the App Store to pay an annual Apple Developer fee of $99 to distribute their apps, which is especially damaging to smaller and new developers, the developers charge.

The developers argue that putting all iOS apps into one marketplace means consumers never see most apps, stifling competition and innovation.

According to a legal filing made by Apple last year, there were at that time more than two million apps available in the App Store.

“Between Apple’s 30% 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,” says Steve Berman, managing partner of Hagens Berman and attorney representing the proposed class of developers. “In a competitive landscape, this simply would not happen.

“This isn’t the first time we’ve taken Apple to task over anti-competitive behaviour,” Berman adds. “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 monetising their creations.”

Hagens Berman won a suit against Apple and various publishing companies in 2016 that settled for a total of $560 million on behalf of e-book purchasers forced to pay artificially high prices due to Apple and the publishing companies' colluded price-fixing. That suit went to the Supreme Court, where the court ruled against Apple.

Abusive monopoly

The latest lawsuit seeks to force Apple to end its abusive monopoly and allow competition in the distribution of iOS apps and related products, to get rid of its pricing mandates, and reimburse developers for overcharges made through abuse of its monopoly power, the law firm says.

The class-action accuses Apple of violations of federal anti-trust law and California unfair competition law.

“Apple admits it shuts out all competition from app-distribution to iOS device consumers, ostensibly to protect its device customers from bad apps and malware,” the suit says.

“But this is overblown pretence. 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.”

“We think app developers should be rewarded fairly for their creations, not over-taxed by a corporate giant,” Berman says.

“After 11 years of monopoly conduct and profits, we think it’s high time that a court examines Apple’s practices on behalf of iOS app developers and take action as warranted by the law and facts.”

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