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`BLIX INC.,
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`v.
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`APPLE, INC.,
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`Plaintiff,
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`Defendant.
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`C.A. No. 19-1869-LPS
`
`SECOND AMENDED COMPLAINT
`
`ASHBY & GEDDES
`John G. Day (#2403)
`Andrew C. Mayo (#5207)
`500 Delaware Avenue, 8th Floor
`P.O. Box 1150
`Wilmington, DE 19899
`(302) 654-1888
`jday@ashbygeddes.com
`amayo@ashbygeddes.com
`
`Attorneys for Plaintiff
`
`
`
`
`
`
`
`
`
`
`Of Counsel:
`
`Daniel J. Melman
`Guy Yonay
`Sarah Benowich
`Shaoul Sussman
`PEARL COHEN ZEDEK LATZER BARATZ LLP
`Times Square Tower
`7 Times Square, 19th Floor
`New York, NY 10036
`(646) 878-0800
`
`Mark C. Rifkin
`Thomas H. Burt
`WOLF HALDENSTEIN ADLER
` FREEMAN & HERZ LLP
`270 Madison Avenue, 9th Floor
`New York, NY 10016
`(212) 545-4600
`
`Dated: February 12, 2021
`
`
`
`
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 2 of 99 PageID #: 1695
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`TABLE OF CONTENTS
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`Page
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`
`
`I.
`II.
`III.
`IV.
`V.
`
`B.
`
`C.
`
`INTRODUCTION .............................................................................................................. 1
`NATURE OF THE ACTION ............................................................................................. 9
`THE PARTIES.................................................................................................................... 9
`JURISDICTION AND VENUE ....................................................................................... 10
`FACTUAL BACKGROUND ........................................................................................... 12
`A.
`The Rise of the iPhone .......................................................................................... 12
`i. Mobile OS and iOS.......................................................................................... 13
`ii. The Rise of Third-Party Developers for iOS .................................................. 15
`iii. Apple’s Smartphone Business Model: Selling Smartphones and Smartphone-
`Related Services ............................................................................................ 17
`iv. Apple’s Control of App Distribution ............................................................. 20
`Apple Maintains its Monopoly Power Through Anticompetitive Conduct .......... 23
`i. Apple’s OS market power depends on significant barriers to entry ............... 23
`ii. Apple’s Efforts to Deter, Suppress, and Neutralize Mobile OS Competition 25
`iii. Stealing Innovation Using the App Store ...................................................... 30
`The Relevant Markets and Apple’s Monopoly Power .......................................... 32
`i. Mobile OS in the United States ....................................................................... 32
`ii. Apple’s Monopoly Power in the Mobile OS Market ...................................... 33
`iii. Consumer Single Sign-On in the United States ............................................ 36
`A New Threat to Apple’s Mobile OS Monopoly Emerges ................................... 42
`i. Blix’s ’284 Patent ............................................................................................ 42
`ii. Blix’s Implementation of The ’284 Patent ..................................................... 44
`iii. How Blix Messaging Bridge is Integrated in Third-Party Software ............. 46
`iv. Blix’s Patent and Products Pose a Substantial Threat to Apple’s Monopoly
`Power in The OS Market, and Apple’s Position In the Consumer SSO
`Market. .......................................................................................................... 50
`Apple’s Anticompetitive Conduct to Neutralize Blix and the Emergence of
`Competitive Privacy-Driven Messaging Technology ........................................... 56
`i. Apple Put Sand in Blix’s Gears and Sabotaged its Plans to Scale its
`Technology in Order to Maintain its Monopoly Power in the Mobile OS
`Market ............................................................................................................. 56
`ii. Apple’s Infringement of the ‘284 Patent ........................................................ 58
`
`D.
`
`E.
`
`
`
`i
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`
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`F.
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`iii. Apple’s Tie in the Consumer SSO Market .................................................... 63
`iv. Apple Continues to Target and Harm Blix .................................................... 67
`Harm To Competition ........................................................................................... 71
`i. Apple’s Anticompetitive Embrace and Extend Strategy .................................. 71
`‘Sign In With Apple’ Uses the Pretext of User Privacy as an Anticompetitive
`ii.
