The Korean Publishers Association (KPA) and the Korea Electronic Publishing Association, both comprising multiple webtoon and web novel companies, as well as iOS app developer Dan Scalise and Korean app developer PangSky (collectively, the plaintiffs, or KPA et. al), filed a class-action lawsuit against tech giant Apple on May 23, alleging past and ongoing anticompetitive behavior. It was filed at the U.S. Northern District Court of California.
They seek damages due to the revenue lost from Apple’s “anticompetitive conduct,” which mandated that most digital purchases related to an iOS app must use its payment system, of which Apple took a 30% cut. iOS app developers weren’t allowed to suggest their own payment services within the app, and weren’t allowed to link out from the app to external payment options. The 30% fee also applies to purchases on the App Store. App distribution via third-party app stores, which could’ve provided lower fees, isn’t permitted on iOS (except in the E.U.).
Apple also blocked developers from communicating with many users through email, notifications, and other means about alternative payment options, stifling competition. The lawsuit calls for an order to permanently bar Apple from “engaging in further illegal, monopolistic conduct with regard to iOS App distribution and payment processing services.“
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Kim Hwan-chul, CEO of the major Korean web novel publisher Munpia, is the current chairman of the Korea Electronic Publishing Association (KEPA). KEPA’s members include representatives from webtoon and web novel publishers RIDI, Joara, Laon, Delight Books, MrBlue, uPaper, and dozens of others. Also party to the lawsuit is the KPA, the oldest publishing association in the country, comprising hundreds of members, including Munpia, Solo Leveling publisher D&C Media, and Haksan Publishing, which publishes original IP and imports Japanese titles, such as Attack on Titan, Demon Slayer, and Chainsaw Man.
A press release from the KPA quoted Kim, who said, “This lawsuit is for all those who are judged to have been harmed by the policies of Apple and Google. In particular, I ask for active participation and support from developers in various fields, including publishing, web novels, webtoons, and distribution apps. We can exert greater power when we collect cases of harm and join voices.”
The plaintiffs in this class action lawsuit are mostly representing large U.S. app developers and all Korean developers, given that Apple settled with smaller U.S. developers (Small App Developers) in a previous lawsuit. Those who didn’t opt out of the Small App Developer settlement are barred from making future legal claims that arise from the same facts already argued in that case. The plaintiffs also represent any app developer globally whose country applies U.S. court judgments. Small App Developers are defined below.
All former or current U.S. developers of any Apple IOS application or in-app product (including subscriptions) sold for a non-zero price via Apple’s IOS App Store that earned, through all Associated Developer Accounts, proceeds equal to or less than $1,000,000 through the App Store U.S. storefront in every calendar year in which the U.S. developer had a developer account between June 4, 2015 to the date of the [Small App Developer] Agreement (August 24, 2021). [annotation added]
- So, still represented in this new lawsuit are: “U.S.-based App developers who had App Store proceeds of $1,000,000.01 or more in a calendar year; (b) non-U.S. based App developers who received any App Store proceeds; (c) U.S.-based App developers and non-U.S. based App developers’ sales through non-U.S. App Store storefronts; and (d) claims based on events that occurred after August 24, 2021“
- The lawsuit excludes Chinese app developers, with plaintiffs arguing that China’s ecosystem prevents Apple’s App Store operation. See Page 27 for more details.
Separately, the plaintiffs have also requested (PDF) that this class action lawsuit be formally related to a lawsuit initiated by Epic Games against Apple (more on that below), as it relies on many of the findings already established, and they share very similar grievances. This will save time. They also request the same judge to preside over both cases.
A likely motivation for having the same judge is that in the Epic lawsuit, Apple was already found to have broken California law by not allowing app developers to communicate with many users about other payment options. The judge also commented that Apple’s 30% fees may be anticompetitive, but did not rule on this, in part because Epic didn’t pursue arguments on the specific fee.
Why Have Korean Publishers Sued Apple in the U.S.?
On May 30, a week after KPA et. al initiated their lawsuit, the KPA said in its press release that they also plan to file a lawsuit against Google over similar anticompetitive allegations. The KPA estimates that the “damage” caused by Apple’s fees on Korean publishers alone is approximately 60-80 billion won (43.5 – 58.0 million USD) every year.
In 2021, Korea introduced an amendment to its Telecommunications Business Act, blocking Apple and Google from mandating in-app payments (payments that are made within the app and so use Google/Apple’s own payment system). iOS app developers could now link out to external payment processors. The plaintiffs argue that Apple effectively circumvented this amendment in January 2022 by, yes, allowing developers to communicate with users and link out to external services, but charging 26% if the sale began from the app. Apple claims commissions are necessary as app developers are licensing its intellectual property; Apple develops and provides tools (the iOS SDK) to help developers create iOS apps.
