By Reed Albergotti
A new lawsuit brought by one of Apple's oldest foes seeks to force the iPhone maker to allow alternatives to the App Store, the latest in a growing number of cases that aim to curb the tech giant's power.
The lawsuit was filed Thursday by the maker of Cydia, a once-popular app store for the iPhone that launched in 2007, before Apple created its own version. The lawsuit says Apple used anti-competitive means to nearly destroy Cydia, clearing the way for the App Store, which Cydia's attorneys say has a monopoly over software distribution on iOS, Apple's mobile operating system.
"Were it not for Apple's anticompetitive acquisition and maintenance of an illegal monopoly over iOS app distribution, users today would actually be able to choose how and where to locate and obtain iOS apps, and developers would be able to use the iOS app distributor of their choice," says the lawsuit, which was filed in federal court in Northern California.
Apple is facing an onslaught of lawsuits and scrutiny from lawmakers and regulators around the world for the way it allegedly uses its power to maintain its dominant position over App Store. Epic Games, the maker of "Fortnite," sued Apple in August for allegedly monopolistic behavior, and a coalition of software developers taking on Apple's power has been growing in membership. Apple is facing investigations in Europe, spurred by music streaming service Spotify and other competitors, over allegedly anti-competitive behavior. In the United States, lawmakers have scolded Apple and its peers in a report on the power of large Silicon Valley companies.
An Apple spokesman did not immediately respond to a request for comment. Apple has denied that it is a monopoly. It says it faces competition from Google's Android operating system, which is used by competing handset makers including Samsung and Google. And Apple says it must tightly control the way software is installed on the iPhone to protect its customers from inadvertently downloading viruses and other security threats, and from installing apps that invade its customers' privacy.
The Cydia lawsuit represents a new kind of challenge to Apple's power. While Epic, Spotify and other companies say they are victims of Apple's alleged App Store monopoly, they are not direct competitors to the App Store itself. Cydia, which was popular in the early days of the iPhone, offers a real-world example of what competition might look like.
App Store has been a huge success for Apple, generating about $15 billion a year in revenue, according to analysts' estimates. While the sum represents a small portion of the company's roughly $275 billion in total revenue, it has become an important springboard for the company's fast-growing services business, which could help the company through slowing growth of iPhone sales. Apple generally takes a 30% cut of revenue earned by app developers on its platform.
App Store's success has come least in part because of the way it controls the software on iPhones and iPads. Unlike the company's Mac computers, which allow customers to install software in a variety of ways, including the Mac App Store, other competing app stores and directly from websites, the iPhone's software prohibits all methods of software distribution except one: the Apple App Store.
Apple vets every app before it is available for the iPhone, and software developers must abide by a long list of rules that define exactly what an iPhone app can and cannot do.
It was not always that way. Jay Freeman was consulting as a software developer in Santa Barbara, Calif., when the iPhone launched in 2007.
When a colleague bought Freeman an iPhone, he tested it out and was at first disappointed, he said in an interview. The phone lacked features such as cutting and pasting text, and he thought the Web browser on his Nokia phone was better than the iPhone's. The iPhone offered no way for its owners to install new software, such as alternative Web browsers.
Still, the iPhone's potential as a truly mobile, Internet-connected computer had quickly captured the attention of software developers who began tinkering with it. One of Freeman's friends convinced him that, instead of complaining about the iPhone's lack of software, he should get to work and create software of his own.
Freeman quickly found himself at the center of a burgeoning community of developers building new features for the iPhone. Those additions required unlocking the phone so new applications would run on the operating system, much like a traditional computer. The act of unlocking the iPhone became known as "jailbreaking."
Freeman wanted to make that process and installing new software easy, even for customers with little technical knowledge. The effort resulted in Cydia, an app store through which customers could install games and features, including the ability to cut and paste text.
Freeman said Cydia, which he named after an agricultural pest that affects fruit crops, was an immediate hit. There were so many people using it that he estimates half of early iPhone customers must have been "jailbreaking" their phones to take advantage of the additional features it offered. In 2010, Freeman told The Washington Post that Cydia had 4.5 million people searching for apps every week.
In 2008, Apple came out with its own version, called App Store.
Apple also began adding additional protections to the phone's operating system and warning its customers that jailbreaking their phones could put them at risk of security vulnerabilities. Freeman said he remembers seeing physical signs in Apple retail stores with such warnings. Freeman says the security risks are overblown. It is similar to downloading to a PC, which could include software that invades a user's privacy or gathers data. And even Apple-approved apps can expose customers to privacy risks.
"Morally speaking, it's your phone and you should be able to do whatever you want with it," Freeman said. "You should get to decide which applications you put on it, and you should be able to decide where you get those applications from."
In 2009, the U.S. Copyright Office established that jailbreaking was not an illegal activity, after Apple argued that it violated the law.
"The ability of people to jailbreak and put their own software on devices is an important one that has allowed people to do a lot of cool and interesting things," said Kurt Opsahl, deputy executive director and general counsel of the Electronic Frontier Foundation, a nonprofit technology advocacy group that helped gain the legal exception for jailbreaking. Opsahl said that, with only one app store to install software on iPhones, he's concerned about whether the process for installing apps is fair. "How are they going to use that monopoly power?" he asked.
After losing its argument to the Copyright Office, Apple continued its attempts to stop Cydia. It made jailbreaking more difficult by adding barricades against outside software being installed on the phone. At the same time, Apple added new features that had previously been available on Cydia. Apple's Control Center, its bubble notifications and the ability to immediately respond to text messages on the home screen originated on Cydia.
According to the lawsuit, Apple used "coercive" terms to try to prevent Apple customers from using Cydia or any alternative means to install software and discouraged developers from using services such as Cydia.
Cydia's revenue peaked in 2011 and 2012, when it earned about $10 million, Freeman said. Cydia, like Apple, charged Apple developers a commission on sales. In 2013, as Apple's App Store gained more power and prominence, Cydia's business began to dry up.
Apple also began hiring former "jailbreakers" to work on its security team. Freeman said some of those people were his friends, and he said those discussions were awkward. "When Robin Hood is willing to go work for the sheriff of Nottingham because they have cool crossbows, it's like, What were you doing?" he said.
Jailbreaking an iPhone has become so difficult that many in the jailbreaking community have essentially thrown in the towel and moved on, and some have declared the practice essentially dead.
Freeman is working in software development and spends less time on Cydia, which still exists but is far less popular than it once was. He is head of technology for a privacy software company called Orchid, and he is an elected official in California, serving on the board of the Isla Vista Community Services District in Santa Barbara County.
Freeman's attorneys at Quinn Emanuel Urquhart and Sullivan, the same law firm that represented Samsung in its patent war with Apple, say now is the time for Cydia to take on Apple in court.
"The legal climate for this claim has been changing," said Stephen Swedlow, the lead attorney for Cydia. Swedlow said that he's been watching other lawsuits, including the one filed by Epic, and that Cydia could be the "perfect claimant" for an antitrust case against Apple. If the suit is successful, Swedlow said, Cydia would aim to once again compete with Apple, this time without the need for jailbreaking.
Swedlow filed an antitrust case against Facebook last week on behalf of people who use the social network, and Quinn Emanuel is representing Blix, a maker of email software, in another antitrust case against Apple, which was recently dismissed in federal court.
Other lawsuits point out that Apple has no competitors when it comes to iOS app distribution. But Cydia was that competitor, Swedlow says. And it had millions of followers. Then, he said, Apple took anti-competitive measures to snuff Cydia out.
The Washington Post