Case 3:21-cv-05567-EMC Document 85 Filed 11/30/21 Page 1 of 34
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`CORONAVIRUS REPORTER, et al.,
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`Plaintiffs,
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`v.
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`APPLE INC., et al.,
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`Defendants.
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`Case No. 21-cv-05567-EMC
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`
`ORDER GRANTING DEFENDANT’S
`MOTION TO DISMISS, AND
`DENYING PLAINTIFFS’ MOTIONS
`FOR PRELIMINARY INJUNCTION,
`TO STRIKE, AND TO APPEND CLAIM
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`Docket Nos. 20, 45, 51, 52, 74
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`
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`I.
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`INTRODUCTION
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`Plaintiffs bring this action for antitrust and RICO violations, and breach of contract and
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`fraud against Apple, Inc. (“Apple”) to challenge Apple’s allegedly monopolist operation of its
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`“App Store” through “curation” and “censor[ship]” of smartphone apps. Docket No. 41 (“FAC”)
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`¶ 1-2. Plaintiffs seek to vindicate the right of “the end users of Apple’s iPhone” to “enjoy
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`unrestricted use of their smartphones” to run “innovative applications, written by third party
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`developers.” Id. ¶ 5.
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`Now pending is Apple’s motion to dismiss all of Plaintiffs’ claims against Apple. Docket
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`No. 45. Additionally, Plaintiffs two motions for preliminary injunction, Docket Nos. 20, 52,
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`motion to strike Apple’s motion to dismiss, Docket No. 51, and request to append a claim to its
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`FAC, Docket No. 52, are also pending. Finally, Apple’s motion to quash Plaintiffs’ subpoena
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`request, Docket No. 74, is pending. For the reasons explained below, the Court GRANTS
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`Apple’s motion to dismiss all of Plaintiffs’ claims against Apple, and DENIES AS MOOT each
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`of Plaintiffs’ pending motions and Apple’s motion to quash.
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`Case 3:21-cv-05567-EMC Document 85 Filed 11/30/21 Page 2 of 34
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`A.
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`Summary of Allegations
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`II.
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`BACKGROUND
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`Plaintiffs bring this antitrust and breach of contract action against Apple, Inc. (“Apple”) to
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`challenge Apple’s allegedly monopolist operation of its “App Store” through “curation” and
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`“censor[ship]” of smartphone apps. Docket No. 41 (“FAC”) ¶ 1-2. Plaintiffs seek to vindicate the
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`right of “the end users of Apple’s iPhone” to “enjoy unrestricted use of their smartphones” to run
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`“innovative applications, written by third party developers.” Id. ¶ 5.
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`1.
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`Apple’s App Approval Process
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`Apple launched the iPhone and its proprietary iOS ecosystem in 2007. See Epic Games,
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`Inc. v. Apple Inc., 2021 WL 4128925, at *17 (N.D. Cal. Sept. 10, 2021). Apple introduced the
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`App Store the following year. Id. at *19. App developers wishing to distribute apps on the App
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`Store must enter into two agreements with Apple: the Developer Agreement and the Developer
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`Program License Agreement (“DPLA”). Developers must also abide by the App Store Review
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`Guidelines (the “Guidelines”).1 The Developer Agreement governs the relationship between a
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`developer and Apple, see Docket No. 42 (“Brass Decl.”), Exh. 1 (“Developer Agreement”), while
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`the DPLA governs the distribution of apps created using Apple’s proprietary tools and software,
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`see id., Exh. 2 (“DPLA”). By signing the DPLA, developers “understand and agree” that Apple
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`may reject apps in its “sole discretion.” Id. § 6.9(b). The Guidelines set out the standards Apple
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`applies when exercising that discretion to review and approve apps for distribution on the App
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`Store, a process known as “App Review.” See generally id., Exh. 3 (“Guidelines”).
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`2.
