Apple defends App Store fees as U.S. Supreme Court weighs consumer suit

The U.S. Supreme Court “will hear arguments Monday on accusations that Apple is using its market dominance to jack up prices for iPhone apps,” Greg Stohr and Naomi Nix report for Bloomberg. “A ruling against Apple, letting a lawsuit go forward, could add to pressure the company already faces to cut the 30 percent commission it charges on app sales.”

“The case turns on what happens when iPhone users buy something at the Apple App Store. In allowing the suit, a federal appeals court said the transaction is a simple one in which consumers buy directly from Apple. Apple says it’s more complicated, with the company serving as a middleman connecting app developers with users,” Stohr and Nix report. “The distinction is critical because of a 1977 Supreme Court ruling that says only direct purchasers of a product can collect damages for overpricing under federal antitrust law. That decision was designed in part to ensure companies don’t have to pay twice for the same misconduct.”

“Apple says the focus of the lawsuit is the 30 percent commission, something it says is paid by the developers, not the app purchasers,” Stohr and Nix report. “Although the consumers say they pay for the commissions through higher app prices, Apple says those are the type of ‘pass-through’ damages barred under the Supreme Court’s 1977 Illinois Brick v. Illinois ruling.”

Read more in the full article here.

MacDailyNews Take:

Setting aside the security implications, the Ninth Circuit decision should be overturned simply because Apple’s App Store customers are the app developers, not the app consumers.

Apple owns the shopping mall. The developers pay Apple for space within. The end customer buys their apps from the developers. Indirect purchasers of goods or services along a supply chain cannot seek remedies over antitrust claims.

See Illinois Brick Co. v. Illinois.MacDailyNews, October 31, 2018

SEE ALSO:
Apple wants U.S. Supreme Court to undo previous decision regarding an antitrust suit – October 31, 2018
U.S. Supreme Court will decide if Apple’s App Store is an anti-competitive monopoly – June 19, 2018
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

7 Comments

  1. And the App Store customers have no other store or mall in which to sell.

    Fortunately, MDN is now on the Supreme Court and we have a President that believes in two set of rules…

    1. The Ninth Circuit is not reversed at a much higher rate than the average. The Supreme Court does not grant review unless four judges think the decision below is likely incorrect. It only takes one more vote to reverse. That happens almost three-fourths of the time… no matter which court is being appealed. The Ninth’s rate is a little higher than average, but there are several circuits with a higher reversal rate.

  2. I’ll give SCOTUS a simple example to explain this is not an Antitrust issue. Simple market economics… Louis Vuitton (think of them as the developer) sells their wares in high end locations. They chose to pay a premium for location to get the best customers and increased sales (think Apple). They don’t want to sell in Strip malls or Outlets (Think Android), as they won’t make many sales or much profit. If you don’t already know, all malls make a percentage of their tenants sales (Think App Stores). So are the malls colluding? I don’t think so. They set their rate (rent and sales %) The developer has a choice. If you don’t want to pay, by a knockoff Louey Vittone (aka Android) 😉

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