Published: Wed, November 28, 2018
Electronics | By Shannon Stone

Supreme Court to hear antitrust case over sale of iPhone apps

Supreme Court to hear antitrust case over sale of iPhone apps

Apple's pricing policies for iPhone apps bought on its exclusive App Store ran into trouble Monday at the Supreme Court.

Yesterday, we told you that the U.S. Supreme Court would be hearing arguments today on whether to allow a class action suit against Apple to proceed. Judges could force it to change its pricing structure and Apple may face hundreds of millions in penalties to refund some of the commission it has taken in the past four years. The company's antitrust violation, he said, was the App Store itself. Developers must submit their apps to Apple for approval, and if they meet all of the company's criteria (and are malware-free), they can be listed either as a free, freemium, or paid app.

A trial court initially dismissed the suit.

If Apple fails, the business model of the App Store, one of the company's fastest-growing and most profitable divisions, could be threatened, it added. When developers want to sell them, Apple examines them for compatibility and security and, once approved, charges the developer a 30% commission on the sold product.

Developers "cannot risk the possibility of Apple removing them from the App Store if they bring suit", the American Antitrust Institute advocacy group said in a brief.

If the justices permit the suit to go forward, a decision against Apple would nearly certainly be a blow to its business.

The justices will ultimately decide a broader question: Can consumers even sue for damages in an antitrust case like this one?

At points during the argument, Justices Neil M. Gorsuch and Kavanaugh appeared to agree.

Apple urges the Supreme Court to throw the case out, arguing that it's not actually selling anything but is instead operating a marketplace that allows app developers to sell their products.

It will be several months before the justices hand down a ruling in the case.

The lawsuit said Apple violated federal antitrust laws by requiring apps to be sold through the company's App Store and then taking a 30 percent commission from the purchases. The company's lead Supreme Court lawyer, Dan Wall, declined to discuss the case in advance of the argument.

App Association President Morgan Reed said the appeals court misunderstood the relationship between developers and platforms, improperly looking at platforms as distributors that buy from vendors and resell to customers, rather than as conduits that simply connect the two. Plaintiffs in the lawsuit claim that Apple's 30% cut on all sales in the App Store are causing consumers to overpay.

Conservative Chief Justice John Roberts' questions suggested he agreed with Apple's position.

In other words, "they're subject to suit on both sides of the market for a single antitrust price increase that they're alleged to have imposed", Roberts said.

Most states already allow downstream purchasers to collect damages, and the group says courts have been able to ensure that companies don't have to double-pay. Let us know in the comments.

A ruling is expected in late spring.

Like this: