Earlier today, Proton filed court papers in the US District Court for the Northern District of California to join an existing class-action lawsuit against Apple. Proton is a plaintiff in the case, but we are representing and suing on behalf of a class of similarly situated developers. Challenging one of the most powerful corporations in the history of capitalism is not a decision we make lightly, but Proton has long championed online freedom, privacy, and security, and we believe this action is necessary to ensure the internet of the future lives up to its potential.
Why are we doing this now?
Apple’s App Store policies have long been considered anti-competitive and illegal in many jurisdictions around the world. Most recently, on April 22, the European Commission found Apple to be in breach(nuova finestra) of European competition law and fined it €500 million for violations. On April 30, as part of the Epic Games v. Apple case, Judge Yvonne Gonzalez Rogers found Apple willfully defied a court order(nuova finestra) and created new anti-competitive barriers. The company’s misconduct was so extreme that the judge referred Apple to the US attorney for potential criminal prosecution. This comes on the heels of other countries around the world recognizing the need to reform Apple’s anti-competitive behavior, including the UK(nuova finestra), Brazil(nuova finestra), the Netherlands(nuova finestra), and South Korea(nuova finestra).
We believe that Apple’s conduct, as detailed in the complaint we filed, constitutes further violations of US antitrust law. Without this case, Apple could get away with behavior in the US that is already outlawed in the European Union. If this were to happen, American consumers, and developers focused on the American market, would have to pay higher prices for fewer choices, and be left at a disadvantage.
There is also urgency to act now because of a parallel class-action suit(nuova finestra) by app developers against Apple on May 23, and any settlement there could be binding on all other developers. By joining that lawsuit, we can ensure that this suit will not only be about monetary damages to compensate app developers for the harm caused by Apple’s conduct, but also changes to App Store policies that will improve the state of the internet. We are seeking to permanently end anti-competitive behavior on the App Store, and we are joining this lawsuit to ensure that any future settlement enforces real changes to Apple’s practices and policies to benefit all consumers, developers, and competition, and not just cosmetic changes.
While the suit does seek monetary damages on behalf of all developers who have been harmed in order to deter future anti-competitive behavior and provide compensation to class members harmed by Apple’s anti-competitive conduct, Proton will donate any money we receive from the lawsuit to organizations fighting for democracy and human rights so that some portion of Apple’s profits made from countries with authoritarian regimes are redirected to freedom. These donations will be coordinated through the nonprofit Proton Foundation, which oversees Proton and ensures that our work always prioritizes the public good over financial gain.
What is at stake?
Apple’s monopoly control of software distribution on iOS devices presents a myriad of problems for consumers, businesses, and society as a whole. Anti-monopoly laws exist because the power gifted by monopoly status inevitably leads to abuse. In the case of oligarchic tech giants, these abuses have wide implications for society, and it’s vital to the future of the internet that they be addressed now.
The App Store policies hurt privacy
Apple’s App Store policies disproportionately favor the surveillance capitalism business model employed by companies like Meta and Google and therefore entrench an online business model that routinely violates consumers’ personal privacy. All developers are required to pay Apple an annual fee of $99 to be in the App Store, but Apple also takes a 30% cut from payments made through iOS apps, which are forced to use Apple’s payment system.
Companies that monetize user data in exchange for “free” services that abuse your privacy aren’t affected by this, as they don’t process payments through the App Store. However, privacy-first companies that monetize through subscriptions are disproportionately hit by this fee, putting a major barrier toward the adoption of privacy-first business models. Naturally, these are also the very companies Apple is directly competing with through its disingenuous privacy marketing campaigns. This is a significant driver behind the internet’s descent into widespread surveillance capitalism.
Apple’s policies undermine freedom and democracy
Apple’s complete control of the App Store has given it a dangerous level of control over app distribution, giving it the power to decide which apps can and cannot be distributed in different markets. Apple argues this control is necessary for security reasons. But the reality is that this has made Apple the single point of failure for free speech and a tool of dictatorships. There have been numerous incidents where Apple has removed or censored apps at the behest of authoritarian governments, in order to continue profiting from those markets.
For example, the advocacy group GreatFire.org(nuova finestra) publishes important information about the state of censorship in the App Store through its AppleCensorship program(nuova finestra), which highlights some striking statistics. Sixty-six of the 100 most popular apps worldwide are unavailable to iOS users in China. Additionally, all 240 VPN apps that the group tested were also unavailable to Chinese users. Overall, 27% of apps are missing from the Chinese App Store, more than double the global average of 13%. Many of those missing apps are news apps (including the likes of The New York Times, BBC News, and Reuters) or social networking or messaging apps, strongly implying that this is a matter of censorship, not security. Apple has also been caught removing apps to help suppress protests, such as the 2019 case of HKmap.Live(nuova finestra), which was removed at the height of the pro-democracy protests in Hong Kong.
