Do You Really Know What’s Going On Behind the Scenes of Your Shiny New iPhone?

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By Alana Bess
Alana Bess is a freshman (C ‘25) in the College of Arts and Sciences from Los Angeles, California with an undecided major.

As of May 28, 2021, an estimated 1 billion people use iPhones worldwide [1]. As that number continues to grow, it is impossible to ignore Apple’s overwhelming success and influence on today’s world. Once a new iPhone comes out, thousands of people flock to Apple stores across the globe, as well as their website, to order the most updated model. Today’s widespread trends of consumerism and overconsumption don’t draw the line at iDevices either. Apple’s yearly “September Event” performs as the widely anticipated release day of the brand’s newest iPhone and Apple Watch, contributing to the problem of pervasive, extreme obsession with technology. Apple has even been accused of planned obsolescence multiple times in order to sway their consumers to buy the newest phone, pen, watch, or anything else under the sun [2].

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However, one of the largest problems Apple is facing today is its antitrust investigations. Apple imposes tight restrictions on their App Store developers, such as a 30% commission requirement. App developers also are unaware that other avenues to market their apps exist [3] because Apple has been covertly hiding such information from them. Apple argues that they don’t have a dominant position in the app market, but that is far from the truth. Apple has a monopoly on the iOS app market, and there realistically is no way for an application developer to bring their app to market without going through the official Apple App Store [4]. 

Epic Games, one of the world’s most popular gaming companies and the brains behind the almost universally played Fortnite, began a private lawsuit against Apple last summer as a result of the almost tyrannical approach Apple takes to running the App Store.. Epic Games had tried selling virtual currency on the mobile Fortnite App without using the official App Store as their medium in order to avoid the 30% tax they would have to pay to Apple. In response, Apple kicked Epic Games off of the App Store, which prompted Epic Games’ lawsuit. Epic CEO Tim Sweeney took to Twitter on April 28th to share his opinion, saying “Apple believes you should have a choice! Just not about payments. Nor stores. Nor a choice to play Fortnite. Nor a choice for developers to distribute apps directly. Apple thinks those choices should be Apple’s alone [5].”

Epic had the money to win the lawsuit, being worth around $30 billion, but courts are less likely to rule against large companies like Apple. An exception, though, is the 1992 Kodak Case where the Supreme Court ruled that Kodak did, in fact, violate antitrust laws by refusing to sell replacement parts to competitors [6]. The Apple-Epic lawsuit, however, truly revealed the immense power Apple has on today’s world. 

U.S. District Judge Yvonne Gonzalez Rogers ruled that Apple had been violating California laws by hiding that cheaper options for developers exist outside the App Store, but didn’t rule any further in favor of Epic. “Apple enjoys considerable market share of over 55 precent and extraordinarily high profit margins, [but] these factors alone do not show antitrust conduct,” Gonzalez Rogers found. “Success is not illegal [7].” Additionally, Gonzalez Rogers ruled that Fortnite still owes Apple 30% of the money they made when they introduced their virtual currency to their users outside of the App Store. 

To prevent the monopoly exploitation of consumers, antitrust laws have a long way to go. The injunction for Apple to revise their contracts in the Apple-Epic lawsuit are forms of progress, but beyond that, app developers should be able to market their apps without falling victim to 30% commission rates. Especially for growing developers, 30% can mean a world of a difference. Whether or not antitrust laws’ presence actually grows, it is extremely important to know what large monopolies are doing to their so-called “partners” in allowing their users the best possible experience. 

The opinions and views expressed in this publication are the opinions of the designated authors and do not reflect the opinions or views of the Penn Undergraduate Law Journal, our staff, or our clients.
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References:
[1] “IPhone Users and Sales Stats for 2021.” Backlinko, May 28, 2021. https://backlinko.com/iphone-users. 
[2] “Apple to Pay Consumers $3.4 Million in a Lawsuit over Programmed Obsolescence of Iphones in Chile- Technology News, Firstpost.” Tech2, April 8, 2021. https://www.firstpost.com/tech/news-analysis/apple-to-pay-consumers-3-4-million-in-a-lawsuit-over-programmed-obsolescence-of-iphones-in-chile-9507131.html. 
[3] Nylen, Leah. “Apple Wins Epic Antitrust Suit.” POLITICO. POLITICO, September 10, 2021. https://www.politico.com/news/2021/09/10/apple-wins-antitrust-challenge-as-judge-rules-commissions-dont-violate-law-511142. 
[4] Robertson, Adi. “A Comprehensive Breakdown of the Epic V. Apple Ruling.” The Verge. The Verge, September 12, 2021. https://www.theverge.com/2021/9/12/22667694/epic-v-apple-trial-fortnite-judge-yvonne-gonzalez-rogers-final-ruling-injunction-breakdown. 
[5] Sweeney, Tim. “Apple Believes You Should Have a Choice! Just Not about Payments. nor Stores. nor a Choice to Play Fortnite. nor a Choice for Developers to Distribute Apps Directly. Apple Thinks Those Choices Should Be Apple's Alone.” Twitter. Twitter, April 28, 2021. https://twitter.com/timsweeneyepic/status/1387256953475239943. 
[6] Marcus, Ruth. “Antitrust Case Ruling Goes against Kodak.” The Washington Post. WP Company, June 9, 1992. https://www.washingtonpost.com/archive/business/1992/06/09/antitrust-case-ruling-goes-against-kodak/42f08ac9-3d44-48be-b19d-b05f2ba3a163/. 
[7] Nylen, Leah. “Apple Wins Epic Antitrust Suit.” POLITICO. POLITICO, September 10, 2021.

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