Apple Arcade Class Action Lawsuit Alleges Company Has Gaming Monopoly

A New Jersey man has filed a class action lawsuit against Apple, accusing the company of monopolizing the market for subscription-based mobile gaming with its Apple Arcade service.

Plaintiff John Pistacchio, an iPhone owner and Apple Arcade subscriber, says he has been forced to pay “supracompetitive prices” for the service as a result of Apple’s anticompetitive conduct.

Pistacchio alleges that by “unlawfully foreclosing competition, Apple has eliminated consumer choice, stymied innovation, and reduced quality of service.”

According to the class action lawsuit, Pistacchio subscribed to Apple Arcade on March 21, 2020, and pays $4.99 per month for the service.

The plaintiff maintains Apple has a monopoly on the iOS subscription-based mobile gaming marking because its App Store is the only means through which such services are distributed to iOS users.

Developers who want to distribute through the App Store must follow strict Apple guidelines in order to be allowed to do so, the Apple Arcade class action lawsuit says.

Allegedly, no developer can distribute a subscription-based mobile gaming service to iOS users without agreeing not to distribute through third-party app stores.

Pistacchio also argues there are “no constraints on Apple’s market power in the relevant market.”

“App developers and publishers are likewise powerless to constrain Apple’s conduct by refusing to develop and publish apps for iOS,” the Apple Arcade class action lawsuit says.

In addition, the plaintiff argues Apple’s conduct “prevents innovation” and reduces the quality of subscription-based gaming available to iOS users.

In what Pistacchio calls Apple’s “most flagrant anticompetitive act,” the company repeatedly rejects competing services’ applications for approval for the App Store until the publishers either give up or strip their apps of “key features that compete with Apple Arcade.”

Pistacchio cites the example of Facebook Gaming: Because Apple only approved the service after it got rid of its game-playing feature, iOS users are not able to use the feature at all.

And iOS users can only download games as separate apps, resulting in a “bad experience for customers,” the lawsuit quotes a Microsoft spokesperson as saying.

“Gamers want to jump directly into a game from their curated catalog … and not be forced to download over 100 apps to play individual games,” the quote continues.

The plaintiff says consumers who purchase an iOS device are “locked into” that ecosystem and face “substantial” costs if they want to switch operating systems because it means switching to an entirely different device.

Apple iOS users are unlikely to make such a switch in order to access similar subscription-based gaming content from other providers, the plaintiff argues, because of the cost of switching and the necessity of learning a new mobile operating system.

Because of Apple’s alleged anticompetitive conduct, the plaintiff claims he and Class Members have suffered antitrust injury.

In addition, Pistacchio says, Apple has benefited unjustly from Apple Arcade subscription sales “and have thus far retained the illegally obtained profits.”

The proposed Class includes anyone living in the U.S. who directly paid Apple a subscription fee for Apple Arcade from Sept. 19, 2019, through “such time as the anticompetitive effects of Apple’s anticompetitive conduct ceases.”

Most of the accusations in Pistacchio’s class action lawsuit are violations of the Sherman Act, the California Unfair Competition Law and the California Cartwright Act.

Pistacchio says the benefits Apple received from himself and Class Members belong to the Class, and it would be unfair for Apple to be allowed to retain any such profit or benefits “derived from the unfair and unconscionable methods, acts, and trade practices alleged in this Complaint.”

The Apple Arcade class action lawsuit seeks an award of compensatory damages, punitive damages “to punish Apple’s egregious conduct” alleged in the lawsuit and to deter Apple and others from engaging in future similar conduct and an injunction enjoining Apple from continuing the unlawful practices.

In addition, the plaintiff is asking the Court to award statutory interest and penalties, court costs, pre- and post-judgment interest, disgorgement and restitution, and to establish a trust “into which Apple’s ill-gotten gains” will be put and paid out to the plaintiff and potential Class Members.

He also demands a jury trial.

Are you an Apple Arcade subscriber? Do you think Apple’s conduct is anticompetitive? Tell us your thoughts in the comments.

The plaintiff is represented by Todd A. Seaver of Berman Tabacco and Vincent Briganti, Christian Levis, Peter A. Barile III, Amanda Fiorilla and Noelle Feigenbaum of Lowey Dannenberg PC. 

The Apple Arcade Class Action Lawsuit is John Pistacchio, et al. v. Apple Inc., Case No. 5:20-cv-07034-NC, in the U.S. District Court for the Northern District of California.

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