Just last year Apple removed dozens of VPN apps from the Russian App Store(nuova finestra), a particularly concerning move considering how vital these services are for Russian citizens trying to access independent media and bypass censorship by the Russian government.
Proton itself has also been victim of Apple’s censorship. In 2020, Apple threatened to take Proton VPN out of the App Store unless we removed language from our App Store description that said the app could be used to “unblock censored websites.” We don’t question Apple’s right to act on behalf of authoritarians for the sake of profit, but Apple’s monopoly over iOS app distribution means it can enforce this perverse policy on all app developers, forcing them to also be complicit. We believe it is critical for the future of the internet to end the monopoly on app distribution, so that developers and companies who are prepared to fight for democracy can do so.
App Store policies lead to a worse user experience
Apple’s approach to subscriptions management is designed to ensure it maintains complete control over the relationship between users and developers. To guarantee it gets its 30% cut of subscription revenue, it has imposed ironclad rules that dictate what developers can and cannot say to their users, which has a detrimental impact on the user experience. One basic example of this is that developers cannot tell users that other pricing options or discounts may be available if users upgrade via a website instead of inside the app. Not supporting Apple’s payment system is also considered a violation, which can lead to threats to remove your app, as happened to Proton(nuova finestra).
But this controlling behavior goes even further. Developers are prohibited from linking to their websites at all. Proton cannot even link to FAQ or customer support pages from its apps, as Apple believes it’s possible that users will then navigate from the support page to a pricing page and upgrade their accounts without paying Apple its fee. This has a direct, negative impact on customer experience.
It’s also impossible for users to manage their subscriptions from multiple devices, as this would necessitate stepping outside Apple’s walled garden and weakening its control over the user. For example, users who upgraded their accounts on the web and then wish to upgrade or downgrade their subscription are not allowed to do so from their iOS devices. It is similarly impossible for users who purchased a subscription on iOS to change the subscription on the web. In a world where most users are accessing their apps and services over multiple devices, this is an unacceptably poor customer experience.
Apple, however, goes even further in a bid to maintain its monopoly and trap users within the Apple ecosystem. Apple intentionally cripples third-party apps that compete with Apple services by making functionality that is available to Apple apps unavailable to other apps. For instance, there is no way to set Proton Calendar as the default calendar app on iOS. Furthermore, in a bid to prevent data portability, competing cloud storage services like Proton Drive are unable to seamlessly do background processing, while no such restrictions are known to exist for iCloud.
These examples of coercive behavior illustrate time and time again that Apple is willing to inflict a worse experience and higher prices on consumers out of corporate greed, and it leverages its monopoly control over the App Store to do so.
App Store tariffs cause price inflation
Apple’s 30% fees act as an artificial and arbitrary tax on internet commerce, which, much like a tariff, serves to raise prices, as part or all of this fee is inevitably passed on to the customer. Apple claims this fee is necessary to pay for the maintenance of the App Store, but evidence presented in the Epic Games v. Apple case indicated that Apple makes a 78% profit on App Store fees, raising the question of whether these fees are really necessary or a clear example of the company profiting from its illegal monopoly.
The only reason Apple can get away with this behavior is because there’s no competition in iOS app distribution or iOS in-app payments. If you want to provide an app or service to iOS users, you have to go through Apple’s systems, and you have to use Apple’s system for collecting payments. Breaking this monopoly and ending this punitive tax on the internet would allow companies like Proton to collect payments via less expensive methods, enabling the option to pass these savings on to you, and ultimately reducing the prices you pay.
Why this matters
The remedies we are seeking would address many of the social ills mentioned above, ensuring that the internet of the future can continue to protect privacy and democracy. Mobile apps are now the dominant platform of the internet and the way the bulk of the world interacts with one another and with the web. Even if app stores started out as niche markets, today they are a critical component of the internet and fundamental to democracy. It is more essential than ever that we fight to create mobile ecosystems that are truly free, competitive, and not beholden to whichever dictator corporate leaders are currently bowing down to.
This is also why we enter this fight not just representing ourselves, but as a class representative, to ensure that the outcome of this litigation will benefit all app developers and users of apps in this market. We expect this to be a difficult fight that could take many years, but our mission to build an internet that serves the interest of all of society affords us no other choice. By bringing this case, we hope to set an important precedent that free people, not monopolies, will dictate the future of the internet.
Proton is being represented by Quinn Emanuel Urquhart & Sullivan LLP and Cohen Milstein Sellers & Toll PLLC. The full complaint in the case of Proton v. Apple can be found here(nuova finestra).
