Apple App Store Class Action

A class action has been commenced in the Federal Court of Australia by David Anthony (First Applicant) and Dark Ice Interactive Pty Limited (ACN 153 761 276) (Second Applicant) against Apple Inc and Apple Pty Limited (together, Apple).  The action is brought by the Applicants on their own behalf and on behalf of app developers who sold their apps and in-app content via the Australian App Store storefront, as well as eligible Australian iPhone and iPad users who purchased iOS or iPadOS apps and in-app digital content from iOS or iPadOS apps via the Australian App Store storefront, from 6 November 2017 to 20 June 2022 (Relevant Period), and who suffered loss or damage by reason of Apple's alleged conduct (See 'Are you a class member?' below).

The action alleges that Apple engaged in anti-competitive conduct in contravention of Australian law, which enabled it to charge commission rates on purchases of iOS or iPadOS apps and in-app digital content from iOS or iPadOS apps over and above what it would otherwise have been able to charge in a competitive market. The action seeks compensation for eligible purchasers and app developers from Apple for the alleged excess prices charged. Apple denies the allegations.

The Federal Court has ordered the Opt Out Notice be published for the information of persons who might be members of the class on whose behalf the action is brought and may be affected by the action.  

A class action is an action that is brought by one person or a small number of persons (Applicant(s)) on their own behalf and on behalf of a class of people (class members) against another person or persons (Respondent(s)) where the Applicants and the class members have similar claims against the Respondent(s). 

Class members in a class action are not individually responsible for the legal costs associated with bringing the class action.  In a class action, only the Applicants are responsible for the costs (See 'How is the Apple App Store Class Action being funded and will you be liable for legal costs if you remain a class member?')

Class members are “bound” by the outcome in the class action, unless they have opted out of the proceeding.  A binding result can happen in two ways being either a judgment following a trial, or a settlement at any time. If there is a judgment or a settlement of a class action class members will not be able pursue the same claims and may not be able to pursue similar or related claims against the Respondent/s in other legal proceedings.  Class members should note that:

(a) in a judgment following trial, the Court will decide various factual and legal issues in respect of the claims made by the Applicants and class members.  Unless those decisions are successfully appealed, they bind the Applicants, class members and the Respondent.  Importantly, if there are other proceedings between a class member and the Respondents, it may be that neither of them will be permitted to raise arguments in that proceeding which are inconsistent with a factual or legal issue decided in the class action.

(b) in a settlement of a class action, where the settlement provides for compensation to class members it may extinguish all rights to compensation which a class member might have against the Respondents which arise in any way out of the events or transactions which are the subject-matter of the class action.

If you consider that you have claims against Apple which are based on your individual circumstances or otherwise additional to the claims described in the class action, then it is important that you seek independent legal advice about the potential binding effects of the class action before the deadline for opting out. 

This class action is brought by the Applicants, David Anthony and Dark Ice Interactive Pty Limited, on their own behalf and on behalf of all persons who are “class members” as defined in the proceeding.

The action concerns Apple’s conduct in relation to its Australian App Store storefront.  Apple Inc developed and operates the Australian Apple App Store storefront and the payment solution for both app and in-app purchases by Australian iPhone and iPad users. Apple Pty Limited, among other things, collects and receives payments from purchasers of iOS or iPadOS apps and in-app digital content from iOS or iPadOS apps. Apple typically charges developers either a 30% or a 15% commission on these purchases.

The Applicants allege in the statement of claim in Federal Court proceeding David Anthony & Anor v Apple Inc & Anor (VID341/2022) that from 6 November 2017 to 20 June 2022:

• Apple had a substantial degree of power in the markets for the purchase of apps from the Australian App Store storefront (the iOS App Distribution Markets) and for the purchase of digital content from within such apps (the iOS In-App Payment Solution Market).
  
  
• Apple was able to impose terms on iOS app developers which restricted the ability of these developers to offer other means of iOS app distribution and payment for such apps and in-app digital content purchases from those apps.
  
  
• As well, Apple was able to charge commission rates on those purchases over and above what it would otherwise have been able to charge in a competitive market.
  
  
• By the above conduct, Apple Inc and/or Apple Pty Limited, among other things:
  • gave effect to provisions in a contract which restrained developers from distributing iOS apps other than through the Apple App Store and from using payment solutions other than those controlled by Apple;
  • supplied services to iOS app developers on the condition that those developers not use alternative means of distributing iOS apps and payment solutions other than those controlled by Apple;

• The above conduct had the purpose, effect or likely effect of substantially lessening competition in the iOS App Distribution Markets and/or the iOS In-App Payment Solution Market, in contravention of ss. 45, 46 and 47 of the Competition and Consumer Act 2010 (Cth).
  
  
• This conduct resulted in higher prices for users who purchased apps and in-app digital content from those apps through the Australian App Store storefront.
  
  
• The above conduct also was, in all the circumstances, unconscionable in contravention of s. 21 of the Australian Consumer Law.

The class action seeks compensation for eligible purchasers and app developers from Apple for the alleged excess price charged.

The Respondents to the class action are Apple Inc and Apple Pty Limited. The Respondents deny the allegations and are defending the class action. 

A First Stage Trial of the class action (First Stage Trial) is scheduled to begin on 18 March 2024 and will run for approximately 16 weeks. At the First Stage Trial, the Court will determine the Applicants' claims that Apple contravened the provisions of the Competition and Consumer Act 2010 (Cth) and Australian Consumer Law listed above, and that this alleged conduct allowed it to charge commission rates on purchases of iOS or iPadOS apps and in-app digital content from iOS or iPadOS apps over and above what it would otherwise have been able to charge absent the conduct. 

