Antitrust Law Doesn’t Prevent Apple From Rejecting Apps From Its App Store–Coronavirus Reporter v. Apple
This case involves two apps that Apple rejected from its app store. The Coronavirus Reporter app “sought to collect ‘bioinformatics data’ from users about COVID-19 symptoms that it would then share with ‘other users and [unidentified] epidemiology researchers.'” Sounds sketchy as hell. Apple rejected it based on its policy that any COVID-19 apps had to come from the government or medical institutions. Apple rejected the Bitcoin Lottery app based on its anti-blockchain policy. The app vendors sued Apple for rejecting the apps.
Antitrust. The court couldn’t sufficiently discern the relevant market from the complaint, so the court can’t figure out any cross-elasticities. The court rejects the plaintiffs’ attempts to create single-brand markets. Other problems: the plaintiffs defined their markets on dimensions other than product markets, and the complaint didn’t properly acknowledge the two-sided nature of the markets.
With respect to injury, “None of the allegations in the FAC allege harm generally to the market of transactions for apps across a relevant market.” Plus:
its decisions as to which apps are allowed to sell through the App Store is not an act that in itself causes harm the antitrust laws were designed to protect. Plaintiffs failed to make any allegation the Apple benefits from its rejection of apps or from suppression of apps in the search function. There is no showing that Apple is reaping the fruits of anticompetitive conduct. The deficiency of Plaintiffs’ claim in asserting an antitrust injury is demonstrated by the following analogy. Query: if the only newspaper in town decides which advertisements may properly be posted or which advertisements to accept, does a rejected advertiser suffer an anti-trust injury? No. That is not the kind of injury antitrust laws are intended to protect.
Breach of Contract. The plaintiffs claim Apple’s developer agreement said “that entities with ‘deeply rooted medical credentials’ were permitted to publish COVID apps on the App Store.” The court says that’s not an affirmative promise to approve all such apps; plus, the contract reserved Apple’s right to decide in its sole discretion.
Though this case comes from an antitrust perspective, it fits nicely into the genre of account termination/content removal cases; and this opinion supplements the list for the article Jess and I put together earlier this year. Apple decided that the apps weren’t appropriate for its audience, and the plaintiffs sought to overturn Apple’s discretion to make that decision. (Indeed, the plaintiffs said they sued to redress Apple’s “curation” and “censor[ship]” of smartphone apps). We need app stores to retain editorial discretion as a public safety measure. Even if these two apps (Coronavirus Reporter and Bitcoin Lottery) were not scams (a topic I have no opinion about), others in the same niche almost certainly would be scams–and dangerous ones at that. So the legal and policy stakes are high here.
This opinion provides more evidence why the legal standard from the Enigma v. Malwarebytes ruling is so problematic. That case said that allegations of “anticompetitive animus” can get around Section 230. Here, the plaintiffs didn’t allege direct competition with Apple, but their framing nevertheless might fit into the Malwarebytes exception–and every rejected app could make the same arguments. Section 230 proved irrelevant to this case, and this opinion reminds us that must-carry cases fail for many reasons, not just Section 230. (Though app stores have used Section 230 for their app rejection/removal decisions).
Case citation: Coronavirus Reporter v. Apple, Inc., 2021 WL 5936910 (N.D. Cal. Nov. 30, 2021)