The *reduction* from 30% to 26% (a 4% discount) was estimated to cost most companies more, given the cost of operating third-party systems. Effectively, most app developers would struggle to avoid high fees if the purchase were initiated via an iOS app.
Despite the amendment to the law and the Korea Communications Commission, Korea’s media regulator, announcing plans to fine Google and Apple, the KPA says both persisted in their anticompetitive behavior. They brought this lawsuit in America due to the clause in Apple’s terms and conditions that requires legal disputes to take place under California law at this court. Multiple Korean courts have previously found that they can’t resolve disputes between Korean and U.S.-domiciled companies.
Arguments From Epic vs. Apple
Apple’s alleged anticompetitive conduct has been criticized for years and was the subject of a massive lawsuit filed (PDF) by Fortnite‘s Epic Games. Epic Games alleged that Apple locked its customers into its ecosystem and prevented developers from using or communicating about external payment processors. As customers were purportedly trapped, app developers had no choice but to stay in Apple’s ecosystem and endure high fees, which Apple profited from highly (Page 40-50).
For years, Apple mandated that app developers use its payment system for purchases made within an app on iOS, taking a 30% cut of all sales revenue from these purchases (like many other app/game platforms), as well as 30% of sales made on the App Store. Apple also mandates that all apps on iOS be distributed through its store, meaning these 30% fees on in-app purchases were inescapable.
- Apple is also facing several other lawsuits for anticompetitive conduct:
Apps often have features or functionality that allow a user to unlock something—for example, unlocking a Pro version, a game skin, or the latest chapter of something. If developers were willing to accept the 30% hit from in-app purchases, users could benefit from these unlock features. But it’s also possible and reasonable (given the fees) for app developers to want to direct users to their preferred storefront (e.g., their website), pay the developer there, and then have the unlocked features/functionality propagated to the app. This would save them money and potentially allow for lower prices. Apple curbed this in its App Guidelines:
Policy 3.1.1 If you want to unlock features or functionality within your app, (by way of example: subscriptions, in-game currencies, game levels, access to premium content, or unlocking a full version), you must use in-app purchase. Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, cryptocurrencies and cryptocurrency wallets, etc. [emphasis added in the second instance]
This meant all iOS apps that didn’t want to go through Apple’s payment system were blocked from having unlock features or functionality, which rules out numerous use cases.
Nevertheless, even if a developer didn’t want their app to have unlockable features or functionality, but still had a reason to request payment from users (perhaps tipping, physical merch, or events), Apple also blocked developers from even communicating external payment methods to users if those users’ contact details had come through registration via the app and not some other medium, creating a distinct class of unaware customers (App Store Review Guidelines, 3.1.3 – Archived):
The following apps may use purchase methods other than in-app purchase. Apps in this section cannot, within the app, encourage users to use a purchasing method other than in-app purchase. Developers cannot use information obtained within the app to target individual users outside of the app to use purchasing methods other than in-app purchase (such as sending an individual user an email about other purchasing methods after that individual signs up for an account within the app). Developers can send communications outside of the app to their user base about purchasing methods other than in-app purchase. [emphasis added]
This interference between an app developer and its customer, simply because they registered through an iOS app and not somewhere else like the developer’s website, led to the following characterization of Apple that was cited in KPA et. al’s lawsuit: “When someone signs up for your product in the App Store, they aren’t technically your customer anymore – they are essentially Apple’s customer,” remarked an app developer.
For an app developer’s user to “essentially” be Apple’s customer has potential reputational effects. Since payments are through Apple’s system, Apple is the ultimate handler for all payment queries. The above app developer continued:
“They pay Apple, and Apple then pays you. So that customer you’ve spent years of time, treasure, and reputation earning, is handed over to Apple. And you have to pay Apple 30% for the privilege of doing so!
You can no longer help the customer who’s buying your product with the following requests: Refunds, credit card changes, discounts, trial extensions, hardship exceptions, comps, partial payments, non-profit discounts, educational discounts, downtime credits, tax exceptions, etc.“
The judge noted this (Page 41):
How The Decision of Epic Games’ Apple Lawsuit Led to Korean Publishers Suing Apple:
Epic Games sued Apple in August 2020. In September 2021, Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California handed down her ruling, largely rejecting Epic Games’ claims that Apple’s conduct was illegal.
