U.S. Supreme Court Appears 'Open' to Allowing App Store Monopoly Lawsuit vs. Apple to Proceed
U.S. Supreme Court justices "appeared open" to letting a proposed class-action lawsuit proceed against Apple that accuses the company of operating an illegal App Store monopoly, according to Reuters.
The lawsuit was filed in 2011 by a group of iPhone users who believe Apple violates federal antitrust laws by requiring apps to be sold through its App Store, where it collects a 30 percent commission from all purchases, leading to inflated prices as developers pass on the cost of the commission to customers.
The bottom line is that the iPhone users, led by Chicago resident Robert Pepper, believe that apps would be priced lower outside of the App Store, as Apple's 30 percent cut would not be baked in to prices.
The lawsuit was initially dismissed in 2013 by a California district court, due to errors in the complaint, but the U.S. Court of Appeals for the Ninth Circuit revived the case in 2017. Apple appealed with the Supreme Court, which will rule whether the case should proceed after hearing an hour of arguments today.
From the start, Apple has argued that it doesn't set prices for paid apps, and that charging a 30 percent commission on the distribution of paid apps and in-app purchases does not violate antitrust laws in the United States. Last year, the U.S. Department of Justice filed an amicus brief in support of Apple.
The plaintiffs, meanwhile, are backed by 30 state attorneys general, including those representing Texas, California, and New York. The Supreme Court is expected to make its ruling by June 2019.
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People with Little or No Understanding of Technology Demonstrate Little or No Understanding of Technology
And for those wondering, some of what Apple's 30% pays for for devs:
- Credit card transactions (incl. associated fees)
- Managing sales tax - local and international (!!!)
- Distribution (server and bandwidth costs)
- Sales and installation analytics
FWIW, as most of my app development is corporate in nature, I have to say that not everything must be distributed through the App Store. There are enterprise deployment options. While this doesn't change things for Joe Consumer, it does mean that when a company hires me to create an app for internal use, we can develop, test and deploy internally without ever touching the App Store and I can turn the app over to them at the end of the contract where they can continue to administer and deploy as they see fit.
Ultimately I see this suit going nowhere. SCOTUS has historically sided with multiple companies accused of the same sort of monopoly. Apple created the platform, they created their ecosystem and there are other alternatives out there. Apple has already won a similar suit regarding iTunes music distribution and AT&T and Verizon have both won similar suits in the past with their own services and music offerings (although on a much smaller scale) before smartphones/ iPhone came along.
And if this suit progresses through, then we as a collective society may as well file suit against Microsoft, Google, Sony, Nintendo, and so on... As they all have their "app stores" for various devices or systems. I can't just download any app/game I want and run it on my Nintendo Switch -- nope, got to get it from the eShop. PlayStation Store? Yep. Xbox Live? Yep.