There could be trouble in Cupertino, California, if the US Supreme Court decides to reopen an antitrust lawsuit against Apple, who have been accused of monopolising the market for iPhone app sales.
Apple has made more than 2 million apps available to iPhone users over the past 10 years. Whilst discussing the way Apple makes these apps available to its users, other antitrust cases were also referenced involving concrete, aluminium, shoes and natural gas.
Software Developer Commissions
The suit started by iPhone users could force Apple to cut the 30% commission it charges software developers who sell apps through the App Store. The compensation to consumers under the antitrust law could triple if the lawsuit is lost by Apple.
However, the issue right now is if the lawsuit will move forward at all. From abcnews.go, a former teacher of antitrust law at Harvard Law School, Justice Stephen Breyer, stated that the consumers’ case seemed to be in line with 100 years of antitrust law.
Apple has argued that their App Store is merely a conduit between the app developers and the consumers, and that iPhone users have no claims against Apple under federal laws designed to prohibit unfair control of markets.
Daniel Wall, Apple’s lawyer, said “Tens of thousands of software developers set the prices and agree to pay Apple a 30% commission on whatever they sell. If anyone should be able to sue Apple, it’s a developer. There have been plenty of disputes, but none has ever gone to litigation.”
Only one of the nine justices, Chief Justice John Roberts, seemed ready to agree with Apple. Those on the other side feel consumers appear to have a direct relationship with Apple, Justice Elena Kagan: “I pick up my iPhone. I go to Apple’s App Store. I pay Apple directly with the credit card information that I’ve supplied to Apple. From my perspective, I’ve just engaged in a one-step transaction with Apple.”
Justice Brett Kavanaugh said if consumers are paying more than necessary, then perhaps they should be able to sue. The relevant federal antitrust law says “any person injured” can sue, said Kavanaugh.
So Much Choice
Consumers have a choice of 2 million apps, as opposed to the 500 apps available when Apple created the App Store in 2008. Apple says the popularity of iPhone software and its App Store shouldn’t hide the fact that consumers buy apps from developers, not from Apple itself. The Trump administration is backing Apple.
The lawyer representing the consumers, David Frederick, had this to say: “Apple can’t point to another e-commerce distributor that does what it does. Even Apple allows third parties to sell computer software directly to purchasers of its laptop and desktop computers.
A victory for Apple could severely restrict consumers’ ability to sue over antitrust violations even though Congress envisioned these suits going a long way to enforcing antitrust laws.
A decision in Apple Inc. v Pepper, 17-204, won’t be coming until late spring.