`Weapon Against Developers .......................................................................... 73
`iii. Apple’s Decision to Flood The Market With Its Corrupted and Inferior
`Version of Blix’s Technology Harms Third-Party Developers and Users ... 78
`COUNT I .......................................................................................................................... 81
`A.
`Infringement of the ’284 Patent ............................................................................ 81
`VII. COUNT II ......................................................................................................................... 88
`A.
`Monopolization Under 15 U.S.C. § 2 –Monopoly Maintenance .......................... 88
`VIII. COUNT III ........................................................................................................................ 91
`A.
`Monopoly Tying Under 15 U.S.C. §§ 1 and 2 ...................................................... 91
`JURY DEMAND .............................................................................................................. 93
`PRAYER FOR RELIEF ................................................................................................... 93
`
`VI.
`
`IX.
`X.
`
`
`
`ii
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`
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 4 of 99 PageID #: 1697
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`Plaintiff Blix Inc. (“Blix” or “Plaintiff”) hereby demands a jury trial and alleges the
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`following against Defendant Apple Inc. (“Apple” or “Defendant”):
`
`I.
`
`INTRODUCTION
`
`1.
`
`At its core, this case is about how Apple, a once disruptive and inventive
`
`company, has become an immovable roadblock on the path to innovation.
`
`2.
`
`Consumers should have access to the best software and on terms that best suit
`
`their needs, chosen through the natural selection process of fair competition on the merits. That
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`evolutionary process drives innovation, ensures competitive pricing, improves user privacy and
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`security, and increases demand for cutting-edge technologies. Apple harms that process by using
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`its increasing monopoly control over Mobile operating systems in the United States to
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`continuously and stifle emerging competitive threats and disruptive technology in order to
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`maintain its market power.
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`3.
`
`This is not case about product design or technical integration; rather, it is about
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`Apple’s using anticompetitive contractual restrictions to exclude competition and limit the ability
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`of rivals and threatening technology. Blix is asking to eliminate anticompetitive terms and
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`conditions—not to redesign iOS.
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`4.
`
`In this action, the Court is confronted with the task of determining whether Apple
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`should continue to exclude competitive threats and maintain its unchecked monopoly power to
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`the detriment of consumers, businesses, and innovation.
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`5.
`
`Apple is the most dominant provider of smartphones and smartphone operating
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`systems in the United States. With a market capitalization of over $2 trillion, Apple is the most
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`valuable company in the U.S. and one of the most recognized brands in the world. Apple’s
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`ubiquitous iPhone is an American status symbol, marketed as a premium product and sold for
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`about $300 more than the average smartphone.
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`
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`1
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 5 of 99 PageID #: 1698
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`6.
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`Apple commands a massive and unique user base with a high switching costs for
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`users and substantial barriers to entry for rivals.
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`7.
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`Through its iPhones, Apple runs a tightly integrated digital ecosystem centered on
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`its proprietary mobile operating system, iOS. In addition to Google’s Android OS, iOS is one of
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`two major players in the mobile operating system market, though there are important differences
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`between them. Apple’s iOS is the only OS allowed on its devices and is not licensed to other
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`manufacturers. Google, by contrast, does allow users to run a third-party OS on its devices, and
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`licenses its Android OS to a variety of manufacturers.
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`8.
`
`iOS holds a 61.47% share of the mobile operating system (“Mobile OS”) market,
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`measured by the number of smartphones on which it runs in the U.S.1 However, this estimate
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`likely understates the true magnitude of Apple’s market share. Given the significantly higher
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`prices that Apple charges for the iPhone in comparison to phones that run Android OS, Apple’s
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`market share measured by revenue is likely considerably higher than 61.47%.
`
`9.
`
`Even Apple’s high market share understates its market power over users and
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`developers. Apple’s monopoly power relies upon the centrality of its devices and iOS to the user
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`experience. For decades, Apple has used this dynamic to its advantage, entrenching its power
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`over both consumers and developers. For example, Apple has consistently raised prices on new
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`iterations of the iPhone, without any significant number of consumers switching to Android.2
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`And most iOS users do not multi-home, meaning that they do not use both an Apple and Android
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`product, but are instead trapped by the stickiness of the Apple ecosystem.
