May 13, 2019

US Supreme Court Rules Consumers Can Sue Apple For Monopolizing App Store

The US Supreme Court has decided to allow consumers to file a class action against Apple and its App Store and reinforces the ruling of the Ninth Circuit Court (Via CNBC). The lawsuit argues that Apple request apps distributed on the iPhone to be sold within the App Store, and says that they monopolized the retail market for the sales of app, as the company charge developers unfair fees that are passed on to consumers. Apple typically cuts revenue by 30% through the App Store.

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.
Last fall, when the Supreme Court heard the arguments of both parties before finally deciding to allow the lawsuit to continue, Apple demanded that the lawsuit be revoked. The Cupertino based tech-giant had previously appealed to the court for a ruling in the lawsuit.

The lawsuit against Apple was not dismissed and the Supreme Court has decided to allow the lawsuit to move forward. This means that the lawsuit will return to the court system and may eventually lead to a decision to force Apple to change its App Store business model and policies.

However, we still have a long way to go before the final court ruling, since the Supreme Court is only based on the merits of the lawsuit rather than the subject of the debate. Specifically, the court's decision was that Apple could not rely on the so-called Illinois buyer's direct buyer rules as a defense to suppress the lawsuit.

Here's what Apple has to say about the case (Via John Paczkowski) :
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.

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