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`Plaintiffs’ Apps
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`Plaintiffs allege they are developers of “a diverse group” of apps: Coronavirus Reporter,
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`Bitcoin Lottery, CALID, WebCaller, and Caller-ID. FAC ¶¶ 8, 27–30. Two of these apps,
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`Coronavirus Reporter and Bitcoin Lottery, were never approved for distribution on the App Store.
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`Id. ¶¶ 29, 53.
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`1 The agreements and Guidelines are “central” to Plaintiffs’ claims, FAC ¶ 273, and are
`incorporated by reference in the FAC. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003);
`see also FAC ¶¶ 19, 24, 56, 74, 113–14, 135, 145, 165, 186, 195–206, 245, 254–55, 258–59, 269–
`71.
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`Case 3:21-cv-05567-EMC Document 85 Filed 11/30/21 Page 3 of 34
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`Coronavirus Reporter sought to collect “bioinformatics data” from users about COVID-19
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`symptoms that it would then share with “other users and [unidentified] epidemiology researchers.”
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`FAC ¶¶ 48, 52. The Coronavirus Reporter team allegedly included Dr. Robert Roberts, a former
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`cardiologist for NASA. Id. ¶ 47. The Coronavirus Reporter app was developed in February 2020,
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`and, if approved, “this startup COVID app” would allegedly have been “first-to-market.” Id. The
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`Coronavirus Reporter app was rejected by Apple on March 6, 2020, under Apple’s policy
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`requiring that any apps related to COVID-19 be submitted by a recognized health entity such as a
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`government organization or medical institution. Id. ¶¶ 54, 56, 69, 94, 96, 98; see also Guidelines
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`§ 5.1.1(ix) (“Apps that provide services in highly-regulated fields (such as banking and financial
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`services, healthcare, and air travel) or that require sensitive user information should be submitted
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`by a legal entity that provides the services, and not by an individual developer”). Apple allegedly
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`denied Coronavirus Reporter’s appeal from rejection on March 26, 2020, which Plaintiffs alleged
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`was concurrent with “Apples internal discussions with its own partners” in order to “further
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`cement Apple’s own monopolistic trust and medi[c]al endeavors.” FAC ¶ 56.
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`Similarly, Apple allegedly rejected Plaintiff Primary Productions’ Bitcoin Lottery, a
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`“blockchain app” developed by Plaintiff Primary Productions, under its alleged policy “generally
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`block[ing] blockchain apps.” FAC ¶¶ 85–86.
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`Plaintiffs’ other apps (CALID, Caller-ID, and WebCaller) allegedly were approved for
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`distribution on Apple’s App Store. FAC ¶¶ 97, 103. CALID, “a cross-platform scheduling
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`platform with an initial focus on telehealth,” id. ¶ 94, was approved after the developer addressed
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`several violations of Apple’s Guidelines, including Apple’s requirement that developers use
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`Apple’s payment system for in-app purchases. Id. ¶¶ 95, 97. Although Plaintiffs state that they
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`later “abandoned” the app, id. ¶ 97, they allege “CALID was subject to ranking suppression,” id. ¶
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`28. Through “ranking suppression,” Plaintiff allege that Apple rendered the app “invisible on App
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`Store searches” by end users. Id. Plaintiffs similarly allege that Apple “suppressed” Caller-ID
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`and WebCaller because it competed with Apple’s own Facetime app and because Apple retaliated
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`against Plaintiff Isaacs after he “informed Apple he held a patent on web caller ID, and that
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`[Apple’s] crony, Whitepages . . . violated his patent.” Id. ¶¶ 104–07, 305. Plaintiffs concede,
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`Case 3:21-cv-05567-EMC Document 85 Filed 11/30/21 Page 4 of 34
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`however, that Isaac’s patent was invalidated. Id. ¶ 305.
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`3.