The First Stage Trial will be heard together with a trial in a separate but related legal action that has been commenced by Epic Games, Inc and Epic Games International S.à r.l. (together, Epic Games), in which Epic Games alleges that Apple contravened the same provisions of the Competition and Consumer Act 2010 (Cth) and Australian Consumer Law listed above. 

The Applicants cannot, without leave of the Court, adduce any evidence on these issues except for expert economic evidence.

The parties have agreed that the Applicants and class members (who have not opted out) will be bound by all findings of fact, findings of law and mixed findings of fact and law made as part of the First Stage Trial.   

If the class action is successful at the First Stage Trial, a second stage trial may be held at a later date to determine the loss or damage suffered by class members as a result of Apple’s conduct.

A potential conflict of interest may arise between app developer class members and app purchaser class members on questions relating to the allocation of loss and damage between them, including in relation to questions concerning the extent to which app developer class members would have passed on any reduction in commission rates to app purchaser class members. The Applicants will take appropriate steps to manage any potential conflict of interest.

An Applicant in a class action does not need to seek the consent of class members to commence a class action on their behalf or to identify a specific class member. However, class members can cease to be class members by opting out of the class action. An explanation of how class members are able to opt out is found below in the section headed “What do class members need to do?”.

You are a class member if at any time during the Relevant Period you:

• Purchased: (i) an app on an Apple iPhone or Apple iPad from the Australian App Store storefront; and/or (ii) in-app digital content within such an iOS or iPadOS app; and suffered loss or damage by reason of the conduct of Apple pleaded in the Further Amended Originating Application and Further Amended Statement of Claim;
  
• Supplied: (i) an iOS or iPadOS app on iOS Devices via the Australian App Store storefront; and/or (ii) in-app digital content within such iOS or iPadOS app; and suffered loss or damage by reason of the conduct of Apple pleaded in the Further Amended Originating Application and Further Amended Statement of Claim; and

Were not, during any part of the Relevant Period, and are not, as at the date of this Notice, any of the following:

• a related party (as defined by s 228 of the Corporations Act 2001 (Cth) (Corporations Act) of any Respondent;
• a related body corporate (as defined by s 50 of the Corporations Act) of any Respondent;
• an associated entity (as defined by s 50AAA of the Corporations Act) of any Respondent;
• an officer or associate (as defined by s 9 and s 11 of the Corporations Act) of any Respondent; or
• a Justice or the Chief Justice of the Federal Court of Australia, or a Justice or the Chief Justice of the High Court of Australia;
• a solicitor or barrister acting for the Applicants or the Respondents;
• an expert or professional adviser briefed in relation to this proceeding;
• an employee or officer of a litigation funder providing funding for the proceeding; or
• an employee or officer of an insurer providing after the event insurance for any party to the proceeding.

You may also be excluded from participating in the class action if you have released Apple from any claims related to the facts underlying this class action, for example, in the context of a class action overseas.    

The Apple App Store Class Action is being funded partly by a litigation funder, CF FLA Australia Investments 2 Pty Ltd, which is an Australian proprietary company owned and controlled by funds managed by Fortress Investment Group LLC (CF FLA). Phi Finney McDonald and Maurice Blackburn are deferring payment of the portion of their legal fees that are not being paid by CF FLA. For more information about how the class action is funded please refer to the Opt Out Notice or contact us using the contact details provided.  

You will not become liable for any legal costs simply by remaining as a class member.  However, if any compensation becomes payable to you as a result of any order, judgment or settlement in the Apple App Store Class Action, the Court may make an order that some of that compensation be used to help pay a share of the costs which are incurred by the Applicant in running the class action, but which are not able to be recovered from the Respondents. Any such amounts will only be payable in the event of a successful outcome by way of a deduction from any compensation to which you become entitled and will never exceed the amount of compensation to which you may otherwise become entitled. For more information about legal costs please refer to the Opt Out Notice or contact us using the contact details provided.

Unless you opt out, you will be bound by any settlement or judgment of the Apple App Store Class Action.  If the class action is successful you will be entitled to share in the benefit of any order, judgment or settlement in favour of the Applicant and class members, although you may have to satisfy certain conditions before your entitlement arises.  If the action is unsuccessful or is not as successful as you might have wished, you will not be able pursue the same claims and may not be able to pursue related claims against the Respondents in other legal proceedings.

If you want to register to be kept informed about developments, please do so by following the Registration link above. 

How to remain a class member:

If you wish to remain a class member there is nothing you need to do at the present time.  The Applicant will continue to bring the proceeding on your behalf up to the point where the Court determines those questions that are common to the claims of the Applicant and the class members.  If you have registered your details you will be kept informed. 

How can you opt out of the class action:

If you do not wish to remain a class member you must opt out of the class action.  If you opt out you will not be bound by or entitled to share in the benefit of any order, judgment or settlement in the class action, but you will be at liberty to bring your own claim against the Respondents, provided that you issue Court proceedings within the time limit applicable to your claim.  If you wish to bring your own claim against the Respondents, you should seek your own legal advice about your claim and the applicable time limit prior to opting out.

If you wish to opt out of the class action you must do so by completing an “Opt Out Form” in the form shown in Schedule 1 below (Form 21 of the Court’s approved forms), then returning it to the Registrar of the Federal Court of Australia at the address on the form. 

IMPORTANT: the Opt Out Form must reach the Registrar by no later than 4:00 pm (AEDT) on Friday, 23 February 2024, otherwise it will not be effective.

Each class member seeking to opt out should fill out a separate Opt Out Form.  If you are opting out on behalf of a company or business please provide your name, the name of the company or business and your position within the company or business (e.g. director or partner).