Apple Agrees to Settle Class-Action Lawsuit

The Six Five team discusses Apple agreeing to settle their class-action lawsuit.

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Patrick Moorhead: So, Apple came out with an announcement last night that that says, “Hey, we’re the good guys here in respect to this class action lawsuit.” What’s going on, Daniel?

Daniel Newman: Yeah, this is a really interesting one and I really enjoyed your tweet. You came out, broke it first. Couple of people pinned it into my inbox right away. So over the last several months, you and I both had a lot of opportunities. I’ve made my Network Circuit, CNBC, iFinance, MarketWatch talking about regulatory. There was these new bills that got passed and we’re looking at the scrutiny, we’re looking at the future. We’re saying what antitrust legislation and what antitrust activities out there really have a shot of creating meaningful change?

So this is interesting because it was self-inflicted by Apple, essentially coming out and saying, “We’re going to settle. We are going to go ahead and we are going to settle a class action lawsuit with the developers.” The charges would’ve been led by the Spotify and Epic Games, those are the two most notable that have taken place over the past several months, where the developers are saying, “There is no option for us.” Apple controls over 50% of the US smartphone market and a significant chunk of the world. For a developer like Spotify and Epic Games that wants to give their users a chance to pay directly to them, to use the service on a device without having to go through the App Store was impossible. It didn’t exist, there was no way around it.

So Android has a way around it. It’s not a very good way around it, but you can do it. That was the thing, when I’ve been basically talking, Pat, to anyone that would listen. I was saying that this is the one that’s going to happen. Apple, if they do not change … First of all, they continue to raise their rates, which was very monopolistic, knowing they had so much power. Remember they went from 15% to 30%? And then on top of it, as Android and others gave some option, Microsoft probably leading the charge of being most open, yet not having necessarily the mobile OS in the same capacity, Apple just doubled down. They literally doubled down.

They doubled their price and they said, “No, we’re not changing. Our platform is awesome. You want to use it? You pay the toll.” That’s the thing, you can’t have a toll. In the anti-competitive space, you can’t toll people for using your platform. Although that’s what’s happening every day and that’s what regulators want to know. Can we fix this? Can we change this? I think the change is this. Platforms are largely awesome. I don’t care if you’re talking about Facebook, Apple, Amazon, they offer a ton of value. People’s experiences are better because of them, but you can’t give no option.

You give no option, now you are basically throwing out the checker flag for regulators to come after you. Apple said, “You know what? We’re going to pay now and hopefully get out of the way.” Pat, you and I both love The Wolf Of Wall Street, remember that inflection point where he could have taken the charge when the SEC gave him the chance to walk away and he didn’t walk away? Apple’s walking away and I think they’re making a good decision here that’ll probably slow down, major antitrust against their App Store activities. Although this may or may not be the end, but I think it’s a gesture with the intent of slowing down enforcement.

Patrick Moorhead: Yeah, I’m going to just say right now, this is not the end. This will have very little impact with Epic versus Apple and the global antitrust scrutiny of Apple. Essentially what Apple agreed to do was allow ISVs that are on the platform to email their customers, and also let them know that there’s another way to pay for it. By the way, that doesn’t include an alternative payment on the platform itself.

Daniel Newman: Nope.

Patrick Moorhead: And this was a group of small ISVs in this class action lawsuit and this gesture … I don’t always agree with what the folks over at The Verge say, but I just cracked up with some of their comments. We’re definitely on the same page on this. Any of the press that gets sucked into … By the way, awesome PR. I mean, Apple is incredible in PR. Really needs to really do the double-click on what this really means and what it doesn’t. I believe they’re going to be forced to accept alternative payment methods in the app itself, in the Apple platform. So with that, Daniel, any other thoughts?

Daniel Newman: No, I just wanted to say you made a great point. Looking at the macro here, the fact is, is this is … and I think hopefully when I summated this about being a gesture, what I guess I’m saying about the gesture here is that Apple is showing a willingness to acquiesce. And I’m wondering if they’re hoping that regulators will slow their roll. That’s all I’m getting at is, “Hey, slow your roll.” Because unquestionably, the most monopolistic behavior I could identify on all the platform companies was Apple’s App Store. It just was. There’s just nothing else that was more clear. There was other minutia about algorithms and ways that products are prioritized on different platforms using AI and search. But Apple was just like … they were just leaving their stuff, they’re leaving their laundry in the road and they were like, “Come after us.”

So this just to me, was a gesture. I just don’t know how much it’s going to work, but I feel like you said their PR so good, so much feel good about this. Like, “Look at these nice guys doing this great things for the little companies now.” I don’t know, it’s going to be a fast…

Patrick Moorhead: Daniel, I got to tell you, I think they knew they were going to lose this class action lawsuit, and so they just gave up.

Daniel Newman: It’s not charity, dude.

Patrick Moorhead: They’re smart. I mean, look what they did with Qualcomm. The second day of what’s called the Qualcomm ODM trial in San Diego, they saw what they were up against and they quit and they settled and signed a multi-year licensing agreement with Qualcomm. So Daniel, we have turned this into The Six Seven show. We need to wrap this up. I just want to say, thank you for everybody coming on the show. If you liked what you heard, you can find me on Twitter. If you disliked what you heard, you can find Daniel. Press that subscribe button, as I hear Mr. Fanzo, smash that, smash the button. Press the damn button.

Daniel Newman: What’s up Brian?

Patrick Moorhead: What’s up Brian? But here we are, have a great weekend. Thank you for tuning in and we appreciate you.

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.


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