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`Plaintiffs’ Antitrust Claim Theory
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`The core of Plaintiffs antitrust claims are challenges to Apple’s alleged exercise of market
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`power in reviewing proposed apps and to Apple’s unilateral authority to approve or deny which
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`apps are allowed on the App Store. Plaintiffs challenge Apple’s unilateral control over the ability
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`of developers to access and provide apps to iOS users, including Apple’s alleged practice of
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`suppressing the visibility of apps which compete with Apple’s own apps or apps of Apple’s
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`“cronies.” FAC ¶ 21-23, 127, 199.
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`Plaintiffs’ FAC articulates at least fifteen different relevant markets to its antitrust claims
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`against Apple:
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`(1) a “Smartphone Enhanced National Internet Access Devices”
`market;
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`(2) a “smartphone market”;
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`(3) a “single-product iOS Smartphone Enhanced Internet Access
`Device” market;
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`(4) “[t]he iOS market”;
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`(5) the “market for smartphone enhanced commerce and information
`flow (devices and apps) transacted via the national internet
`backbone”;
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`(6) the “institutional app market”;
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`(7) the “iOS institutional app market”;
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`(8) the “iOS notary stamps” market;
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`(9) the “iOS onboarding software” market;
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`(10) the market for access rights to the iOS userbase;
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`(11) the “national smartphone app distribution market”;
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`(12) the “iOS App market”;
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`(13) the “US iOS Device App market”;
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`(14) the “market of COVID startups”; and
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`(15) “the App Market.”
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`FAC ¶¶ 8 n.1, 11, 12, 17–18, 81, 121, 135–37, 142, 165–66, 168, 233, 235. Plaintiffs’ Opposition
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`Case 3:21-cv-05567-EMC Document 85 Filed 11/30/21 Page 5 of 34
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`brief attempts to clarify that certain of the alleged markets are synonyms for other alleged markets,
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`and that, to simplify for purposes of the instant motion, Plaintiffs are focused on “two relevant
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`foremarkets” (apparently the “US smartphone market” and the “US iOS smartphone market”
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`which “is an alternative single-produce market to the US smartphone market”) and “five
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`downstream markets”:
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`(1) the institutional app market (i.e. wholesale app competition);
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`(2) the iOS institutional app market (iPhone app single-product wholesale marketplace);
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`(3) iOS notary stamps market (permission tokens to launch iOS apps);
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`(4) iOS onboarding software (‘Mac Finder’ capability disabled on all nonenterprise iOS
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`devices); and
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`(5) access rights to the iOS userbase”).
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`Docket No. 55 (“Opp.”) at 7 (citing FAC ¶¶ 8 n.1, 16, 18). Plaintiffs allege that its market
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`definitions cover and “equally apply to free apps – a major component of the ecosystem” of iOS
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`app purchases. FAC ¶ 16.
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`Plaintiffs’ antitrust theory allegedly “flow[s] logically” from the key fact that “the only
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`marketplace, the only seller of apps to end-users, is Apple itself” and thus Apple monopolizes an
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`“institutional smartphone application software marketplace” in which Apple “purchase[s]” apps
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`from developers—by approving or rejecting them through the App Review process—and then
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`resells them to consumers on its own terms. Id. ¶¶ 9–11, 19.
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`Plaintiffs allege that “Apple’s App Store retails approximately 80% of the apps in the US
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`consumer-facing market for smartphone apps,” but that the relevant market for its antitrust claims
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`is the “national institutional app market” where Apple “is a monopsony buyer of developers’
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`apps.” Id. ¶ 121. Plaintiffs allege that “Apple has complete control of pricing and contractual
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`terms in [the national institutional app market]” and, accordingly, “they can reject apps simply
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`because the app competes with Apple’s own competitor app, or its cronies.” Id. ¶ 127. Plaintiffs
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`allege that Apple monopolizes three additional downstream markets, (a) iOS notary stamps market
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`(permission tokens to launch iOS apps), (b) iOS onboarding software, and (c) access rights to the
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`iOS userbase, through Apple’s unilateral control of access to those markets. FAC ¶¶ 135-41.
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`Case 3:21-cv-05567-EMC Document 85 Filed 11/30/21 Page 6 of 34
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`4.