`
`
`1 See “Mobile Operating System Market Share United States Of America,” https://gs.statcounter.com/os-
`market-share/mobile/united-states-of-america/#monthly-200901-202102
`2 See “Yup, it costs $999. But you'll pay it.”
`https://money.cnn.com/2017/09/12/technology/gadgets/iphone-x-price/index.html
`
`
`
`2
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 6 of 99 PageID #: 1699
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`10.
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`Correspondingly, because developers cannot reach iOS users on any non-iOS
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`device, they have no choice but to multi-home. Given the size and more lucrative nature of the
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`iOS user base, developers have no choice but to distribute their apps through iOS. As a result of
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`this dynamic, Apple can charge supra-competitive fees and impose restrictive terms on
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`developers in exchange for accessing iOS users.
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`11.
`
`Apple understands that to maintain its dominance, it must identify and neutralize
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`any threat to its power or the anticompetitive effects that flow from it. Therefore, any innovative
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`technological development that lowers switching and multi-homing costs for users, decreases
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`dependence on iOS for developers, and reduces barriers to entry for rivals pose a major
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`competitive threat to Apple.
`
`12.
`
`Plaintiff Blix Inc. poses exactly that threat. Blix’s patented Messaging Bridge is
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`an innovative tool aimed at promoting true privacy online. After verifying a user’s private e-mail
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`address, Blix’s Messaging Bridge creates randomly generated incognito aliases to facilitate
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`anonymous e-mail communications. Third-party developers can integrate Messaging Bridge into
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`their apps, allowing users to anonymously engage with those developers. Importantly, Messaging
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`Bridge offers interoperability and flexibility for users, as it can be used on any OS, across media
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`types (e.g., apps, Twitter links, websites, etc.), and with any e-mail client.
`
`13. Messaging Bridge is especially useful for the facilitation of Consumer Single
`
`Sign-On (“Consumer SSO”), a service that centralizes a single set of user credentials which can
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`be used to authenticate that user’s identity for multiple apps or services across platforms.
`
`Because anonymity is an integral aspect of its Messaging Bridge technology, Blix could offer a
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`more secure and private Consumer SSO than its competitors. Furthermore, Blix offers a seamless
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`experience for users to easily link Consumer SSOs to their email clients and addresses.
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`3
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 7 of 99 PageID #: 1700
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`14.
`
`Apple appears to have recognized the nascent competitive threat that Messaging
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`Bridge posed to its marker power in mobile phones and operating systems, particularly as a
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`privacy-focused entrant into the Consumer SSO market. Unlike any other competitor, Blix
`
`threatens Apple by offering a more secure and more private solution than Apple’s solution while
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`at the same time lowering barriers to switching for users and reducing the dependence of
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`developers on iOS and Apple.
`
`15.
`
`In the past, when onerous fees and unreasonable restrictions were not enough to
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`stop iOS developers from offering monopoly-threatening products, Apple has escalated its
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`anticompetitive behavior. The integration of stolen technology into its own products is a well-
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`known chapter in Apple’s playbook. Apple frequently takes other companies’ innovative
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`features, adds those ideas to its own software products without permission, and then either ejects
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`the original third-party app from its operating systems or suppresses it in iOS App Store
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`searches. This behavior has been so pervasive throughout Apple’s history that it acquired its own
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`name, “Sherlocking,” after a bygone file and web search tool—the functionality of which Apple
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`conveniently plucked from a third-party developer’s product, rendering it immediately obsolete.
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`16.
`
`Apple escalated similarly with Blix. In September 2019, Apple introduced
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`‘Sign in with Apple’ as its proprietary Consumer SSO,3 infringing upon Blix’s Messaging
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`Bridge patent and offering the copycat ‘Hide my email’ feature as its own. Essentially, Apple
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`Sherlocked Blix’s technology, and then took steps to use that stolen technology to entrench
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`Apple’s dominance in iOS and eliminate the threat of competition in the Consumer SSO market.
