Judge agrees to $100 million deal, but not lawyer’s share

A lawsuit filed by an Apple developer in 2019 was settled after the Cupertino company agreed to pay $100 million in compensation and the court approved the deal – but the judge in the case asked the lawyers to justify their $27 million reduction.

The antitrust case was brought by a number of smaller iOS developers, on the same basis as the separate case brought by Epic Games that Apple has a monopoly on selling iOS apps, forcing them to give the maker iPhone a 30% discount…

Background

The biggest antitrust complaint filed against Apple in multiple countries concerns the company’s total control of the iOS app market.

Apple argues that it does not have a dominant position in this market, because it considers that the relevant market is either that of “smartphones” or that of “applications”. Since the company holds a minority share of the smartphone market in most of the countries where it operates, it believes that it cannot be considered to have a dominant position.

Competition regulators tend to consider the relevant market to be “iOS apps”, and Apple has a 100% monopoly on their sale and distribution here. Edge cases aside, there’s no way for a developer to release an iOS app without selling it through the App Store.

Companies like Epic Games say they should be allowed to sell in-app purchases without Apple seeing a cut in their revenue. The argument here is that Apple is hurting developers by taking a chunk of their revenue, and consumers by forcing developers to charge more to compensate for Apple’s cut. Apple, in response, says it’s perfectly normal for a company to take a cut of the sales it facilitates.

Apple developer lawsuit

While 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 filed in the U.S. District Court for the Northern District of California in San Jose concerns allegedly anti-competitive practices by Apple by mandating only one app store for iOS devices, setting the stage for ‘Apple is abusing its market power. […]

Today’s lawsuit seeks to force Apple to end its unfair monopoly and allow competition in the distribution of iOS apps and related products, get rid of its pricing mandates and reimburse developers for overcharges due to the abuse of its monopoly power.

Two things have happened since the Apple Developers lawsuit was filed:

  • Epic Games’ more high-profile lawsuit ended in a compromise decision.
  • Apple has reduced its cut for 98% of developers from 30% to 15%.

This facilitated the settlement of the small developer’s separate lawsuit.

Apple’s $100 million settlement

Apple responded by offering to create a fund to help small developers. This proposal was accepted, subject to court approval.

The small developer relief fund created as part of the settlement will benefit more than 99% of U.S. iOS developers, whose revenue from sales of apps and in-app digital products through all associated accounts was less than $1 million per calendar year during the June 4 period. , 2015 to April 26, 2021. These developers can claim amounts from the fund ranging from minimums of $250 to $30,000, depending on their historical participation in the App Store ecosystem.

Developers had until May 20 of this year to submit their request for inclusion in the payment.

Law360 reports that the court approved the settlement, but questioned the attorney’s cut of $27 million. In particular, she wants to see the impact on developer payments.

A California federal judge said on Tuesday she would approve Apple’s $100 million settlement resolving class antitrust claims by app developers, but told class counsel she wanted more information about the “math” behind their $27 million attorney’s fee request and how much their fee offer will reduce claims by small app developers.

During a hearing in Oakland, Calif., U.S. District Judge Yvonne Gonzalez Rogers told class attorney Steve W. Berman of Hagens Berman Sobol Shapiro LLP, to submit a mathematical breakdown of how much each class member would receive if it awarded class attorneys $25 million in fees. instead of the $27 million they requested from the non-reversive settlement.

The judge noted that for some developers, who she says “really are the people who suffer the most,” the difference between $1,000 and $2,000 can be significant.

“That’s why I want to see the numbers,” she said.

The 9to5Mac take

It’s not unusual in class action lawsuits to see payouts in the tens of millions of dollars – but there are so many plaintiffs that the actual amount received by most is just a few dollars.

The Small Developer Assistance Fund gave claimants a better deal than most, as it allowed them to receive payouts ranging from $250 to $30,000, depending on their level of app store activity.

However, the other factor that impacts payouts is the fees charged by attorneys. Typically, it’s 25%, which means lawyers make tens of millions. This already seems wildly excessive for most cases, but in this one they demanded 27% – or $27 million. It’s good to see a judge demanding that this amount be justified.

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Jon J. Epps