- It’s important to note that Epic Games filed the lawsuit after it illegally inserted its own in-app purchase method, violating Apple’s (and Google’s) rules, and leading to Fortnite being removed from the platform. Apple filed a lawsuit over breach of contract, winning millions (Page 180). Epic Games had predicted that Fortnite would be removed, and so prepared the lawsuit and numerous PR operations in advance. This plan was called Project Liberty.
For Apple to be a monopoly, as Epic alleged, it must artificially restrain competition or control prices in a market. First, Rogers identified the market Apple and Epic compete in, determining that it was in digital mobile gaming transactions (Page 2). This was because mobile gaming transactions account for a significant majority of all revenue made on the App Store.
Rogers commented on many areas of antitrust law in regards to Epic Games’ claims. For example, while not impossible, Epic Games failed to demonstrate to Rogers that Apple had a monopoly in digital mobile gaming transactions. This could be proved if there was evidence that Apple baited customers into using its products, who were unaware that once in, it would be very difficult to get out, and then by limiting competition with other app developers, profited from charging these high fees that might be passed on to customers. If Apple customers were locked in, Apple could induce higher fees, and customers wouldn’t be able to escape (Page 130-133).
Since Apple requires all apps to be distributed through the App Store, and apps with unlock features must use Apple’s in-app payment system, this could limit competition. However, evidence suggests that Apple users are satisfied with the customer service linked to limiting competition, such as security and reliability. Rogers credited Apple device safety to the company’s investment in creating safe ways for developers to access customer devices and data, as well as Apple’s app vetting programs. Data suggested that Apple users aren’t particularly prevented from switching to different phone brands. Apple’s closed ecosystem was said to create competition by contrasting with Google’s open Android system.
There was also evidence that even after Fortnite was removed from the App Store, player migration and revenue retention were significant, and likely would have increased over time. Rogers concluded that Epic failed to show that users were locked in, and thus developers were not locked in (Page 53-55).
However, notably, Rogers did find that Apple’s 30% fee was potentially anticompetitive. The fee was found not to be tied to Apple’s costs or value to users, but simply because Apple could impose it due to its size. Apple would likely lower its fee to compete if it allowed competition. Nevertheless, Rogers says, “Epic Games did not challenge the rate [30%]. Rather, Epic Games challenged the imposition of any commission whatsoever.” Rogers believed Apple had a right to charge a fee (Page 143-148).
Epic’s lack of scrutiny of the impact of 30%, and instead focusing on any commission in general, coupled with increasing mobile gaming competition from other companies, a lack of data on whether other companies could force Apple to be more competitive if they tried, and Apple’s very high (55%) but not necessarily monopolistic market share of digital mobile gaming, meant Rogers found there wasn’t enough evidence to conclude that Apple was a monopoly. She warned:
“That said, the evidence does suggest that Apple is near the precipice of substantial market power, or monopoly power, with its considerable market share. Apple is only saved by the fact that its share is not higher, that competitors from related submarkets are making inroads into the mobile gaming submarket, and, perhaps, because plaintiff did not focus on this topic.”
Rogers did, however, find that Apple had broken the law by banning developers from communicating with its customers about other payment systems, stating (Page 3):
“Nonetheless, the trial did show that Apple is engaging in anticompetitive conduct under California’s competition laws. The Court concludes that Apple’s anti-steering provisions [blocking developers from steering users to external systems] hide critical information from consumers and illegally stifle consumer choice. When coupled with Apple’s incipient [verging on] antitrust violations, these anti-steering provisions are anticompetitive and a nationwide remedy to eliminate those provisions is warranted.” [annotation added]
“Apple created a new and innovative platform which was also a black box. It enforced silence to control information and actively impede users from obtaining the knowledge to obtain digital goods on other platforms.” (Page 166)
Rogers, therefore, issued an order barring Apple from (the First Injunction):
“prohibiting developers from (i) including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.” (Page 169)
While developers would still have to give up 30% of all revenue for purchases made through Apple’s payment system (i.e., purchases made on the app/App Store), at least developers could direct app users to another storefront that didn’t have these restrictions.
Similar to Apple’s response in Korea after forced in-app payments were banned, and, in fact, shaped by its approach in Korea (Page 14), Apple responded to the court order by allowing developers to link out to external systems, but for a 27% fee on those purchases if the user had initiated the purchase via the app and completed it within 7 days (Apple). According to Apple employees, they used 27% instead of the previous 30% because of estimates that it would actually cost most developers more than the 3% difference to use external systems, and so developers would effectively opt to stick with the 30% fee (Page 17, Page 19). This was despite Apple previously not charging any fees for external payments.