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`Specifically, in addition to infringing the patent, Apple abused its power, pretextually removing
`
`
`3 See “Sign In with Apple will come to every iPhone app: How the new privacy login tool works,”
`https://www.cnet.com/how-to/sign-in-with-apple-will-come-to-every-iphone-app-how-the-new-privacy-
`login-tool-works/
`
`
`
`4
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`
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 8 of 99 PageID #: 1701
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`Blix’s e-mail client, BlueMail, from its app stores without reasonable explanation. On
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`information and belief, Apple then used this pretextual conduct to further harm competition by
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`throwing sand in Blix’s gears, forcing Blix to divert attention from deploying and scaling
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`Messaging Bridge at a critical moment for the Consumer SSO market, while Apple used its
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`behemothian resources to misappropriate Blix’s product. Where Blix could have benefitted from
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`a first-mover advantage in the market spurred by its own innovation, Apple was able to capture a
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`significant portion of that value through anticompetitive means.
`
`17.
`
`Blix’s Messaging Bridge threatens Apple in two important ways, which Apple
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`has taken anticompetitive action to resist. First, Blix poses a threat to Apple’s monopoly power
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`in the Mobile OS market. Second, the ease of integration of Blix’s Messaging Bridge into
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`Consumer SSOs threatens Apple’s offering in this market.
`
`18.
`
`Blix’s technology allows iOS users to interact with third-party app developers
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`seamlessly and anonymously. Communications funneled through the Messaging Bridge are
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`completely insulated from Apple’s surveillance, preventing Apple from monitoring and cross-
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`referencing communications between iOS users and developers. In essence, Blix offers
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`technology that would make it more difficult for Apple to Sherlock rivals.
`
`19.
`
`In keeping with its traditional adhesion approach to developer contracts, Apple
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`revised the contractual provisions in its App Store Review Guidelines to mandate that any app
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`which offers any third-party Consumer SSO must also offer ‘Sign in with Apple’ as an option.
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`The ‘Sign in With Apple’ requirement is not based on any technological integration of software
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`functionality embedded in iOS. It is a plain and aggressive exclusionary conduct and contractual
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`tie intended to further raise the walls around Apple’s user base, defending and entrenching the
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`iOS monopoly. And it creates a lose-lose-lose situation for Blix and the entire mobile OS user
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`
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`5
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 9 of 99 PageID #: 1702
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`base. If Blix maintains users’ ability to offer an email service that provides users with the ability
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`to authenticate and access to popular email services such as Gmail or Outlook it will trigger
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`Apple’s exclusionary restriction and tie, rendering Blix’s Messaging Bridge duplicative and
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`obsolete. If Blix resists Apple’s tie and removes these authentication methods, then it loses one
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`of its core functionalities, that is, seamless, centralized secure, and private communication across
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`e-mail boxes. If a third-party app chooses not to comply with Apple’s anticompetitive
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`requirement, then, per Apple’s guidelines, Apple will exclude the app from the App Store.
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`Additionally, forcing developers to use ‘Sign in with Apple’ increases the amount of developer
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`resources that comes at a substantial opportunity cost and will go toward enriching Apple, rather
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`than innovating and creating richer user experiences.
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`20.
`
`Apple has, as it often does, inserted itself as the intermediary between users and
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`developers through ‘Sign in with Apple,’ which harms both, by increasing already high
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`switching costs and user lock-in even further.
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`21.
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`Apple simply reserves its power over users for itself. An iOS user who wants to
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`switch would not be able to bypass Apple’s control over ‘Sign in with Apple’ and easily
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`reestablish communications with developers on Android. Instead, that user would have to log-in
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`to each individual app manually and reenter their information, which discourages switching and
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`intensifies Apple’s stickiness.
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`22.
`
`In contrast, Blix’s Messaging Bridge is a tool of disintermediation. Its platform-
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`agnostic, user-centric model reduces consumer and developer dependence on iOS and could
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`facilitate an increase in switching or multi-homing by making it easy to sign into non-Apple
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`devices and services privately and securely.
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`6
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 10 of 99 PageID #: 1703
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`23.
