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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)

18 weeks 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?
Rating: 45 Votes
18 weeks ago
They can always buy an Android phone if they want a more open and potentially insecure way of getting apps.
Rating: 45 Votes
18 weeks 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.
Rating: 44 Votes
18 weeks 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.
Rating: 36 Votes
18 weeks 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.
Rating: 33 Votes
18 weeks 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.

Yes, but you could have bought Android, or at the time of the lawsuit, Windows or Blackberry too. I much prefer Apple's tight control on the App Store to ensure the that the likelihood of malicious apps or usage of API's is kept at a minimum.

If I wanted otherwise, I am free to choose Android and their ecosystem.
Rating: 24 Votes
18 weeks 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.
Rating: 24 Votes
18 weeks ago
I wish there was an alternate source for apps - non apple, I would buy all my apps there. This is defintely a monopoly and many a good developer has given up with all the rules and restrictions. I have a lot of apps on older iOS versions that were cool and then suddenly not available on the app store on the next version of iOS
Rating: 23 Votes
18 weeks 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.

Then go to android
Rating: 21 Votes
18 weeks ago
So silly. Apps are generally so inexpensive what’s the point?
As others note, the app maker will not lower the price but keep it the same and simply keep more product.
It may be onerous at times, but I’d rather trust an app from the App Store than ones downloaded from any old site/publisher. Sure, let’s just load up everything we find, end up in the toilet, and then blame Apple when your phone/pad/computer goes bonkers!
Geesh!
Rating: 20 Votes

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