Apple also put multiple restrictions on the manner developers could link out of their app to external payment systems, and used “scare screens,” as characterized by Rogers and KPA et. al (Page 34), when users were being externally directed. You can see an example below.
The mention of privacy and security was intentional. Senior Apple employee Philip Schiller said it was included because it “tells ppl its dangerous and they are leaving the app store.” Rafael Onak, User Experience (“UX”) Writing Manager at Apple, said to include the section ‘By continuing on the web, you will leave the app and be taken to an external website’ because “‘external website’ sounds scary, so execs will love it.” Another employee added, “To make your version even worse you could add the developer name rather than the app.“
Apple Found In Contempt of Court Over Order To Stop Blocking Developers From External Linking
On April 30, 2025, Judge Rogers found Apple’s response to the first order to be anticompetitive and in contempt of the order. A significantly more restrictive instruction compared to the first order was issued (the Second Injunction). Apple could now only display a neutral message linking to a third-party site. Furthermore, Apple was also blocked from:
(1) “[i]mposing any commission or any fee on purchases that consumers make outside an app, and as a consequence thereof, no reason exists to audit, monitor, track or require developers to report purchases or any other activity that consumers make outside an app;” [emphasis added]
(2) “[r]estricting or conditioning developers’ style, language, formatting, quantity, flow or placement of links for purchases outside an app;”
(3) “[p]rohibiting or limiting the use of buttons or other calls to action, or otherwise conditioning the content, style, language, formatting, flow or placement of these devices for purchases outside an app;”
- Apple had previously drafted several requirements on how linking out of the app must be done, emphasizing a more plain style and restricted placements. It also banned developers from discouraging paying through Apple’s payment system. [annotation added]
(4) “[e]xcluding certain categories of apps and developers from obtaining link access;”
- Apple offered a Video Partner Program (“VPP”) and News Partner Program (“NPP”) to qualifying apps. E.g., VPP was for premium video subscription apps, allowing them to be featured on Apple TV. They’re required to integrate with Apple products, like Siri and AirPlay, and could pay a preferential 15% commission on in-app purchases instead of 30%. In response to the First Injunction, Apple added rules that said if Partners linked out of their apps, they would need to pay the 27% commission, thus losing preferential status. [annotation added] (Page 43)
(5) “[i]nterfering with consumers’ choice to proceed in or out of an app by using anything other than a neutral message apprising users that they are going to a third-party site;”
(6) “[r]estricting a developer’s use of dynamic links that bring consumers to a specific product page in a logged-in state rather than to a statically defined page, including restricting apps from passing on product details, user details or other information that refers to the user intending to make a purchase.
- In response to the First Injunction, Apple prevented dynamic links, which can allow for information to be passed to the external site, e.g. customer details, which streamlines the process. [annotation added]
In Rogers’ comments for the Second Injunction, she argues that Apple staff consistently chose the most anticompetitive options in response to her instructions and lied to her under oath. For allegedly lying under oath, Rogers referred Apple and Alex Roman, Apple’s Vice President of Finance, specifically, to the Attorney General of the Northern District of California for investigation (Page 78).
Apple asked the appeals court for a stay on this order on May 7 (PDF), arguing that it significantly overreaches past the first instruction and “violates the First Amendment by requiring Apple to accommodate messages it would prefer to exclude.” Apple argued that the legality of setting a fee for transactions initiated through the app but completed externally was never ruled on, so the court shouldn’t have mandated that Apple make it 0%. Apple also quotes the judge in multiple areas to argue that its interpretations of the first order were reasonable.
It also refused to reinstate Fortnite until a decision on a stay on the order had been reached. No such order had arrived after twelve days. On May 19, Rogers clamped down on Apple’s delay and said if there was no confirmation from both Epic Games and Apple that all problems were settled, then the person at Apple “personally responsible for ensuring compliance shall personally appear at the hearing.” Epic Games and Apple confirmed all issues were resolved a day later, on May 20.
Apple will follow the stipulations of the Second Injunction as it awaits the appeals court’s decision on a stay. It’s also awaiting the Attorney General of the Northern District of California’s decision on a criminal prosecution.
Below is KPA et. al’s specific request for relief in their lawsuit against Apple:
Source: Korean Publishers Association v. Apple, Inc. (PDF), Application to relate Korean Publishers Association lawsuit to Epic Games’ lawsuit (PDF), KPA statement, via The Seoul Economic Daily
Featured image © DUBU(REDICE STUDIO), Chugong, h-goon 2018 / D&C MEDIA
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