[ad_1]
The company behind Cydia, an iPhone app store that launched before Apple’s own App Store, sued Apple arguing that Apple has monopolized the market for iOS app stores, violating antitrust law in the process.
When the iPhone was introduced in 2007, it had no mechanism to run third-party software natively. Instead, Steve Jobs encouraged developers to create web applications that would run in the iPhone’s Safari browser.
But people soon figured out how to jailbreak the iPhone and started building iPhone apps without any help from Apple. Seeing an opportunity, software developer Jay Freeman created a program called Cydia that made it easy for users to download and install native iPhone apps, an app store before the App Store.
A few months later, Apple introduced its own official App Store. Since then, Apple has tried to push Cydia and other unauthorized app stores off the market using both technological and contractual restrictions. For example, anyone who wants to sell software through the official App Store must agree not to offer the software in competing app stores like Cydia.
In a lawsuit filed Thursday in federal court in California, the company behind Cydia argues that it was a flagrant violation of antitrust law. “Apple has wrongly acquired and maintained monopoly power in the iOS application distribution market and in the iOS application payment processing market,” the lawsuit argues.
The lawsuit points to several ways this has hurt consumers and the applications industry. Most obviously, Apple charges a 30 percent commission on most app purchases, which was recently reduced to 15 percent for apps making less than $ 1 million. Cydia maintains that Apple could not get away with such high fees in a competitive market.
Cydia also maintains that Apple takes a long time to approve applications and limits direct communications between developers and their users. Again, Cydia argues that increased competition would force Apple to improve its game.
An Apple spokeswoman did not provide an official comment on the lawsuit. But we can get an idea of the company’s likely response by looking at Apple’s August filing in Epic’s antitrust lawsuit. In that case, Apple argued that its app store strategy could not have violated antitrust law because it had “exponentially increased production, lowered prices and dramatically improved consumer choice.”
Apple also argued in the Epic case that there was no separate “iOS Application Distribution Marketplace.” Rather, in Apple’s view, the iPhone and its app store are two parts of one product. In Apple’s view, the antitrust law gives Apple wide flexibility in deciding how to monetize this platform.
This is a recurring theme in antitrust cases related to the technology sector. In the 1990s, the United States government sued Microsoft for linking its operating system to its web browser. Microsoft insisted that the Internet Explorer browser was not a separate product, but rather a new feature of Windows. A trial court rejected Microsoft’s arguments, but that decision was partially overturned on appeal. The case was settled shortly after George W. Bush took office, and Microsoft agreed to make modest changes to its business model.
Since then, there have been few, if any, successful antitrust lawsuits challenging this type of integration between technology products. And Apple notes that it is far from the only hardware manufacturer that strictly controls third-party software on its platform. For example, Apple argues that Cydia’s argument implies that Sony, Microsoft and Nintendo are also monopolists, as they try to control who makes software for their game consoles.