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`Class Allegations
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`Plaintiffs propose to represent various classes pursuant to “Fed R. Civ. P. 23(b)(1), (2), and
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`(3),” including for “All U.S. iOS developers of any app that was excluded through disallowance
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`and/or ranking suppression on the App Store,” and “Any iOS developer who paid a $99 annual
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`subscription fee[] to Apple for access to the iOS userbase and/or ‘app notarization.’” FAC ¶¶ 148-
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`51. Plaintiffs allege that the $99 annual fee is required for app developers to access the “App
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`Store Connect developer portal” to develop and test apps on Apple’s software, and to submit apps
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`to for Apple to consider for inclusion on the App Store. Id. ¶ 135.
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`5.
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`Causes of Action
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`Plaintiffs allege eleven causes of action against Apple:
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`(1) Violation of § 2 of the Sherman Act for “interstate restriction
`of smartphone enhanced internet userbase access services, iOS
`notary stamp and iOS onboarding software markets.” FAC ¶¶
`160-172.
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`(2) Violation of § 2 of the Sherman Act for “denial of essential
`facility in the institutional app markets” for Apple’s
`“exclusionary behavior that denies essential facilities” that are
`necessary to compete in the smartphone market, such as denying
`“notary stamps.” Id. ¶¶ 180-88.
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`(3) Violation of § 1 of the Sherman Act because the “DPLA [is
`an] unreasonable restraint of trade” by “limiting competition in
`the critically important US institutional app marketplace.” Id. ¶¶
`195-206.
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`(4) Violation of § 2 of the Sherman Act for “ranking suppression
`as restraint of interstate trade.” Id. ¶¶ 207-212.
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`(5) Violation of § 1 of the Sherman Act for “tying the App
`Store, Notary Stamps and Software Onboarding to the iOS
`device market.” Id. ¶¶ 213-217. Plaintiffs allege that “Apple is
`able to unlawfully condition access to iOS device to the use of a
`second product—App Store app marketplace.” Id. ¶ 217.
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`(6) Violation of § 2 of the Sherman Act for “$99 fee illegality.”
`FAC ¶¶ 231-234. Plaintiffs allege “Apple unlawfully maintains
`is monopoly powers in the aforementioned markets” by “issuing
`an illegal demand of money from 20 million aspiring
`developers” of $99 each year “if they wish to access the iOS
`userbase or get their software notarized on an iOS device.” Id. ¶
`235.
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`(7)
`“Cameron Antitrust Class Action Opt Out:” Plaintiffs
`CALID and Jeffrey Isaacs “assert claims for non-zero price apps
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`Case 3:21-cv-05567-EMC Document 85 Filed 11/30/21 Page 7 of 34
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`as specified in the already docketed complaint Cameron v.
`Apple.” Id. ¶¶ 241-43. Plaintiffs allege the Cameron case, No.
`19-cv-3074-YGR (N.D. Cal.) is a “developer class-action
`antitrust suit” where the “class is restricted to app developers
`who sold apps for non-zero prices.” Id. ¶ 36. Plaintiffs allege
`that certain Plaintiffs in this case are Cameron class action opt-
`outs, and state the Cameron causes of action in this suit through
`“reference to the Cameron complaint.” Id. ¶ 132. Plaintiffs
`allege that Judge Gonzalez Rogers deemed this litigation not
`subject to consolidation with Cameron. Id. ¶ 243.
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`(8) Breach of Contract for Apple’s pretextual refusal to approve
`the Coronavirus Reporter app for distribution on the App Store
`in violation of the DPLA and Developer Agreement. Id. ¶¶ 244-
`260.
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`(9) Breach of the Covenant of Good Faith and Fair Dealing for
`Apple’s refusal to approve the Coronavirus Reporter app. FAC
`¶¶ 261-66.