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`Consumers also suffer harm from Apple’s exclusion of Blix as a new entrant with
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`a new business model in the Consumer SSO market. Consumers’ frustration with trading their
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`privacy and personal data for software and online services is at a new high, leading them away
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`from names like Amazon, Facebook, or Google, which they know surveil them, mine their data,
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`and sell it to advertisers. ‘Sign in with Apple,’ though it does offer an alternative model, provides
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`a distinction without a difference. It is easy for Apple to offer more privacy in comparison to
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`companies like Google, and their for-profit data mining operations.
`
`24.
`
`But the level of privacy Apple offers its users pales in comparison with the
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`new wave of privacy-centric offerings. With its competitive technology, Blix is able to offer
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`users more privacy and control than Apple, which is significant benefit to consumers and a
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`significant and direct competitive threat to Apple.
`
`25.
`
`Blix offers an innovative third alternative that asks the least of the end user.
`
`Blix provide the login service without taking control of the communication, neither taking
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`payment in the form of data for targeted advertising, or in the case of ‘Sign in with Apple’ for
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`marketing, nor extracting control of the interaction as its price. In an attention- and data-
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`economy, this is the equivalent of a steeply discounted price.
`
`26.
`
`Relatedly, Apple’s claim that its anticompetitive behavior is justified by its
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`privacy advantages over other Consumer SSOs is pretextual. Apple acts as an overseer of nearly
`
`every iOS-based user relationship and abuses that position to undercut rivals and deepen its
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`moat. Additionally, Apple’s many “privacy” justifications for its abusive practices instead act as
`
`a shield from scrutiny—either from competitors, iOS users, or antitrust regulators. While Apple
`
`claims to be an industry leader in protecting user privacy, Blix actually protects user privacy.
`
`Apple’s exclusionary conduct harms competition to provide users with more private and more
`
`
`
`7
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`
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 11 of 99 PageID #: 1704
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`secure technology. In today’s digital economy, this is precious and substantial dimension of
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`competition and well within the boundaries of the harms that the antitrust laws are intended to
`
`address.
`
`27.
`
`Apple’s monopoly power in iOS allows it to use ‘Sign in with Apple’ to hold
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`developers hostage, offering guidelines and agreements with highly unfavorable terms, under
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`threat of removing access to the critical iOS user base.
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`28.
`
`If allowed to, Blix’s innovative technology can offer, quite literally, a bridge
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`over the moat Apple insidiously dug around its captive user base. But instead, it is becoming
`
`merely the latest of Apple’s long line of victims that have suffered extraordinary injury from
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`Apple’s anticompetitive conduct. As a result, Blix’s ability to succeed in the marketplace for
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`cross-platform messaging solutions is at grave risk. Indeed, this underscores the anticompetitive
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`intent and effect behind Apple’s actions, as cross-platform messaging solutions are a threat to
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`Apple’s dominance.
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`29.
`
`Like past competitive threats, Apple seeks to neutralize the danger to its
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`monopoly by misappropriating and weaponizing innovative technologies given to Apple for
`
`distribution on iOS, which developers generally cannot forgo. And in addition to the specific
`
`consumer harm flowing from Apple’s inferior ‘Sign in with Apple,’ the company’s conduct
`
`harms consumers generally because developers like Blix cannot invest in new software for iOS
`
`users if Apple cannot offer fair access to users nor refrain from stealing patented technology.
`
`30.
`
`Apple harnesses its omnipotent market power to deepen the moat it dug around
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`its cash cow, the imprisoned iOS user base, from which it extracts supracompetitive profits, as
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`well as maintaining high barriers to entry for competitors that rely on iOS.
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`
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`8
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 12 of 99 PageID #: 1705
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`31.
`
`Apple’s exclusionary conduct harms to the competitive process, and the remedies
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`Blix seeks from the Court in this case center on restoring competition to the Mobile OS and
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`Consumer SSO markets. First, Blix seeks to hold Apple accountable for its infringement upon
`
`the patent it appropriated in order to create ‘Sign in with Apple.’ Blix respectfully asks this Court
`
`to protect patented inventions, and to compensate for the damages arising from this patent
`
`infringement. Second, and equally importantly, Blix seeks to enjoin Apple from engaging in the
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`anticompetitive conduct which has created and sustained its monopoly power in the Mobile OS
`
`market, and to prevent Apple from abusing that power to harm consumers and thwart innovative
`
`entry into emerging markets.
