Apple settles lawsuit with developer over App Store rejections and scams

An app developer’s lawsuit over App Store rejections, scams and fraud has ended in a settlement agreement after court filings show a request to dismiss the suit earlier this summer. The plaintiff, app developer and former Pinterest engineer Kosta Eleftheriou, made a name for himself in recent months calling out some of the most egregious App Store scams. This later culminated in a lawsuit of his own against Apple, filed in California’s Superior Court in Santa Clara County in March 2021, where he alleged his own app had been unfairly rejected from the App Store and then later targeted by scammers, leading to lost revenues.

The case had been a high-profile example of developer discontent with Apple’s App Store business. Many developers have become dissatisfied not only with the requirement to pay Apple commissions on their own sales — something Epic Games is suing over currently — but also the how the App Store model itself incentivizes scammers to rip off and profit from legitimate developers’ work. But few take these matters court, as Eleftheriou had done.

His complaint alleged that not only had Apple rejected his FlickType Apple Watch keyboard app from the App Store, it then approved competitor keyboard apps and others that used an integrated version of FlickType keyboard to publish to the App Store. This seemingly contradicted Apple’s claim that the FlickType keyboard offered a “poor user experience,” given that Apple’s own app review team was greenlighting the same technology when integrated into other apps like Nano for Reddit, Chirp for Twitter, WatchChat for WhatsApp and Lens for Instagram.

In addition, when the keyboard app was allowed to reenter the App Store, its early success made it a target for App Store scammers who launched less usable competitors boosted by fake ratings and reviews.

As a result, FlickType’s own revenue dropped from $130,000 in its first month to just $20,000 as consumers went for the “better-rated” alternatives, the developer said.

Eleftheriou was unable to comment on the terms of the settlement. Apple was not immediately able to comment on the dismissal either.

However, it’s hard to imagine the developer would have agreed to dismiss the case if terms were not at least somewhat agreeable, given his ongoing criticism of Apple’s App Store business and the hardships developers face.

Last year, for example, Eleftheriou served as the source for news stories about App Store scams like a crypto wallet app that scammed a user out of his life savings (~$600,000); a kids game that contained a hidden online casino; and a VPN app that scammed its users out of $5 million per year, among others. His findings were also brought up in a line of questioning during a Senate antitrust hearing in April 2021, when Apple Chief Compliance Officer Kyle Andeer as to why Apple was not able to locate these sorts of scams itself, given they were “trivially easy to identify,” citing Eleftheriou’s work.

More recently, the FTC highlighted fake App Store reviews as a part of a larger action against rental platform Roomster, in its lawsuit filed this week — an indication that if Apple wouldn’t take action, it would.

Though App Store reviews continue to be an issue, Apple has made some concessions related to developers’ needs in the time since Eleftheriou’s lawsuit was filed.

Last fall, Apple brought back the “Report a Problem” button on the App Store, which invites the public to help it fight apps committing fraud. It also updated its App Store Guidelines in June of last year to crack down on fraud and scams by promising to remove scammers from the Apple Developer Program.

But more work still needs to be done, as app developers are still too often left with no recourse but to post to Twitter or reach out to the media to have their complaints heard when a scammer is impacting their business and revenues. That was recently the case with Authenticator app developer Kevin Archer, who detailed in a Twitter thread how he continues to face subscription scammers on the App Store who copied his legitimate app, then beg for reviews during onboarding and push a subscription on consumers upon first launch.

While settling smaller lawsuits like Eleftheriou’s may be routine for a company of Apple’s size, the attention they receive — not only amongst developers but also in the broader community of Apple consumers — is not something Apple likely wants to manage at present. The company particularly wants to avoid negative public perceptions of its business at a time when the U.S. Justice Department is in the early stages of filing an antitrust lawsuit targeting Apple.

The developer says he’s now working on a project related to an iPhone keyboard but doesn’t have further details to share at this time. Notably, his amended complaint referenced difficulties with building keyboard apps as Apple never made available a developer API to request “Full Access” directly from the keyboard. He also argued that Apple constrains third-party keyboards in areas like available memory, the ability to gather data to make better predictions, the ability to be used in password fields and restrictions over showing visual elements above the keyboards, the complaint stated.

Eleftheriou couldn’t say yet what, if anything, has since changed on this front and that his new app may be able to address.

He’s still on the lookout for scams, too. Using a software tool he built to identify App Store subscription scams and fraud, Eleftheriou realizes there’s still much more work that needs to be done.

“Just the other day, I re-ran my scam-finding tool and was able to find several new scam apps within five minutes, and this clearly affects users and developers alike,” he noted.