App Store monopoly claim rejected by federal court; Apple wins

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A class action lawsuit alleging that Apple has an App Store monopoly has been rejected by a federal court judge, in a 34-page ruling.

Part of the ruling essentially said that the plaintiffs did a poor job in stating their case, but another element potentially puts Apple in a strong position when it comes to defending other antitrust cases against the App Store …

The lawsuit was led by the developers of Coronavirus Reporter, whose app was banned by Apple under rules, which only allow COVID-19-related apps from official governmental health bodies.

Courthouse News reports that the developer initially wanted a preliminary injunction prior to a full hearing, but the judge rejected the claim in its entirety.

The developers claimed Apple used its monopoly power to exclude Coronavirus Reporter from the App Store to benefit its own “institutional partners.” Apple rejected the software under a policy that bans Covid-related apps unless they are submitted by a recognized health entity such as a government agency or medical institution. The developers said Apple used similar policies to exclude or suppress the rankings of other apps for anticompetitive reasons.

Coronavirus Reporter and its co-plaintiffs sought a preliminary injunction that would temporarily block Apple from keeping certain apps out of its App Store and charging developers a $99 yearly App Store submission fee.

In a 34-page ruling issued Tuesday, U.S. District Judge Edward Chen denied the motion for an injunction as moot after dismissing the lawsuit.

A significant part of the ruling was that the lawsuit failed to properly define the market in which it claimed Apple held a monopoly.

The developers described multiple markets in their complaint, including the “smartphone market,” “iOS institutional app market,” and the “national smartphone app distribution market.”

In subsequent briefs, the developers sought to clarify that Apple dominates two primary markets, defined as the “U.S. smartphone market” and “U.S. iOS smartphone market.” They also identified five downstream markets, including markets for wholesale app competition, iPhone apps, permission tokens to launch iOS apps, onboarding software and access to iOS users.

Chen concluded those market definitions were unclear and “failed to pass muster.”

As our antitrust guide explains, the entire debate centers on the definition of the word “market.”

Apple argues that it does not have a dominant position in this market, as it considers the relevant market to be either “smartphones” or “apps.” Since the company holds a minority share of the smartphone market in most of the countries in which it operates, it believes it cannot be considered to have a dominant position.

Competition regulators tend to take the view that the relevant market is “iOS apps,” and here Apple has a 100% monopoly on their sale and distribution. Edge cases aside, there is no way for a developer to bring an iOS app to market without selling it through the App Store.

But the judge went further, ruling that even where Apple does undeniably hold a monopolistic position, that isn’t necessarily an antitrust violation.

Most of the markets identified are “single-brand markets” in which Apple is “inherently and necessarily” the only participant, Chen wrote. The judge said the developers offered no facts that would justify an “extremely rare” finding that a single-brand market gives rise to an antitrust claim […]

Chen compared the App Store to a newspaper that publishes advertisements. If a newspaper accepts some ads and refuses to print others, the rejected advertiser has not suffered an antitrust injury, the judge wrote. A true antitrust injury would look more like a newspaper barring advertisers to stop them from promoting a competing news service, he explained.

This is now an argument that can be used by Apple, with the authority of a federal court ruling behind it. However, the plaintiffs plan to appeal, and the antitrust claims continue across multiple countries.

Via Patently Apple. Photo: Pxhere.

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