Did you sell a subscription app or an app with in-app purchases via Apple’s App Store? You may have rights to compensation for Apple’s failure to abide by a 2021 legal injunction. Fill out the form to find out your rights »
WHAT’S THE ISSUE?
Hagens Berman has filed a class-action lawsuit against Apple Inc. for violating a 2021 injunction that required Apple to permit its app developers to sell subscriptions and other in-app products directly to their customers using links within their apps. A federal district court found that Apple willfully violated the injunction by barring developers from directing customers to their own websites and payment platforms, where they could avoid extra fees and Apple’s commissions. Apple has been found to have conducted internal analyses that showed its intention to circumvent the injunction to unlawfully preserve a billion-dollar revenue stream. Apple then allegedly engaged in a series of actions for which it has now been held in contempt of court and referred to the United States Attorney’s office in San Francisco for potential criminal prosecution.
WHO IS AFFECTED?
Any iOS app developers who sold an in-app digital product (including subscriptions) through Apple's App Store after Jan. 16, 2024, may have rights to reimbursement for Apple’s alleged failure to abide by the injunction. Fill out the form to find out your rights.
WHAT IS THE APPLE APP STORE INJUNCTION?
The lawsuit accuses Apple of violating an injunction that was entered in 2021 following a bench trial. The injunction became effective after appeals on Jan. 16, 2024. It put an end to Apple’s use of anti-steering rules that prevented app developers from competing with Apple on payments for in-app products – enhancements, content and other features sold within an app. For every in-app purchase a consumer makes, Apple charges the app developer uniform transaction fees (defaulting at 30%, and 15% under some programs), and under the injunction, app developers could use links in their apps to sell in-app products directly to their customers, through their own platforms, without paying Apple’s fees.
The injunction states:
Apple Inc. and its officers, agents, servants, employees, and any person in active concert or participation with them (“Apple”), are hereby permanently restrained and enjoined from prohibiting developers from
- (i) including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and
- (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.
Under the injunction, iOS developers were to save billions of dollars in revenues by processing their own payments, funds they could reinvest int their apps and operations. But “[t]o neutralize the effect of the injunction and illicitly retain this revenue stream, Apple engaged in a series of contrivances for which it has now been held in contempt,” the lawsuit explains.
APPLE’S ALLEGED VIOLATIONS EXPLAINED
The lawsuit states that Apple penalized developers who sought to use linked payments with fees that rendered it economically non-viable. Apple executives up to the highest levels (including Apple CEO Tim Cook) also worked on “scare screens” and other “frictions” purposefully designed to discourage linked-out payments, all while knowing that this was the very competitive payment alternative the injunction aimed to facilitate.
“Apple’s scheme worked as planned,” the lawsuit states. “Although the injunction has been in ‘effect’ for over 15 months, Apple has been able to identify only 34 developers who have even applied to offer linked-out payments through their apps. This represents an infinitesimal 0.025% of the 136,000 developers who offer apps through the App Store.”
The court ultimately held that Apple willfully violated the injunction to protect its revenues, and then “reverse engineered justification[s] to proffer to the Court” often with “lies on the witness stand.” The evidence showed that while one senior Apple executive “advocated that Apple comply with the Injunction,” Mr. Cook ignored this advice and allowed others in “his finance team to convince him otherwise. Cook chose poorly.”
HARM TO IOS DEVELOPERS
The lawsuit’s named plaintiff is Pure Sweat Basketball Inc., a corporation offering an app used by players across the country to train and improve their basketball skills. Had Apple complied with the injunction, as required, Pure Sweat would have been able to sell subscriptions to its app directly to its customers, using “link-out” buttons directing customers to Pure Sweat’s own website. As a result of Apple’s misconduct, potentially more than 100,000 similarly situated app developers were likewise prevented from selling in-app products (including subscriptions) directly to their customers, and were forced to pay Apple commissions on in-app sales Apple was not entitled to receive.
ABOUT APPLE’S ALLEGED COVER-UP
According to the lawsuit, Apple’s scheme to violate the injunction came to light during two evidentiary hearings in which the court heard evidence, analyzed Apple internal business documents and interrogated Apple’s reasoning for its conduct. Apple had attempted to shield its incriminating internal analyses by claiming they were privileged, but the district judge held that Apple’s privilege claims were improper and sanctionable.
HOW CAN A LAWSUIT HELP?
Had Apple complied with the injunction as issued, Apple’s own studies show that developers would have saved potentially billions in in-app purchase commissions. According to the class action, “These are ill-gotten gains and Apple should not be permitted to retain them. If it does, Apple will have profited handsomely for violating a court order and scheming to retain revenues to which it had no legal entitlement. That is not an outcome the law, or principles of equity, permit.”
“Apple should be made to disgorge its wrongful profit, and Developers are entitled to be made whole. That is what this lawsuit seeks to accomplish,” the lawsuit states.
YOUR APP DEVELOPER RIGHTS
Our legal team believes Apple’s policies violate the law and restrict consumer choice for the sake of profit. The lawsuit seeks to put an end to Apple’s conduct and brings claims of unjust enrichment, tortious interference with business expectancy and other violations of California law.
EXPERIENCED HIGH-TECH LAW FIRM
Hagens Berman is one of the most prominent plaintiffs’ litigation law firms in the U.S. and has achieved settlements valued at more than $320 billion in lawsuits across its practice areas. The firm successfully pursued antitrust claims against Apple, securing a settlement valued at $616 million on behalf of e-book purchasers and a settlement valued at $100 million on behalf of iOS app developers. Potential claims will be handled by lawyers experienced in these matters.
NO COST TO YOU
In no case will any class member be asked to pay any out-of-pocket sum. In the event Hagens Berman or any other firm obtains a settlement that provides benefits to class members, the court will decide a reasonable fee to be awarded to the class's legal team.
