In re Apple iPhone Antitrust Litigation

Filing 364

Discovery Order re: 352 Joint Statement Regarding Apple's Production of Documents Responsive to Consumer Plaintiffs' 2nd Set of Requests for Production of Documents. Signed by Judge Thomas S. Hixson on 1/8/2021. (cdnS, COURT STAFF) (Filed on 1/8/2021)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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IN RE APPLE iPHONE ANTITRUST
LITIGATION

Case No. 11-cv-06714-YGR (TSH)
DISCOVERY ORDER
Re: Dkt. No. 352

United States District Court
Northern District of California

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We’re here again on the Consumer Plaintiffs’ motion to compel concerning their request

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for production (“RFP”) 47. This is the one that, as narrowed, requested aggregated global

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revenues by month for each app available to U.S. customers, including revenues from foreign

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transactions. The Consumer Plaintiffs previously argued that global revenue is relevant because it

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relates to the profitability of being an app developer for Apple. The idea is that if app developers

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can make a lot of money developing apps for the Apple App Store, that will incentivize more of

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them to develop new apps or improve upon existing ones, benefiting consumers. By contrast, if

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developers do not make much money selling apps through Apple’s App Store, then they have less

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incentive to develop or improve content that is available through Apple’s App Store. The

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Consumer Plaintiffs argue that when developers decide whether to develop or improve an app that

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will be available through Apple’s app store, they presumably care about all the revenue they

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would get from the app, not just the domestic revenue.

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Last time the Court saw two problems with this motion to compel. See ECF No. 317. The

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first was that this theory of relevance does not have a clear relationship with the injuries to

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consumers or competition that are the basis for the Consumer Plaintiffs’ case. Unlike the

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Developer Plaintiffs’ claims in the related 19-3074 action, the Consumer Plaintiffs allege a Kodak-

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style aftermarket monopoly. ECF No. 228, Ex. A ¶¶ 73, 76-77, 53. Their theory is that iOS

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devices are expensive, and this expense locks customers into the aftermarket for iOS applications

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because switching costs (i.e., losing out on the money the customer paid for an iPhone, plus

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spending more money to buy an Android phone) are high. Id. ¶ 73. The injury to customers from

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Apple’s alleged monopoly in the app distribution aftermarket is that they can’t buy apps from

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cheaper sources than Apple, such as directly from the developer. Id. ¶ 53. In addition, the fact

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that Apple is the only game in town for getting apps reduces the supply of new apps because there

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aren’t any stores other than Apple’s. Id. By contrast, discovery into how much money developers

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can earn through Apple’s App Store – the discovery the Consumer Plaintiffs want to take here –
seems to relate to developers’ willingness to make new or improved content available through

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United States District Court
Northern District of California

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Apple’s App Store. But at least as pleaded in the operative complaint, this lawsuit seems to be

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about consumers who want to buy cheaper apps, or more apps, from somewhere other than

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Apple’s App Store.

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And that brings us to the other problem the Court had with this motion. The Developer

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Plaintiffs in 19-3074 are pursuing an antitrust theory that does indeed focus on the impact of

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Apple’s policies on developers’ willingness to supply content for Apple’s App Store. The

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Developer Plaintiffs allege that Apple’s commissions are a disincentive for developers to provide

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that content. They also allege that Apple’s monopoly on app distribution makes it hard for

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customers to find desired apps in the App Store, further disincentivizing developers to provide

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quality apps to Apple’s App Store. 19-3074 ECF No. 53 ¶ 65; see also id. ¶¶ 4, 5. Thus, the

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Developer Plaintiffs allege injuries to competition in what is delivered through Apple’s App Store.

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This is the very theory of relevance the Consumer Plaintiffs rely on in their motion to compel.

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Yet, the Developer Plaintiffs have not joined in this motion to compel but are instead working

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cooperatively with Apple on a voluntary accommodation.

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The Court observed that “Proceeding with this motion to compel by Plaintiffs who seem to

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have no standing to request this information, while the Plaintiffs that do seem to have standing are

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trying to work out a voluntary accommodation, would discourage cooperation and encourage

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discovery fights, which is inconsistent with the ‘just, speedy, and inexpensive determination of
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every action and proceeding.’ Fed. R. Civ. Proc. 1.” ECF No. 317 at 3. The Court also observed

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that “[t]he divergent paths taken by the Consumer and Developer Plaintiffs for this RFP are also in

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tension with the Coordination Order. See ECF No. 194 ¶ 1 (‘Plaintiffs shall coordinate discovery

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efforts to minimize expenses and facilitate the orderly and efficient progress of the Related App

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Store Actions. Consumer Plaintiffs and Developer Plaintiffs shall consult in good faith and

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engage in reasonable efforts to coordinate discovery and jointly resolve any disputes concerning

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discovery they are seeking so as to avoid duplication and unnecessary burden.’).” Id.

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Nonetheless, the Consumer Plaintiffs argued that this information was important for their

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showing of classwide injury in their upcoming motion for class certification. So, the Court gave
them an opportunity to submit an expert declaration to demonstrate the relevance of this

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United States District Court
Northern District of California

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information to their claims. The Consumer Plaintiffs have now done this in the joint filing at ECF

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No. 352, and this filing does not change the Court’s mind.

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The five-paragraph expert declaration makes the basic economic argument that Apple’s

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commission likely results in higher prices for customers who buy apps on Apple’s App Store and

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probably also reduces output by reducing incentives for developers to make new or higher quality

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apps for the App Store. However, the Court understood that already.

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The Consumer Plaintiffs’ section of the joint letter brief makes no mention of their pleaded

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theories of antitrust injury and simply presents argument as if they were the Developer Plaintiffs.

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However, the theory of consumer injury alleged in their operative complaint is the inability to buy

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cheaper and more apps from places other than Apple’s App Store. The effect of Apple’s policies

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on the supply and quality of what is sold through the App Store is what the Developer Plaintiffs

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are suing over (among other things).

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At oral argument, the Consumer Plaintiffs agreed that the injury to consumers and

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competition they allege is the lack of alternatives to Apple’s App Store. They also agreed that the

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discovery they are seeking in RFP 47 is really directed to the supply and quality of what is

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available within Apple’s App Store. However, they argued that the result of there being no

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alternatives to Apple’s store is that consumers are stuck with whatever is available in that store,

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and so discovery into what that consists of is relevant in that sense. That is an attenuated theory of
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relevance, and the Consumer Plaintiffs do not dispute that this discovery is more central to the

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Developer Plaintiffs’ claims.

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And those plaintiffs are trying to work cooperatively with Apple on a voluntary

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accommodation instead of moving to compel this type of information. The parties’ joint filing

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confirms that this remains true. ECF No. 352 at 1 n.1 (“The Developer Plaintiffs are still

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requesting that Apple produce this data, but they and Apple agreed to defer the issue.”).

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Allowing the Consumer Plaintiffs to pursue this discovery while the Developer Plaintiffs –
for whom it is more relevant and important – work cooperatively with Apple would be a poor

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exercise of judicial discretion for the reasons the Court previously explained. What the Consumer

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Plaintiffs are doing in pressing this issue now is pretty much the opposite of what Judge Gonzalez

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United States District Court
Northern District of California

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Rogers told them to do in the Coordination Order. Further, since the requested discovery has at

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most an attenuated relationship to the injuries to consumers or competition alleged by the

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Consumer Plaintiffs, they have also not made the case that they need this information for their

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class certification motion. Their motion to compel RFP 47 is therefore denied.

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IT IS SO ORDERED.

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Dated: January 8, 2021

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THOMAS S. HIXSON
United States Magistrate Judge

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