Apple defends App Store fees in U.S. Supreme Court

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 and its tech-industry allies say a decision allowing the consumer lawsuit could open other companies that run online marketplaces and platforms to expensive antitrust claims,” Stohr and Nix report. “A broad ruling could affect Alphabet Inc.’s Google, Inc., Facebook Inc., Etsy Inc. and DoorDash Inc., Apple and its supporters say. Apple gained about 1.3 percent in early trading on Monday.”

Read more in the full article here.

“Consumers can choose from among more than 2 million apps, up from the 500 apps that were available when Apple created the App Store in 2008,” Mark Sherman reports for The Associated Press. “But the company says the popularity of software for iPhones and its App Store shouldn’t obscure that consumers buys apps from developers, not Apple. ‘Apple is a sales and distribution agent for developers,’ Apple’s lawyers said in a Supreme Court filing. ‘Apple’s core argument has always been that any injury to consumers necessarily depends on developer pass-through decisions, since Apple does not set apps prices.'”

Sherman reports, “A decision in Apple Inc. v Pepper, 17-204, is expected by late spring.”

Read more in the full article here.

MacDailyNews Take: The U.S. Supreme Court should rule for Apple in this case.

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

Apple defends App Store fees as U.S. Supreme Court weighs consumer suit – November 23, 2018
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


  1. This is a fundamental of Apple iPhone security. Since security and privacy are one of the bedrock discriminators that make people choose Apple over other phones, how would they be able to maintain that security if anyone can sell an app for the iPhone?

    Their approval process for the acceptance of an App is necessary and costs money. If some method was still in place for that vetting, yet someone else could sell it, then wouldn’t Apple have to charge the developers for that vetting to keep from losing money. Either way, someone has to pay for the marketing and vetting.

    This seems a weird litigation anyway. It is said that the suit is being brought by consumers, not developers. What consumers are so organized that they can bring forth such a complaint? And what do they hope to gain? Cheaper prices for Apps?

  2. All the arguments I see about this case have to do with that 1997 decision and whether or not the class action participants have ground to sue Apple. I hope that the security benefits to Apple’s customers is brought out too. Those suing Apple do not represent me or my interests. I do not want to see Apple have to open the iOS to “open” app marketplaces potentially filled with malware (like Google’s marketplace) and also opening a big door for anybody to potentially add apps/malware to my phone, currently secured by Apple and by Apple-enabled corporate IT management. The latter functionality has (if I remember correctly) already been used to build exploits; think about opening all phones to the “wild west.” Apple is providing a fundamental security function to their users and also provides valuable services to app developers. The data centres and personnel needed for this are not insignificant in cost. Maybe Apple could come up with a way to offer some kind of security to users who would then have an iOS that is “open,” but I suspect this would be a field day of potential exploit opportunities for malware developers.

    I think the voice of Apple customer’s who want a more secure OS should be heard and considered in this important decision. Those putting forward the supposed anti-trust violation are not representing all Apple users, certainly not me.

    1. Also, it would be interesting to actually see a real-world comparision of prices in the Apple App store vs the same apps in open Android marketplaces. I suspect that their is likely not a difference in price. Is this all a tempest in a teapot that will ultimately only benefit those who wish to create a hole in Apple’s security?

  3. Did these people even think to compare prices, convenience, quality, variety, competition, developer profit margins, and security of mobile apps pre and post iOS App Store?

    This suit is laughable.

  4. I liked the App Store model from the beginning. It offers multiple important benefits and also promotes app development by small developers as well as developers who want to offer free products. All products, from free to costly, receive the same treatment and are accessed using the same process.

    Consumers benefit from app vetting and enforced adherence to Apple’s privacy and security policies.

    Small developers benefit from the iOS developer tools and support as well as immediate and broad exposure to the iOS user base once their products are ready to post. In addition, small developers avoid the ecommerce hassles of payment transactions and such, and Apple handles all of the headaches of servers and downloading and such.

    Furthermore, the App Store model encourages developers to build simple specialty apps that they can offer at low prices and, potentially, develop into more capable apps over time. In addition, the App Store model intentionally promotes posting apps for free — 30% of zero is zero, so developers are able to share their work for the benefit of all at no out-of-pocket cost to themselves. The App Store model is egalitarian – there is no separate path for freeware.

    I like the App Store model (apart from the growth in the prevalence of “freemium” games) and I would be very (and vocally) displeased if the courts jacked with it.

    1. All good cogent stuff.
      Maybe Apple should line up half a dozen developers with all those Apple-provided services realistically costed by some alternative system. And, because I’m pretty sure it would cost significantly more, say how much their app prices would increase.

  5. 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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