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`(10) Violation of the Racketeer Influenced Corrupt Organization
`Act, 18 U.S.C. § 1962(c) because “Apple and its cronies formed
`an enterprise meant to exploit the work of developers by
`screening their ideas for purported compliance with DPLA,
`meanwhile lifting and appropriating their ideas for their own
`competing apps[.]” Id. ¶ 269.
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`(11) Fraud for improper rejections of and ranking suppression of
`disfavored apps. Id. ¶¶ 309-23.
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`Plaintiffs initially alleged a twelfth claim against the Federal Trade Commission (“FTC”)
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`under the Administrative Procedure Act, FAC ¶¶ 324-25, but voluntarily dismissed and withdrew
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`that claim on November 23, 201, see Docket No. 83.
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`Plaintiffs seek damages of an estimated $200 billion and a permanent injunction
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`restraining Apple from “denying developers access to the smartphone enhance Internet userbase.”
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`FAC at 106-07.
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`B.
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`Procedural Background
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`On January 19, 2021, Plaintiff Coronavirus Reporter filed the first iteration of this lawsuit
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`in the District of New Hampshire. Coronavirus Reporter v. Apple, Inc. (“DNH Docket.”), No. 21-
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`cv-47, Docket No. 1 (D.N.H.). Coronavirus Reporter twice amended its complaint in response to
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`then-pending motions to dismiss, and then voluntarily dismissed the case when the court ordered it
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`transferred to this jurisdiction. DNH Docket Nos. 17, 19, 26–27, 32–33, 39–40.
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`On May 17, 2021, Plaintiff Primary Productions—represented by the same counsel—filed
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`Case 3:21-cv-05567-EMC Document 85 Filed 11/30/21 Page 8 of 34
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`a separate, nearly identical lawsuit in the District of Maine. Primary Prods. LLC v. Apple Inc.
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`(“D. Me. Docket.”), No. 21-cv-137, Docket No, 1 (D. Me.). There, Primary Productions amended
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`its complaint in response to Apple’s motion to dismiss. D. Me. Docket Nos. 17, 21. That case
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`was then transferred to this Court, and Apple moved to dismiss the action. See Primary Prods.
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`LLC v. Apple Inc., No. 3:21-cv-6841-EMC, Docket Nos. 27 & 32 (N.D. Cal.). Thereafter, Plaintiff
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`Primary Productions voluntarily dismissed that action. Primary Prods., No. 3:21-cv-6841-EMC,
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`Docket. 36.
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`Plaintiffs Coronavirus Reporter and CALID filed this putative class action on July 20,
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`2021, raising substantially similar claims to the prior two actions. Docket. 1. They then moved for
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`a preliminary injunction. Docket No. 20. Apple moved to dismiss the complaint, and Plaintiffs
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`again amended their complaint in response. Docket No. 41. The FAC—a putative class action
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`was brought on behalf of Coronavirus Reporter, CALID, Primary Productions LLC, Jeffrey
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`Isaacs, and two different classes of app developers affected by Apple’s practices —is thus the
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`seventh complaint filed by one or more of these related plaintiffs, all making similar allegations
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`and claims.
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`Apple moves to dismiss the FAC. Docket No. 45 (“Motion to Dismiss”). After amending
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`their complaint, Plaintiffs did not withdraw their motion for preliminary injunction, Docket No.
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`20, which remains pending. Instead, Plaintiff’s filed a second motion for preliminary injunction,
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`which is also pending. Docket No. 52. In that motion, Plaintiffs also request “appending” another
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`claim to their FAC, under the California Unfair Competition Law (although Plaintiffs did not seek
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`leave to amend their complaint as required under Fed. R. Civ. P. 15(a)(2)). Id.
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`Finally, in response to Apple’s motion to dismiss the FAC, Plaintiffs filed a “motion to
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`strike” Apple’s motion to dismiss (although Plaintiffs did not cite any legal authority authorizing
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`them to move to strike Apple’s motion to dismiss). Docket No. 51 (“MTS”). Cf. 5C Wright &
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`Miller, Fed. Prac. & Proc. Civ. § 1380 (3d ed.) (“Rule 12(f) motions [to strike] only may be
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`directed towards pleadings as defined by Rule 7(a); thus motions, affidavits, briefs, and other
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`documents outside of the pleadings are not subject to Rule 12(f).”).
