IPhone owners can sue Apple for monopolizing App Store

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Apple had argued that a Supreme Court ruling allowing the case to proceed could pose a threat to e-commerce, a rapidly expanding segment of the USA economy worth hundreds of billions of dollars in annual sales.

"If, as plaintiffs contend, Apple's 30% commission is a monopolistic overcharge, then the app developers have a claim against Apple to recover whatever portion of the commission they did not pass on to consumers", he wrote. Since the iPhone owners that sued purchased apps directly from Apple they "therefore are direct purchasers under Illinois Brick".

When a user buys an app, Apple collects the money, keeps the 30 per cent commission and gives the rest to the developer.

But now the antitrust lawsuit can go ahead, which could have ramifications for other tech companies who offer platforms for services.

Explaining the ruling from the bench, Kavanaugh said, 'Leaving consumers at the mercy of monopolistic retailers simply because upstream suppliers could also sue the retailers would directly contradict the longstanding goal of effective private enforcement in antitrust cases'.

Taken together, the plaintiffs say this constitutes an unlawful monopoly: consumers are forced to purchase apps in a digital storefront Apple controls, and end up paying higher prices because developers price in the 30 percent commission Apple collects, effectively passing the burden on to consumers.

"Developers have a number of platforms to choose from to deliver their software - from other apps stores, to Smart TVs to gaming consoles - and we work hard every day to make sure our store is the best, safest, and most competitive in the world".

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The dissent was also anxious that simple contractual changes could see companies use the decision to their advantage - but in the opposite direction: "To evade the Court's test, all Apple must do is amend its contracts".

It is important to understand that the Supreme Court has not ruled that Apple violated antitrust laws.

When I initially wrote up the case, I described Apple's argument as "confusing and counterintuitive". In an earlier hearing, Justices Stephen Breyer, Elena Kagan, and Sonia Sotomayor questioned Apple's reference to the Illinois Brick doctrine, relating to direct versus indirect purchasers.

Apple has said the consumers were indirect purchasers, at best, because any overcharge would be passed on to them by developers.

We'll keep you updated as this story develops. The iPhone owners pay the alleged overcharge directly to Apple. A judge could triple the compensation to consumers under antitrust law if Apple ultimately loses the suit.

Trump appointee, Justice Brett M. Kavanaugh, wrote the majority opinion in Apple v. Pepper, No. 17-204.