`
`32.
`
`Apple’s conduct, if not constrained by this Court, will further deepen the moat
`
`that protects it from meaningful competition.
`
`II.
`
`NATURE OF THE ACTION
`
`33.
`
`This is an action for patent infringement arising under the Patent Laws of the
`
`United States, 35 U.S.C. §§ 1, et seq., and for antitrust violations under the Sherman Act, 15
`
`U.S.C. §§ 1 et seq.
`
`34.
`
`Plaintiff filed this lawsuit to stop Defendant’s unlawful infringement of Plaintiff’s
`
`patented invention, to halt Defendant’s unlawful effort to maintain and extend monopolies by
`
`illegally blocking competition, and to obtain damages, an injunction, and other relief.
`
`III. THE PARTIES
`
`35.
`
`Plaintiff Blix Inc. is a Delaware corporation with its principal place of business at
`
`101 Hudson Street, Jersey City, New Jersey. Blix is the successor by merger to BlueMail Inc.
`
`BVI and BlueMail LLC, the entities that first developed BlueMail, and is the exclusive owner of
`
`all claims, including antitrust claims, arising from the injuries Apple caused to the BlueMail
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`business.
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`
`
`9
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 13 of 99 PageID #: 1706
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`36.
`
`Defendant Apple Inc. is a California corporation headquartered in Cupertino,
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`California. Apple operates retail stores throughout the country, including in this District, where it
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`sells iPhone devices preloaded with iOS software—including software specially configured for
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`the infringing features of the ‘Sign In With Apple’ service.
`
`IV.
`
`JURISDICTION AND VENUE
`
`37.
`
`Plaintiff’s claims for patent infringement arise under the patent laws of the United
`
`States of America, 35 U.S.C. §§ 1 et. seq., including 35 U.S.C. § 271. Plaintiff’s claims for
`
`antitrust violations arise under the Sherman Act, 15 U.S.C. §§ 1 et seq., including 15 U.S.C. § 2.
`
`This Court has exclusive subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337 and
`
`1338(a).
`
`38.
`
`Apple is subject to this Court’s personal jurisdiction. Apple has infringed the ’284
`
`patent in Delaware by, among other things, engaging in infringing conduct within and directed at
`
`or from this District. For example, Apple has purposefully and voluntarily placed its infringing
`
`products as described herein into the stream of commerce with the expectation that these
`
`infringing products will be used in this District. On information and belief, these infringing
`
`products, including devices running iOS such as iPhones and iPads, have been and continue to be
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`used in this District.
`
`39.
`
`Apple employs individuals and operates a retail store at 125 Christiana Mall in
`
`Newark, Delaware in this District. Upon information and belief, this store sells more infringing
`
`iPhones than any other Apple retail location in the country and sells and/or supports the second-
`
`highest volume of infringing products out of any Apple retail location in the country.4
`
`
`4 See D.I. 13-2, Exhibit 2 to Amended Complaint
`
`
`
`10
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 14 of 99 PageID #: 1707
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`40.
`
`Consumers and software developers use the infringing ‘Sign In With Apple’
`
`service with Apple devices throughout the District. Apple has provided the ‘Sign In With Apple’
`
`system, including iOS software containing ‘Sign In With Apple,’ to software developers in this
`
`District. Apple is also selling devices running iOS to consumers in this District and pushing
`
`software updates to users in this District. As discussed herein, Apple has specifically instructed
`
`software developers, as well as end-users of Apple devices, to use the infringing features of
`
`‘Sign In With Apple.’
`
`41.
`
`On information and belief, ‘Sign In With Apple’ is already pre-installed on iOS
`
`13 devices being sold in this District and being offered as a software update to existing iPhone
`
`and iPad devices in this District. On information and belief, users in this District are already
`
`using the infringing service—for example, to sign in and communicate with applications such as
`
`Kayak and Instacart. On information and belief, infringing aspects of ‘Sign In With Apple’ such
`
`as the “Hide My Email” option, are available and being used in this District.
`
`42.
