Mobile app developer Kosta Eleftheriou, who publicly called out Apple earlier this year for negligence with regard to policing iOS scams and copycat apps on the App Store, has filed a lawsuit against the iPhone maker in California. He’s accusing the company of exploiting its monopoly power over iOS apps “to make billions of dollars in profits at the expense of small application developers and consumers.”
Eleftheriou’s company KPAW LLC, which he co-owns with his partner Ashley Eleftheriou, filed its complaint in Santa Clara County on Wednesday. It details the development and release timeline of Eleftheriou’s Apple Watch keyboard app FlickType.
At the time he began accusing Apple of abetting App Store scams early last month, Eleftheriou revealed that his FlickType app had been targeted by competing software he says either didn’t work well or didn’t work at all, and yet nonetheless chipped away at this sales and App Store rankings through false advertising and the purchase of fake reviews. After he complained, he said Apple did not do enough to combat the scams, though Apple did later remove some of the apps he called attention to.
The App Store has a big problem
You: an honest developer, working hard to improve your IAP conversions.
Your competitor: a $2M/year scam running rampant.1/
— Kosta Eleftheriou (@keleftheriou) January 31, 2021
Eleftheriou’s claims join a chorus of growing complaints against Apple and the App Store. Some developers, competing tech companies, regulators, and now state lawmakers have accused the mobile marketplace of being a monopoly in software distribution that harms competition and keeps consumers paying higher prices.
Epic Games, the maker of Fortnite, is targeting both Apple and Google with antitrust lawsuits over the removal of the battle royale game last summer for use of an alternative in-app payment system. Meanwhile, a group of app makers, ranging from Epic to Spotify to Tinder parent company Match Group, have begun lobbying state lawmakers to take up the fight against the App Store and Google Play Store, with surprising success so far in Arizona and numerous other bills around the country in the works, too.
In the complaint, Eleftheriou goes further into detail about what he claims is wrongful behavior from Apple, including alleged false advertising, breach of its developer agreement, and fraud. One notable claim involves Apple trying to acquire FlickType, after which Eleftheriou says he faced “roadblock after roadblock” to selling his software on the App Store. The complaint suggests Apple chose not to take action on scam and copycat apps in an effort to force Eleftheriou to sell his app to Apple. “Evidently, Apple thought Plaintiff would simply give up and sell its application to Apple at a discount,” the complaint reads.
At the heart of the dispute appears to be conversations Eleftheriou had with an Apple executive Randy Marsden, who led mobile keyboard technology at the company and later held the position of Text Input Special Projects Manager. Marsden is well known in the tech industry for co-founding the keyboard technology startup Swype, and for later co-founding the app Dryft, which was acquired by Apple in 2015. The acquisition resulted in Marsden being put in charge of the iOS keyboard at Apple from 2014 to 2018.
Eleftheriou says he was approached by Marsden, who expressed interest in having Apple acquire his software to improve typing on the Apple Watch. Yet, the negotiations went quiet, and afterward, Eleftheriou claims Apple removed his FlickType keyboard app and refused to approve future versions as well as a note-taking variant, on what he thinks are suspicious grounds.
Only later did Apple permit both apps after months of appeals and after Eleftheriou let countless other app makers integrate his technology. Those apps using the FlickType tech were approved without issue, the complaint says. Meanwhile, many other wearable and mobile keyboard apps Eleftheriou characterizes as scams were also approved and allowed on the App Store. “By this time, Apple’s wrongful rejections had already cost Plaintiff over a year of revenue,” the complaint reads.
Eleftheriou’s complaint says this is evidence of Apple “flexing its monopoly muscle against potential competition”:
Apple entices software application developers like Plaintiff to develop innovative applications with the promise of a fair and secure App Store in which to sell them. In truth, Apple systematically flexes its monopoly muscle against potential competition through the App Store and profits from rampant fraudulent practices. If Apple cannot buy a desired application from a developer on the cheap, Apple attempts to crush that developer through exploitive fees and selective application of opaque and unreasonable constraints against the developer.
At the same time, Apple permits other developers that Apple does not view as real competition, including scam competitors, to peddle similar, inferior products because Apple profits from their sales. Scammers oftentimes use screenshots and videos taken from legitimate developer’s applications and manipulate their ratings. Apple does little to police these practices because it profits from them. Apple then lies to its regulators by asserting that it must maintain its monopoly power over the sale of Apple-related applications to protect consumers, when, in fact, Apple lets them get ripped off and exploits the developers trying to deliver innovation to consumers.
Eleftheriou says even after his app became the No. 1 paid app on the App Store after it was approved, earning him $130,000 in its first month of release, he had to face down a wave of scam apps and copycat software that targeted FlickType after its visible success.
“Despite possessing massive resources and technological savvy, Apple intentionally fails to police these fraudsters, costing honest developers millions, and perhaps billions, while Apple continues to amass huge profits for itself,” the complaint reads. “Apple holds both its device users and developers hostage. Yet each time it faces antitrust claims, Apple justifies its monopoly by claiming it is necessary to protect its users and developers from unscrupulous conduct and ensure a fair competitive marketplace for the benefit of both. In truth, Apple turns a blind eye to rampant fraud and exploitation to make an easy profit.”
Eleftheriou is accusing Apple of false advertising, unfair competition in violation of California’s business and professions code, breach of good faith and fair dealing with regard to the Apple Developer Program License Agreement, fraud, and negligence and negligent misrepresentation.
Apple was not immediately available for comment.
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