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`Case 3:21-cv-05567-EMC Document 85 Filed 11/30/21 Page 9 of 34
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`A.
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`Failure to State a Claim (Rule 12(b)(6))
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`III.
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`LEGAL STANDARD
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`Federal Rule of Civil Procedure 8(a)(2) requires a complaint to include “a short and plain
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`statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A
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`complaint that fails to meet this standard may be dismissed pursuant to Rule 12(b)(6). See Fed. R.
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`Civ. P. 12(b)(6). To overcome a Rule 12(b)(6) motion to dismiss after the Supreme Court’s
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`decisions in Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atlantic Corporation v. Twombly, 550
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`U.S. 544 (2007), a plaintiff’s “factual allegations [in the complaint] ‘must . . . suggest that the
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`claim has at least a plausible chance of success.’” Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th
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`Cir. 2014). The court “accept[s] factual allegations in the complaint as true and construe[s] the
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`pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire &
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`Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But “allegations in a complaint . . . may not
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`simply recite the elements of a cause of action [and] must contain sufficient allegations of
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`underlying facts to give fair notice and to enable the opposing party to defend itself effectively.”
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`Levitt, 765 F.3d at 1135 (quoting Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d
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`990, 996 (9th Cir. 2014)). “A claim has facial plausibility when the Plaintiff pleads factual
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`content that allows the court to draw the reasonable inference that the Defendant is liable for the
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`misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a
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`‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted
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`unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).
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`IV.
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`ANALYSIS
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`A.
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`Antitrust Claims (Counts 1-7)
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`Apple argues that all seven of Plaintiffs’ antitrust claims should be dismissed because
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`Plaintiffs fail to allege facts sufficient to meet two threshold conditions to proceed on any antitrust
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`theory: (1) Plaintiffs fail to allege a plausible relevant market for their claims, and (2) Plaintiffs
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`fail to allege antitrust injury.
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`As explained below, the Court dismisses all of the antitrust claims for Plaintiffs’ failure to
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`satisfy these threshold conditions. As such, the Court cannot and does not address whether
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`Case 3:21-cv-05567-EMC Document 85 Filed 11/30/21 Page 10 of 34
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`Plaintiffs have sufficiently plead facts to state substantive antitrust claims.
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`1.
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`Relevant Market for Antitrust Claims
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`“A threshold step in any antitrust case is to accurately define the relevant market, which
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`refers to ‘the area of effective competition.’” Fed. Trade Comm'n v. Qualcomm Inc., 969 F.3d
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`974, 992 (9th Cir. 2020) (citation omitted); see also Image Tech. Servs., Inc. v. Eastman Kodak
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`Co., 125 F.3d 1195, 1202 (9th Cir. 1997) (“The relevant market is the field in which meaningful
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`competition is said to exist.” (citing United States v. Continental Can Co., 378 U.S. 441, 449
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`(1964))). Market definition is an essential predicate to the entire case, for “[w]ithout a definition
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`of [the] market there is no way to measure [the defendant’s] ability to lessen or destroy
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`competition.’” Ohio v. American Express Co., 138 S. Ct. 2274, 2285 (2018).
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`Typically, the relevant market is the “arena within which significant substitution in
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`consumption or production occurs.” Id. (citation omitted). But courts should “combine different
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`products or services into ‘a single market’ when “that combination reflects commercial realities.”
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`Id. (citing Brown Shoe Co. v. United States, 370 U.S. 294, 336–337 (1962) (pointing out that “the
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`definition of the relevant market” must “‘correspond to the commercial realities' of the industry”)).
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`“The principle most fundamental to product market definition is ‘cross-elasticity of demand’ for
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`certain products or services.” Kaplan v. Burroughs Corp., 611 F.2d 286, 291–92 (9th Cir. 1979).
