Apple Has ‘Monopoly Power’ in Subscription Gaming, Says Suit Seeking Class-Action Status
Apple “foreclosed competition” in iOS subscription-based mobile gaming, and owns “monopoly power” in the relevant market with no “pro-competitive justifications” for that harmful “misconduct,” alleged a complaint (in Pacer) Thursday in U.S. District Court in San Jose that seeks class-action status. Coming nearly two months after Epic Games sued to break Apple’s alleged stranglehold on the iOS app distribution and payment market (see 2008130048), the new complaint argues Apple monopolization is forcing consumers to pay “supracompetitive prices” for the Apple Arcade mobile gaming subscription service.
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New Jersey resident and iPhone owner John Pistacchio has paid $4.99 a month since March to subscribe to Apple Arcade and “has suffered and will continue to suffer injury, including monetary losses,” said the complaint. Pistacchio also was harmed through limited choice, “stymied innovation” and reduced quality of service “associated with subscription-based mobile gaming services on iOS as a result of Apple’s anticompetitive conduct,” it said. The suit identifies the potential class as all U.S. consumers who subscribed to Apple Arcade from its September 2019 launch until "the anticompetitive effects of Apple’s anticompetitive conduct ceases.” Apple Arcade subscriptions are projected to number 12 million by the end of 2020, it said.
Apple imposes technical restrictions that prevent iOS users from accessing services that compete with Apple Arcade, said the complaint. That forces consumers to shop the App Store for downloads to service their devices, it said: “There is no alternative.” Apple “pre-installs the App Store on the home screen of every iOS device it sells and disables users’ ability to uninstall” it, said the suit. The company also abuses its App Store “review guidelines” to safeguard its monopoly and exclude rival services, said the complaint.
The iPhone maker “outright rejected” competing services that applied for listings on the App Store in “perhaps its most flagrant anticompetitive act,” said the suit: It “foreclosed competition” by approving only “stripped-down versions” of competing services. “Apple Arcade stands virtually alone in the relevant market.” Though Apple recently updated its guidelines to expressly permit game streaming services such as Stadia and Microsoft xCloud on the App Store, it “continues to impose restrictions that prevent these services from meaningfully competing with Apple Arcade in any way,” said the suit.
Apple’s conduct “extinguishes” consumer choice and stifles innovation, said the complaint. Competing subscription services are “prevented from experimenting with alternative ways to list their games in the App Store or developing methods of upgrading their game offerings other than through in-app purchases,” it said. “Consumers are therefore denied the opportunity to experience new and innovative gaming subscription services and content.”
The suit alleges unjust enrichment, unreasonable restraint of trade under the Sherman Act and violations of California unfair-competition laws. It seeks compensatory damages, plus penalties and “statutory interest” to punish Apple’s “egregious conduct.” It wants a "constructive trust" created from which plaintiff Pistacchio and members of the class can get "restitution." Apple didn’t respond to questions Friday.