App Store Agreements Are 'Continuing' Antitrust Violations: Appellant
The U.S. District Court for Northern California’s “change” theory, applied in SaurikIT v. Apple, is “tantamount to the idea that because a business has committed an antitrust violation before, it can continue to commit the same antitrust violation with impunity.” So argued SaurikIT, parent of the Cydia App Store, in the opening brief of its 9th U.S. Circuit Appeals Court appeal (docket 22-16527) of the district court’s May dismissal of certain claims barred by the statute of limitations.
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SaurikIT brought antitrust claims against Apple in 2020, saying Apple’s requirement that all iOS app developers must agree not to distribute through any channel except the App Store -- and to use only Apple’s in-app programming interface for payment processing -- gives Apple a monopoly on both. The Cydia platform allows iOS users to buy and download apps on “jailbroken” devices. It noted Apple generally takes a 30% cut of the more than $50 billion generated in these markets every year.
U.S. District Judge Yvonne Gonzalez Rogers rejected most of Cydia’s claims as time-barred, “despite the continuing violation doctrine and the unchallenged allegations that Apple entered into millions of new anticompetitive agreements during the limitations period" and enforced preexisting and newly entered anticompetitive agreements "from the same ongoing scheme” during the period, SaurikIT said.
Apple’s new agreements and enforcement of agreements during the limitations period are “continuing violations” of antitrust laws, SaurikIT alleged. The district court ruled all of SaurikIT’s claims except for technical changes Apple made in 2018 and 2019 were barred by the statute of limitations, but SaurikIT argues Apple’s entering into agreements, and enforcement of agreements, during the limitation period are “overt acts in support of a continuing violation of antitrust laws.”
The district court “erred” in refusing to accept “the well-established principle that new agreements and enforcement are overt acts that restart the statute of limitations,” SaurikIT said. It referenced “millions” of new anticompetitive agreements that are “restraining consumers on every new device and distributors on every new or revised app,” making it a “quintessential case for a continuing violation.”
The brief cited Samsung v. Panasonic, where the lower court dismissed the antitrust suit as time-barred in a case involving two licenses for royalty payments on SD cards. The 9th Circuit reversed the decision, saying the adoption of the second license was a “new and independent act” that caused “new and accumulating injury” because the prior license didn’t cover second-generation SD cards. A new agreement covering new products “constitutes an overt act for a continuing violation,” SaurikIT asserted.
Consumers who don’t want to void an iPhone warranty can download only iOS apps through the App Store, making each new device activation “a new anticompetitive overt act,” said the brief. Each iOS device sale is accompanied by a “new anticompetitive agreement,” so each iOS device activation “harms Cydia and is an overt act that restarts the statute of limitations.”
Apple also “coerced” iOS app developers into accepting “hundreds of thousands of anticompetitive agreements” on app distribution during the limitations period, the brief said. Every new developer and app uploaded to the App Store is based on an agreement that “harms competition” by precluding the developer from distributing through anyone but Apple, SaurikIT said, noting 600,000 new apps were added to the store 2014-2020.
In August, SaurikIT filed a motion to dismiss claims with prejudice so it could appeal its case in the 9th Circuit, where the parties and court will have “valuable guidance that will reduce the risk of multiple trials” and save each side “millions of dollars” in discovery costs and attorneys’ fees. Apple didn’t oppose the motion.