Supreme Court Allows App Store Monopoly Lawsuit Against Apple to Proceed [Updated]

The U.S. Supreme Court on Monday ruled 5-4 against Apple in an anticompetitive case involving the App Store, allowing iPhone users to move forward with their class action lawsuit against the company, as first reported by CNBC.


From the Supreme Court's ruling:

In this case, however, several consumers contend that Apple charges too much for apps. The consumers argue, in particular, that Apple has monopolized the retail market for the sale of apps and has unlawfully used its monopolistic power to charge consumers higher-than competitive prices.

A claim that a monopolistic retailer (here, Apple) has used its monopoly to overcharge consumers is a classic antitrust claim. But Apple asserts that the consumer plaintiffs in this case may not sue Apple because they supposedly were not "direct purchasers" from Apple under our decision in Illinois Brick Co. v. Illinois, 431 U. S. 720.

We disagree. The plaintiffs purchased apps directly from Apple and therefore are direct purchasers under Illinois Brick. At this early pleadings stage of the litigation, we do not assess the merits of the plaintiffs' antitrust claims against Apple, nor do we consider any other defenses Apple might have. We merely hold that the Illinois Brick direct-purchaser rule does not bar these plaintiffs from suing Apple under the antitrust laws. We affirm the judgment of the U. S. Court of Appeals for the Ninth Circuit.

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.

In other words, the ‌iPhone‌ users 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 then appealed with the Supreme Court.

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. In 2017, the U.S. Department of Justice filed an amicus brief in support of Apple.

Update: Apple has issued a statement (via John Packzowski) regarding the decision:

Today's decision means plaintiffs can proceed with their case in District court. We're confident we will prevail when the facts are presented and that the ‌App Store‌ is not a monopoly by any metric.

We're proud to have created the safest, most secure and trusted platform for customers and a great business opportunity for all developers around the world. Developers set the price they want to charge for their app and Apple has no role in that. That vast majority of apps on the ‌App Store‌ are free and Apple gets nothing from them. The only instance where Apple shares in revenue is if the developer chooses to sell digital services through the ‌App Store‌.

Developers have a number of platforms to choose from to deliver their software — from other apps stores, to Smart TVs to gaming consoles — and we work hard every day to make our store is the best, safest and most competitive in the world.

The Supreme Court's full ruling is embedded ahead.

Supreme Court on APPLE INC. v. PEPPER ET AL. by MacRumors on Scribd on Scribd

Top Rated Comments

(View all)
Avatar
12 months ago
How ridiculous. If they stopped charging the 30%, the companies would just keep the price the same and pocket the 30% Who wouldn't?
Score: 45 Votes (Like | Disagree)
Avatar
12 months ago
They can always buy an Android phone if they want a more open and potentially insecure way of getting apps.
Score: 45 Votes (Like | Disagree)
Avatar
12 months ago

Good. It IS a monopoly.

As I've said repeatedly, it's not Apple's iPhone, it's MY iPhone. I should have the choice to install apps from whatever source I desire, and I shouldn't have to go through ridiculous machinations with Xcode every week to do it.

It’s not though. You’re basically buying a license to software that comes with an end user license agreement (EULA) which dictates what can and can’t be done with the software. It’s not a monopoly because one can easily buy something else.
Score: 44 Votes (Like | Disagree)
Avatar
12 months ago
Good. It IS a monopoly.

As I've said repeatedly, it's not Apple's iPhone, it's MY iPhone. I should have the choice to install apps from whatever source I desire, and I shouldn't have to go through ridiculous machinations with Xcode every week to do it.
Score: 36 Votes (Like | Disagree)
Avatar
12 months ago

Will be interesting to see how this plays out....

It wont. This will go nowhere, platform holders take cuts everywhere (console stores, Steam, Epic Store, literally any marketplace on earth does so to finance the delivery of said content).
30% is the average fee, it‘s ugly but everyone does it.

I, for one, am against having other places than the App Store for app distribution. One unified place to get your apps (securely and up-to-date) from beats out the mess you find on Android.
Score: 33 Votes (Like | Disagree)
Avatar
12 months ago

No You can’t!
Because apple has a walled garden too. If You have a watch?