`
`Apple repeatedly has availed itself of the jurisdiction of this Court by filing
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`complaints for patent infringement in this District (see, e.g., Apple Inc. v. HTC Corp. et al, C.A.
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`No. 11-611-GMS; Apple Inc. v. HTC Corp. et al, C.A. No. 10-544-GMS; Apple Inc. v. HTC
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`Corp. et al, C.A. No. 10-167-GMS; Apple Inc. v. HTC Corp. et al, C.A. No. 10-166-GMS; Apple
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`Inc. v. Atico Int'l USA Inc. et al, C.A. No. 8-283-GMS).
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`43.
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`This Court also has personal jurisdiction over Apple because, as alleged herein, it
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`has transacted business in this District; directly or indirectly sold or marketed substantial
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`quantities of its products and services in this District; and engaged in anticompetitive conduct
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`that was directed at, and had a direct, substantial, and reasonably foreseeable and intended effect
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`of causing injury to, the business or property of persons and entities residing in, located in, or
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 15 of 99 PageID #: 1708
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`doing business in this District. Apple has conducted business in this District, and it has
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`purposefully availed itself of the resources and the benefits of conducting business in this
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`District. These activities, among others, give rise to Blix’s antitrust claims.
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`44.
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`Venue is proper in this Court pursuant to 28 U.S.C. §§ 1391 and 1400 because
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`Apple has a regular and established place of business in this District, is subject to personal
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`jurisdiction in this District, regularly conducts business in this District, and has committed and
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`continues to commit acts of direct and indirect patent infringement in this District. Venue is also
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`proper in this judicial district under 28 U.S.C. § 1391 because a substantial portion of the events
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`or omissions giving rise to Blix’s claims occurred in this District.
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`V.
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`FACTUAL BACKGROUND
`A. The Rise of the iPhone
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`45.
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`Apple was incorporated in 1977 and is headquartered in Cupertino, California.
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`Apple was one of the first companies to design and market mass-produced personal computers.
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`Currently, the company “designs, manufactures, and markets smartphones, personal computers,
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`tablets, wearables and accessories. And it also sells a variety of related services.”5
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`46.
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`At the Macworld Conference and Expo in January 2007, Apple’s late-CEO
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`Steve Jobs introduced the long-awaited iPhone, which was best described at the time as a
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`synthesis of an internet-enabled mobile phone, and the then-widely popular portable music
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`player device, the iPod.6 The first-generation iPhone was released on June 29, 2007. It combined
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`5 See “Description for Apple Inc.,” https://finbox.com/NASDAQGS:AAPL/explorer/description
`6 See “Watch Steve Jobs Unveil the First iPhone 10 Years Ago Today,” https://time.com/4628515/steve-
`jobs-iphone-launch-keynote-2007/
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`Case 1:19-cv-01869-LPS Document 59 Filed 02/12/21 Page 16 of 99 PageID #: 1709
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`cellular phone hardware found in handheld devices with Apple’s own proprietary software
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`dubbed iPhone OS, which was renamed iOS in 2010.7
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`41.
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`The iPhone offered several features, such as a full screen front-facing design that
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`eliminated the need for a physical keypad, which attracted users, and it quickly gained a large
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`market share.
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`42.
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`By July 2016, fewer than ten years after the iPhone first launched, Apple reported
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`that over one billion devices had been sold worldwide.
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`43.
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`Before the iPhone, “handsets were viewed largely as cheap, disposable lures,
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`massively subsidized to snare subscribers and lock them into using the carriers’ proprietary
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`services.”8 In contrast, as a tech journalist explained, “Apple retained complete control over the
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`design, manufacturing, and marketing of the iPhone,” meaning that unlike previous generations
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`of phones, the maker and not the carrier would control the software updates and security
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`patches.9
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`i. Mobile OS and iOS
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`44.
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`Like laptop and desktop personal computers that predated the iPhone, mobile
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`devices such as smartphones and tablets require an operating system or “OS” that enables
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`multipurpose computing functionality.
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`45.
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`An OS for mobile devices (a “mobile OS”), just like the traditional OS used to run
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`any computer, is a piece of software that provides basic functionality to users of smartphones,
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`such as button controls, touch commands, motion commands, and the basic “graphical user
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`7