An Apple developer lawsuit filed back in 2019 has been settled after the Cupertino company agreed to pay $100M in compensation, and the court approved the deal – but the judge in the case has asked the lawyers to justify their $27M cut.
The antitrust case was brought by a number of small iOS developers, on the same basis as the separate case brought by Epic Games: that Apple has a monopoly on the sale of iOS apps, leaving them forced to give the iPhone maker a 30% cut …
Background
The single biggest antitrust complaint levied against Apple in multiple countries has been over the company’s complete control of the iOS app market.
Apple claims it doesn’t have a dominating position in the market. It believes that because it holds only a small share of smartphone markets in many countries, it can not be considered to hold a majority.
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: It is impossible for an iOS developer to release an iOS app without it being sold through the App Store.
Epic Games and other companies argue for in-app purchase without Apple taking any cut. Apple takes a cut of developers’ income and forces developers to raise prices to compensate. This argument is made by Epic Games. Apple responds that it’s perfectly acceptable for companies to receive a portion of sales they facilitate.
Apple developer lawsuit
While the Epic Games lawsuit got all the attention, a smaller class action lawsuit on behalf of a number of smaller developers was also making its way through the courts.
The lawsuit brought by Apple in the U.S. District Court for the Northern District of California, San Jose, concerns Apple’s anticompetitive practice of mandating one iOS app store. This allows Apple to exploit its market power […]
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.
Two events have occurred since the Apple developers lawsuit was brought :
- The higher-profile Epic Games lawsuit ended with a compromise ruling.
- Apple reduced its cut for 98% of developers from 30% to 15%.
This made the separate small developer lawsuit easier to settle.
Apple’s $100M settlement
Apple replied by suggesting the establishment of a Small Developer Assistance Fund. This proposal was accepted, subject to court approval.
The Small Developer Assistance Fund created as part of the settlement will benefit over 99% of U.S. iOS developers, whose proceeds from app and in-app digital product sales through all associated accounts were less than $1 million per calendar year during the period from June 4, 2015 to Apr. 26, 2021. These developers can claim sums from the fund ranging between minimums of $250 to $30,000, based on their historic participation in the App Store ecosystem.
Developers were given until May 20 this year to submit their request for inclusion in the payout.
Judge questions $27M legal bill
Law360 reports that the court has approved the settlement, but questioned the $27M lawyer’s cut. In particular, she wants to see the impact on the developer payouts.
A California federal judge said Tuesday she’ll approve Apple’s $100 million deal resolving class antitrust claims by app developers, but told class counsel she wants more information about the “math” behind their $27 million attorney fee request and how much their fee bid will reduce claims by small app developers.
During a hearing in Oakland, California, U.S. District Judge Yvonne Gonzalez Rogers told class counsel Steve W. Berman of Hagens Berman Sobol Shapiro LLP, to submit a mathematical breakdown of how much each class member would receive if she awarded class counsel $25 million in fees instead of the $27 million they requested from the nonreversionary settlement.
The judge noted that for some developers, who she pointed out “really are the people who are taking the brunt of this,” the difference between $1,000 and $2,000 may be significant.
“That is why I want the numbers to be visible,” she stated.
9to5Mac’s Take
It’s not unusual in class action lawsuits to see payouts in the tens of millions of dollars – but there are so many claimants that the actual amount received by most amounts to just a few dollars.
The Small Developer Assistance Fund gave claimants a better deal than most, as it saw them receive payouts ranging from $250 to $30,000, depending on how active they were in the App Store.
However, the other factor to impact payouts is the fee charged by lawyers. Typically this is 25%, meaning that lawyers make tens of millions. This already seems crazily excessive for most cases, but in this one, they have demanded 27% – or $27M. It’s good to see a judge requiring justification for this sum.
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