“The U.S. Supreme Court on Monday gave the go-ahead for a lawsuit by consumers accusing Apple Inc of monopolizing the market for iPhone software applications and forcing them to overpay, rejecting the company’s bid to escape claims that its practices violate federal antitrust law,” Andrew Chung reports for Reuters. “Apple shares were down about 5% after the justices, in a 5-4 ruling, upheld a lower court’s decision to allow the proposed class action lawsuit to proceed.”
“Conservative Justice Brett Kavanaugh, an appointee of President Donald Trump, joined the court’s four liberal justices to rule against Apple and wrote the decision,” Chung reports. “Apple shares were trading down $10 at 187.13 by late morning.”
“The company, backed by the Trump administration, argued that it was only acting as an agent for app developers, who set their own prices and pay Apple’s commission,” Chung reports. “The dispute hinged in part on how the justices would apply a decision the court made in 1977 to the claims against Apple. In that case, the court limited damages for anti-competitive conduct to those directly overcharged rather than indirect victims who paid an overcharge passed on by others.”
“Noting that they pay Apple – not an app developer – whenever buying an app from the App Store, the iPhone users who brought the case said they were direct victims of the overcharges. Apple said the consumers were indirect purchasers, at best, because any overcharge would be passed on to them by developers,” Chung reports. “Dissenting from the decision, conservative Justice Neil Gorsuch, said that the decision is “not how antitrust law is supposed to work” because it gives a green light to the exact type of case that the court has previously prohibited. Gorsuch also was appointed by Trump.”
Read more in the full article here.
MacDailyNews Take: Again, we think the ultimate ending to this legal challenge will be that developers will be able to accept payments in their apps without being forced to give Apple a cut or as much of a cut as today.
Companies that currently are large enough to work around Apple and send users to their own sites for payment include Amazon and Netflix. Apple will likely need to end this practice and allow all developers to allow users to subscribe to services, buy ebooks, etc. within their apps without a 15%-30% fee. A smaller fee may be tenable, as Apple does have costs to run the App Store, of course. We’ll see after the legal gears grind glacially and eventually spit out their end results.
By the way: 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.
Note also that Apple doesn’t set the prices for paid apps.
Lastly, 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.
Supreme Court rules against Apple in App Store antitrust case – May 13, 2019
Antitrust, the App Store, and Apple – November 27, 2018
Trump administration backs Apple in U.S. Supreme Court over App Store antitrust suit – November 26, 2018
Apple defends App Store fees in U.S. Supreme Court – November 26, 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