Technolgy Rules: Fleksy co-founder is suing Apple over lost revenue resulting from App Store scammers

Kosta Eleftheriou, a co-founder of the Fleksy keyboard app later sold to Pinterest in an acqui-hire deal, has been calling attention to Apple App Store issues like fake reviews, ratings and subscription scams, as well as malicious clone apps, after his own app, FlickType, was targeted by scammers. Now, the developer is taking the next step in his App Store crusade: he’s filing a lawsuit against Apple.

The suit, which the developer claims was filed Wednesday in California Superior Court in Santa Clara county, alleges that Apple enticed developers to build applications for its App Store — the only place iOS applications can be legally sold — by claiming it’s a safe and trustworthy place, but doesn’t protect legitimate app developers against scammers profiting from their hard work.

What’s more, the suit says, Apple is disincentivized to do so because scammers are generating revenue for Apple via their use of subscriptions, which involve a revenue share with Apple.

Eleftheriou has been personally impacted by App Store scammers. He left a well-paying job at Pinterest to develop his FlickType app, an alternative swipe keyboard for Apple Watch. After its launch, the app targeted by copycat app makers who claim their apps offer the same feature set as FlickType does, but instead lock users into high priced subscriptions for their poorly designed software. They also flood their apps with fake ratings and reviews to make them appear to be a much better option when users are looking for an app in this space.

Meanwhile, FlickType sports a 3.5-star rating, as it’s often dinged for Apple Watch platform issues that are outside the developer’s control or missing features users want to call attention to. Eleftheriou engages with his app’s users, however — responding to complaints and letting users know when features they’ve requested were added or bugs have been fixed. Scammers simply buy enough 5-star reviews to keep their apps’ overall ratings higher.

In other words, Eleftheriou is doing the hard work of being an App Store developer carving out a category for swipe keyboards for the Watch, but his potential income is being shifted over to scam apps who have a falsified App Store presence.

In years past, Apple took issues of app quality seriously. It worked to clean up shady subscription apps and remove clones and spam from the App Store through regular sweeps. It even once went so far as to ban apps built using templates in an effort to raise the bar on app quality, which angered small businesses who didn’t have the resources or funds to build more professional apps. (Apple later revised its policy to be more equitable.)

But the new lawsuit alleges that Apple is now doing little to police scammers’ apps because it profits from developer misconduct. Eleftheriou also notes he has raised these issues to Apple via his company KPAW, LLC, but Apple did “next to nothing” to resolve the problem.

Eleftheriou’s story is even more complicated, though, because his app was rejected from the App Store numerous times after meeting with Apple special projects manager Randy Marsden over a possible acquisition. He tells TechCrunch numbers were discussed with Apple and his meetings had included a Director and a VP, among others. Apple was considering turning FlickType into an Apple Watch feature, the lawsuit notes.

Shortly thereafter, FlickType was pulled from the App Store over App Store Review Guidelines violations, even as a competitor’s app was approved. Eleftheriou appealed for his app through Developer Relations but was given no guidance on how to prevent the same problem in the future, he said.

Over the months that followed, FlickType continued to face rejections from App Store Review. Apple’s App Store Review said that the app offered a “poor user experience,” even though tech journalists at numerous outlets had praised it, and Apple had once considering buying it. App Review also told the developer that “full keyboard apps are not appropriate for Apple Watch,” while it continued to allow competitors to publish their own keyboard apps.

Apple’s App Review team also allowed third-party apps that were running FlickType’s integratable version of the keyboard to be approved without issues. These included Watch apps like Nano for Reddit, Chirp for Twitter, WatchChat for WhatsApp, and Lens for Instagram.

The App Store has a big problem

You: an honest developer, working hard to improve your IAP conversions.
Your competitor: a $2M/year scam running rampant.

1/

— Kosta Eleftheriou (@keleftheriou) January 31, 2021

After Apple approved FlickType in January 2020, the company claims it had already lost over a year of revenue to competitor keyboards that were not constantly being rejected. Nevertheless, FlickType reached the App Store’s Top 10 Paid app list and generated $130,000 in its first month. As a result of its success, it was quickly targeted by scammers who launched watered down, barely usable competitors to the app, cutting into FlickType’s revenue. FlickType’s revenue dropped to just $20,000 per month. The competitors were also using fake ratings to get their app boosted and installed by unsuspecting users.

Eleftheriou’s story was not unique, as it turned out. In recent months, he has been documenting the App Store’s multimillion-dollar scams, including those he was facing as well as others brought to his attention by developers with similar struggles. Apple, in some cases, would take action against the scammers he highlighted on social media. In other cases, it would not. And it would sometimes only take down one of the developer’s scam apps, but allow others under the same developer account to continue to operate.

The new lawsuit aims to hold Apple accountable for the issues Eleftheriou faced by asking Apple to restore his lost revenue and pay out any other damages awarded by the court.

Apple has not responded for a request for comment at this time.

A copy of the lawsuit is below. It is not yet appearing in public record searches for verification purposes. We’ll follow up to confirm when the case appears online and update accordingly.

Kpaw, LLC v. Apple, Inc by TechCrunch on Scribd