Apple Inc. (NASDAQ: AAPL) is being sued by two developers who claim the company has for years used its monopoly in the distribution and sale of iOS apps to impose profit-killing commissions.
The lawsuit was filed on Tuesday by iOS developers Donald R. Cameron and Pure Sweat Basketball, Inc., in the U.S. District Court for the Northern District of California in San Jose.
Complainants claim the iPhone maker practice of collecting a 30% commission on all in-app purchases and app sales is killing competition, and sets the stage for the tech giant to abuse its market power.
They also argue that company requires developers who sell products apps through the App Store to pay a fee of $99 per year, thereby hurting new and small developers.
“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,” said Steve Berman, managing partner of Hagens Berman and attorney, which is representing the developers, “In a competitive landscape, this simply would not happen.”
Attorneys for the plaintiffs seek to ask the court to break Apple’s “improper monopolization” of the market, and allow competition in the distribution and sale of iOS apps.
In addition, they want the court to end the company’s pricing requisites, such as the minimum price requirement of $0.99 for paid apps.
“Today’s 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 to reimburse developers for overcharges made through abuse of its monopoly power,” Berman said.
Anyone who has ever sold an iOS app in the country could be potentially represented in the case since the lawsuit seeks class action status. Apple has previously argued that its control of the App Store enables it to maintain quality standards and protect against malicious software.
Apple Inc Profile
Apple designs a wide variety of consumer electronic devices, including smartphones (iPhone), tablets (iPad), PCs (Mac), smartwatches (Watch), and TV boxes (Apple TV), among others. The iPhone makes up the majority of Apple’s total revenue.
In addition, Apple offers its customers a variety of services such as Apple Music, iCloud, AppleCare and Apple Pay, among others. Apple’s products run internally developed software and semiconductors, and the firm is well known for its integration of hardware, software and services.
Apple’s products are distributed online as well as through company-owned stores and third-party retailers. The company generates about 40% of its revenue from the Americas, with the remainder earned internationally.