U.S. Supreme Court will decide if Apple’s App Store is an anti-competitive monopoly

“The US Supreme Court has agreed to consider a case from Apple that could determine how antitrust complaints are handled against a wide range of ecommerce sites including Amazon and eBay,” Tim Bradshaw reports for The Financial Times. “The case will hinge on whether Apple can be held responsible by consumers for the price of the apps they download.”

“The top US court said on Monday that it would hear Apple’s attempt to rebuff a lawsuit that alleged its App Store is anti-competitive and has inflated the price of iPhone software,” Bradshaw reports. “Opponents, led by plaintiff Robert Pepper, an iPhone owner from Chicago, are seeking class action status for their complaint that the world’s most valuable company has “monopolised” the software market for iPhones by forcing developers to sell apps exclusively through its online store.”

“Apple typically takes a 30 per cent commission on upfront prices and in-app payments through the App Store,” Bradshaw reports. “Supreme Court justices will re-examine the so-called Illinois Brick doctrine established by the court in 1977, which stated only the direct victims of monopolist behaviour can claim damages, not customers who purchase goods via an intermediary.”

“Apple says it acts merely as a marketplace, allowing developers to set their own prices for their apps, then acting as their agent by delivering their products to consumers. Because it is an intermediary, the iPhone maker argues that only app developers — not app buyers such as Mr Pepper and the other plaintiffs — can bring an antitrust case against it under the Illinois Brick precedent,” Bradshaw reports. “The case is a key test of how antitrust rules can be applied to online marketplaces operated by tech companies…”

Read more in the full article here.

MacDailyNews Take: Would that Robert were a doctor. (Yes, right now we’re thirsty.)

As we wrote in August 2013:

First: One would assume that a large corporation such as Apple would have had competent legal advice when they set up their App Store, in order that it be set up in legal fashion.

Second: On every iPhone, iPod touch, iPad, and iPad mini box, the potential buyer is informed of requirements, including “iTunes X.x or later required for some features” and also that an “iTunes Store account” is required. The plaintiffs were informed of the requirements prior to purchase. If the plaintiffs didn’t like the terms that came along with Apple devices, they should have opted for a pretend iPhone from any one of a dime-a-dozen handset assemblers. Then they could blissfully infest their fake iPhones with malware from a variety of sources.

Third: Apple doesn’t set the prices for paid apps.

Fourth: The amount by which Apple Inc. has driven down software prices across the board, on every major computing platform, makes legal actions such as this eminently laughable.

SEE ALSO:
U.S. Supreme Court to consider Apple appeal in antitrust suit over App Store prices – June 18, 2018
US DOJ sides with Apple over App Store antitrust allegations in Supreme Court brief – May 10, 2018
9th U.S. Circuit Court of Appeals revives antitrust lawsuit against Apple – January 13, 2017
Apple App Store antitrust complaint dismissed on procedural grounds by U.S. judge – August 16, 2013

13 Comments

  1. From what I’ve read, it appears SCOTUS will decide only if the case should proceed to trial. The case against Apple was dismissed by a lower court and then reinstated by the 9th Circuit. Apple is appealing the 9th Circuit’s decision to reinstate the case.

    So SCOTUS will not be deciding if Apple is a monopoly; they will decide if the dismissal should stand or the case should go back to trial.

      1. It did one better: It monopolized the PC OS market. PC manufacturers, whomever and where ever they were, could only survive by using Windows. MS was coercing non-MS companies when 99% of the market was Windows PCs. For example, if OEMs attempted to sell PCs without Windows (such as Linux), MS required a license of them anyway.

        It defined the market *outside its own products*, driving all other OS’s out of business, except Apple. The market was 99% of all PCs on the planet, not its own products as in the case of Apple’s iOS devices (if the “Software ‘Market’ for iPhone” can even be called a “market”).

        Of course, Apple requires OS X/iOS on its own devices only, and there are thousands of competing models. Likewise, MS is welcome to require Windows and its own gateways on its own Surface devices (how are they doing?).

        So, is the “market” on one company’s own devices really a “market”? It’s like saying the “5-razor blade market for Gillette’s 5-blade razor handle” — buy a different razor handle. …Though, it must be a decent total product (handle and blade) on its own merits, if it starts to make up 20% world sales of all available razor handles (rather than Gillette coercing all razor handle makers to use only its blades, in the style of MS or Google).

        1. I can see large OEMs possibly having MS hold Windows licensing rights held over their heads. This IMO actually encouraged smaller custom PC builders to flourish since they did not have the same requirement to pay for Windows licenses whether used or not. Though I would like to see a citation to that effect, I’ll take your word for it as a strong possibility.

          The current set up with Apple’s App Store is similar to Console makers requiring game developers to pay a license fee to ‘press’ the CD/DVD media. It differs in that after that process, there are many retail outlets that may compete to sell that same game software. The case in contention is not that Apple monopollzes the HW, that is very hard to avoid. Rather, the case is about monopolizing the retail ‘outlet’ for iOS Apps and eliminating market forces that could fairly price them.

          In that light I have a feeling if Apple is forced to allow 3rd party iOS App Stores, they may come up with a App certification program (for a minor fee) that will give consumers some confidence in their purchase when using 3rd party App stores. Apps sold w/o the certification will just have to depend on the reputation of the 3rd party ‘retailer’.

          Even Gillette with it’s unique blades, they are sold via many retail outlets all competing with each other to sell the same blades and allowing market forces to pressure changes in pricing. Apple may eventually be required to do the same with iOS Apps, at least those not developed by Apple.

        2. Absolutely not!
          MS was bad, really bad. They did coerce companies, as you say.
          On iOS, Apple flat out dictates whether an application exists. Period.

          And Apple still has forced bundling, private APIs, etc. as MS did.

        3. There’s a difference between Gillette imposing it’s own blades by hardware design, for which it has patents (a legal monopoly). If they did not have patents, or the patents expired, anyone can make blades for Gillette razors. Why? Because the customer owns the razor.

          The App Store imposed exclusivity over other’s property is not a hardware design and it’s limitations are policy, that is… artificial.

          1. Artificial? Who’s to say? The product is what it is. you either like how it works, and the benefits of different levels of modularity and integration at different places in the stack at different times.

            Separating hardware and OS was …artificial… until Gates sold an OS he didn’t yet have, and hit on a last minute scheme; and IBM ended up making arguably the worst deal of the century.

          2. Yeah, razors aren’t best analogy (neither are cars) since we are talking about something complex with a licensed software component.

            “If they did not have patents, or the patents expired, anyone can make blades for Gillette razors. Why? Because the customer owns the razor.”

            That doesn’t make sense. “Anyone” can make blades for Gillette razors because the patent expires, not because you or I own the razor. But remember — the blade still has to FIT the razor.

            You can jailbreak your iPhone because you own it. Apple doesn’t have to make it so “anyone’s” software “fits” the iPhone, any more than Gillette has to make it so that “anyone’s” blades fits your razor.

            1. It does make sense. Prior to the patent expiring Gillette can block people from making blades fit their razors. That is, they have a say. When the patent expires they no longer have a say, that belongs exclusively with the razor owner.

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