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`“Commodities which are ‘reasonably interchangeable’ for the same or similar uses normally
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`should be included in the same product market for antitrust purposes.” Id. “This
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`interchangeability is largely gauged by the purchase of competing products for similar uses
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`considering the price, characteristics and adaptability of the competing commodities.” United
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`States v. E. I. du Pont de Nemours & Co., 351 U.S. 377, 380–81 (1956). “In defining the relevant
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`market, the court must look beyond the particular commodity produced by an alleged monopolist
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`because the relevant product market for determining monopoly power, or the threat of monopoly
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`control, depends upon the availability of alternative commodities for buyers.” Kaplan, 611 F.3d at
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`292 (citing Fount-Wip, Inc. v. Reddi-Wip, Inc., 568 F.2d 1296, 1301 (9th Cir. 1978)). A plaintiff
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`cannot ignore economic reality and “arbitrarily choose the product market relevant to its claims”;
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`rather, the plaintiff must “justify any proposed market by defining it with reference to the rule of
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`Case 3:21-cv-05567-EMC Document 85 Filed 11/30/21 Page 11 of 34
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`reasonable interchangeability and cross-elasticity of demand.” Buccaneer Energy (USA) v.
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`Gunnison Energy Corp., 846 F.3d 1297, 1313 (10th Cir. 2017) (internal quotation marks and
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`citation omitted).
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`Where a complaint fails to adequately allege a relevant market underlying its antitrust
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`claims, those claims must be dismissed. Pistacchio v. Apple Inc., 2021 WL 949422, at *2 (N.D.
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`Cal. Mar. 11, 2021).
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`a.
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`Unclear Market Definitions
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`First, Apple correctly observes that the FAC lacks clarity as to the relevant product
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`markets for Plaintiffs’ antitrust claims. The FAC articulates and references at least fifteen
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`different markets and does not always define the boundaries of or differences between those
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`markets. See e.g., FAC ¶¶ 8 n.1, 11, 12, 17–18, 81, 121, 135–37, 142, 165–66, 168, 233, 235;
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`Motion to Dismiss at 7-9. For example, Plaintiffs mention the “the App Market” twice in the
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`complaint but do not define it. FAC ¶¶ 109, 183. It is not clear whether this is the same as,
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`distinct from or overlapping with the “national market of apps for smartphone enhanced internet
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`access devices,” id. ¶ 121; “the US consumer-facing market for smartphone apps,” id.; or the
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`undefined “app submarkets” referenced elsewhere, id. ¶¶ 168, 235. Plaintiffs suggest at one point
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`that these “app markets . . . are downstream from the smartphone enhanced device market.” Id. ¶
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`183. But this articulation would seem to contradict Plaintiffs’ allegations that hardware and
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`software are “bundle[d]” together in a single “Smartphone Enhanced Internet Information and
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`Commerce Access Device” market, id. ¶¶ 15–16, which itself is an apparent sub-market of the
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`“market for smartphone enhanced commerce and information flow (devices and apps) transacted
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`via the national internet backbone,” id. ¶ 234. The FAC does not define these terms. And,
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`depending on the boundaries of the alleged markets, they do not seem to correspond with the
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`products subject to the alleged antitrust conduct. For instance, it is not clear why the Coronavirus
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`Reporter is an app or program that can only be used on Apple smartphones and not on other
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`smartphone enhanced Internet access devices, or any other device that has access to the internet.
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`Why can the app not be used on laptops and desktops?
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`Plaintiffs attempt to bring clarity to the FAC through its briefing by seeking to narrow the
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`relevant markets upon which it relies, and abandoning many markets alleged in the FAC.
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`However, it is not permissible for Plaintiffs to amend their complaint through motion practice.
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`Tietsworth v. Sears, 720 F. Supp. 2d 1123, 1145 (N.D. Cal. 2010). But even if the Court were to
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`credit Plaintiffs’ attempt at clarifying the scope of the FAC through briefing, Plaintiffs’ newly
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`proposed relevant markets still rely on inconsistent explanations regarding the relevant product
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`markets.
