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Apple Hit with Antitrust Lawsuit Alleging App Store Monopoly

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A group of Apple consumers represented by Wolf Haldenstein Adler Freeman & Herz LLP filed a complaint against the iPhone maker with the Northern District of California on Friday, alleging that Apple Inc. has violated federal and state competition laws by monopolizing app distribution on iOS — reports Law Street Media.

“Apple took advantage of the heavy demand for its novel product to equip it with an operating system that foreclosed iPhone consumers from buying software from any source other than Apple,” reads the filing.

The language of course refers to Apple’s insistence on outlawing ‘sideloading’ — the act of installing apps from sources other than the company’s App Store, on iOS. The EU’s proposed Digital Markets Act (DMA) threatens to tear down Apple’s anti-sideloading walls.

The company has come out in force against the DMA, with SVP of Software Engineering Craig Federighi saying, “sideloading is a cyber criminal’s best friend” earlier this month, and Apple CEO Tim Cook contesting it passionately.

Apple also requires that all transactions made by iOS users, including in-app purchases, go through the App Store, which nets the tech giant a handsome 30% commission on every single transaction.

It wasn’t until the verdict of Epic Games’ recent lawsuit against Apple that the company so much as let developers inform users of the existence of alternative, third-party payment methods by approaching them outside of iOS apps.

The filing places the iOS app ecosystem in stark contrast with Apple’s macOS, which is (somewhat) more open, in that it allows users to purchase software from any provider and pay software developers directly without cutting Apple in on the transaction.

The lawsuit argues that Apple failed to obtain “contractual consent” from iOS users before monopolizing the distribution of iOS apps and having the platform essentially “locked,” with users forbidden from using any app that has not been approved or sold by Apple itself.

According to the complaint, Apple has engaged in anticompetitive behaviour on the App Store, unbeknownst to consumers, ever since the iPhone 2G launched almost 13 years ago when the only apps available came pre-installed on the device. The complaint also alleges that Apple has succeeded in completely eliminating competition.

As a result, consumers were forced to pay Apple’s prices and weren’t even able to download or use third-party apps found outside the App Store. The plaintiffs allege that Apple has continuously charged iOS users prices that have been artificially inflated by an organized lack of competition on iTunes and in the App Store.

The lawsuit seeks to hold Apple responsible for violations of Section 2 of the Sherman Act and California’s Unfair Competition Law, which prevent companies from employing unfair or deceptive business practices.

The plaintiffs are currently petitioning the court for declaratory and injunctive relief. As for compensation, the lawsuit seeks treble and exemplary damages or, in the alternative, restitution, costs, and their attorneys’ fees.

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