Again no one is personally forced to own any Apple product.
Score: 24 Votes (Like | Disagree)

Top Stories

Leaker Claims New 13-inch MacBook Pro Coming as Soon as Next Month

Monday April 6, 2020 2:56 am PDT by Tim Hardwick
Apple will announce a new 13-inch MacBook Pro in May with the codename J223, according to a rumor shared by YouTuber and leaker Jon Prosser. Note: it’s a refresh to the current 13” So the bigger 14” display upgrade is a big possibility— Jon Prosser (@jon_prosser) April 4, 2020 Analyst Ming-Chi Kuo has said Apple plans to release new MacBook Pro and MacBook Air models with scissor keyboards ...

iOS 14 Could Offer Home Screen Widgets, Wallpaper Customizations

Saturday April 4, 2020 3:30 pm PDT by Frank McShan
iOS 14 could offer home screen widgets and wallpaper customizations for the first time, according to 9to5Mac and Twitter user DongleBookPro. Apple is reportedly working to implement widgets that can be moved freely around like icons on the iPhone and iPad homescreen for the very first time. The feature is reportedly codenamed "Avocado" and no other details are available. It was also...

'Leaked' Images Allegedly Show iPhone 12 With Smaller Notch, Rear Camera Redesign, and Home Screen Widgets

Tuesday April 7, 2020 4:28 am PDT by Tim Hardwick
Two images shared on social media this morning are currently stoking speculation about possible hardware redesigns coming to the iPhone 12 and the potential introduction of Home screen widgets in iOS 14. Shared by Twitter user Fudge (choco_bit), the images depict a front and rear graphical representation of a smartphone with interface elements on the screen, suggesting it came out of a...

More References to Apple's Upcoming Low-Cost iPhone Appear Online

Monday April 6, 2020 4:38 am PDT by Tim Hardwick
Further references to Apple's upcoming low-cost iPhone have appeared online, one on a Chinese e-commerce website and another on Verizon's smartphone trade-in page. Spotted by tech blog MySmartPrice, Chinese retailer JD.com has published a placeholder for Apple's so-called "iPhone 9" that includes a teaser image of a veiled smartphone, but other than that it lacks any particularly revealing...

The New York Times, IFTTT, Medium, and Other Apps Adopt Sign in With Apple Ahead of June 30 Deadline

Sunday April 5, 2020 7:08 pm PDT by Frank McShan
Apps with sign-in functionality, including The New York Times, IFTTT, Medium, and more, have continued to adopt Apple's secure Sign in with Apple feature ahead of a deadline of June 30. The deadline for these apps to support the feature was recently extended from April 30. Sign in with Apple, first introduced in iOS 13, allows users to create accounts for apps and websites using an Apple ID. ...

Some Users Experiencing System Crashes on macOS 10.15.4, Especially During Large File Transfers

Monday April 6, 2020 8:17 am PDT by Joe Rossignol
A sizeable number of Mac users are experiencing occasional system crashes after updating to macOS Catalina version 10.15.4, released a few weeks ago. The crashing issue appears to be most prominent when users attempt to make large file transfers. In a forum post, SoftRAID described the issue as a bug and said that it is working with Apple engineers on a fix for macOS 10.15.5, or a...

Apple Releases iOS and iPadOS 13.4.1 With Fix for FaceTime Bug

Tuesday April 7, 2020 10:06 am PDT by Juli Clover
Apple today released iOS and iPadOS 13.4.1, minor updates that come two weeks after the release of iOS and iPadOS 13.4, major updates that introduced iCloud Folder Sharing, a new Mail toolbar, trackpad support for the iPad, and more. The iOS and ‌iPadOS‌ 13.4.1 updates are available on all eligible devices over-the-air in the Settings app. To access the updates, go to Settings > General...

Top Stories: Apple Leaks iPhone SE and AirTags, Apple Buys Dark Sky, and More

Saturday April 4, 2020 6:00 am PDT by MacRumors Staff
With the calendar rolling over to April this week, we yet again saw several leaks and rumors, most notably including Apple itself leaking some references to a pair of long-rumored products: a new budget iPhone SE and AirTags item trackers. Subscribe to the MacRumors YouTube channel for more videos. Apple also acquired popular weather app Dark Sky, while Amazon's Prime Video app now allows...

Apple Reportedly Targeting WWDC for Over-Ear Headphones Launch, New 'AirPods X' Later in the Year

Tuesday April 7, 2020 7:00 am PDT by Eric Slivka
Rumors of Apple-branded over-ear headphones have been circulating for quite some time, while more recent rumors have mentioned an "AirPods Pro Lite" that could also be in the works, and Twitter leaker Jon Prosser's recent foray into Apple rumors provides a bit more detail on what we might able to expect for these products. Current Beats Studio3 Wireless and BeatsX On the over-ear side,...

Apple Donating Over 20 Million Masks to Healthcare Professionals, Producing Face Shields With Suppliers

Sunday April 5, 2020 2:51 pm PDT by Joe Rossignol
Apple CEO Tim Cook today shared a video message with an update on the company's response to the ongoing pandemic. Cook said Apple has now sourced over 20 million masks that it is in the process of donating to healthcare professionals around the world. Apple is working with governments to ensure that the masks are donated to the places of greatest need. Cook added that Apple's design,...