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`Plaintiffs now argue that the principal markets on which their antitrust claims are two
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`foremarkets – “US Smartphones” or “an alternative single brand foremarket” of “US iOS
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`Smartphones” – and four downstream markets, “which by definition, Apple has 100% control
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`over: the iOS institutional App Market, the iOS notary stamp market, the iOS application loader
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`market and the iOS userbase market.” MTS ¶¶ 11-12. But then, in Plaintiffs’ Opposition to
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`Apple’s Motion to Dismiss, they contend that, notwithstanding the various references to other
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`markets throughout the complaint, their antitrust claims are predicated on two foremarkets and five
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`downstream markets. Docket No. 45 (“Opposition”) at 7. More notably, the term “foremarket”
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`does not appear in Plaintiffs’ FAC; it is an entirely new concept unanchored to the FAC.
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`Even if the Court were to proceed from Plaintiffs’ narrowest formulation of the relevant
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`markets for its claims – the two foremarkets and four downstream markets to which Plaintiffs refer
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`in their Motion to Strike, MTS ¶¶ 11-12 – this attempt at creating a narrower framework for the
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`product market analysis fails to provide sufficient clarity to pass muster. Does the “market for
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`smartphone enhanced commerce and information flow (devices and apps) transacted via the
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`national internet backbone,” FAC ¶ 234, correspond to Plaintiffs’ now asserted “US smartphones”
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`foremarket or to one of Plaintiffs’ single-brand downstream markets? What is included in the
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`market for U.S. smartphones? All brands? What about devices such as tablets? Do the included
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`products have to be Internet-enabled? What if they access the Internet only through a Wi-Fi
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`connection? And where do Plaintiffs’ allegations about Apple’s monopoly over “the iOS market,”
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`id. ¶ 124 fit into its proposed framework of two foremarkets and four downstream markets? How
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`do the newly asserted markets relate to Plaintiffs’ allege antitrust injury in the “market of COVID
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`startups”? Id.¶ 81.
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`Case 3:21-cv-05567-EMC Document 85 Filed 11/30/21 Page 13 of 34
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`In summary, the FAC does not provide sufficient clarity for the Court to assess the
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`threshold question of whether there is a relevant market for Plaintiffs antitrust claims. One cannot
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`discern what is included and what is not, and thus analysis of cross-elasticity of demand is not
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`possible. Nor do the newly asserted markets appear to correspond to the markets and allegations
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`pleaded in the FAC.
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`The Court may dismiss Plaintiffs’ antitrust claims based on these findings alone. Sumotext
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`Corp. v. Zoove, Inc., No. 16-CV-01370-BLF, 2016 WL 6524409, at *3 (N.D. Cal. Nov. 3, 2016)
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`(“The Court also finds the allegations of the relevant market to be unclear, and it disagrees with
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`Sumotext that the relevant market need not be alleged at the pleading stage.”); Newcal Indus., Inc.
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`v. Ikon Office Sol., 513 F.3d 1038, 1044 & n.3 (9th Cir. 2008) (a plaintiff alleging a claim under
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`either Section 1 or Section 2 of the Sherman Act must allege the existence of a relevant market
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`and that the defendant has power within that market); Tanaka v. Univ. of S. Cal., 252 F.3d 1059,
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`1064 (9th Cir. 2001) (affirming dismissal based on contradictory market definitions).
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`b.
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`Plausibility of Alleged Product Markets
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`In light of the foregoing analysis that Plaintiffs’ alleged product markets lack clarity, the
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`Court need not analyze the plausibility of any of the product markets which Plaintiffs allege.
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`Nonetheless, the Court will assume arguendo Plaintiffs’ attempt to narrow the relevant markets to
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`two foremarkets and four downstream markets are defined with sufficient clarity, MTS ¶¶ 11-12,
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`a