Published: Wed, November 28, 2018
Industry | By Dora Warner

US top court leans toward allowing Apple App Store antitrust suit

US top court leans toward allowing Apple App Store antitrust suit

Software developers say that outcome would disrupt similar online marketplaces that operate between app creators and customers.

At issue is whether Apple's walled garden approach to its iOS platform - in which developers are pretty much forced to sell their iPhone and iPad software exclusively via Cupertino's official App Store and pay Apple a 30 per cent cut - is artificially raising prices and a violation of U.S. antitrust laws on monopoly control.

Apple's legal team could soon be headed to the U.S. Supreme Court to face an anti-trust case being levied against the company.

Apple will head to the US Supreme Court this week to block a group of customers from suing the tech giant for monopoly abuse, media has reported. An appeals court reversed the dismissal in 2017, leading to the Supreme Court taking up the matter. Analysts estimate that the company made more than US$22 billion ($32.5b) from the App Store worldwide in the first half of 2018.

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The company argues that because the app developers themselves set the price of apps in the App Store and not Apple, iPhone users are purchasing the apps from the developers directly.

Apple has always allowed you to install apps exclusively from its App Store.

Liberal justices Sonia Sotomayor and Stephen Breyer seemed certain that the iPhone buyers' claims should go forward.

A victory for Apple could severely restrict consumers" ability to sue over antitrust violations even though Congress envisioned such lawsuits "would form a central component of enforcement of the antitrust laws, ' warned 18 scholars of antitrust law in a Supreme Court filing.

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Justice Brett Kavanaugh said if consumers are paying more than they should, then perhaps they should be able to sue. Although the consumers say they pay for the commissions through higher app prices, Apple says those are the type of "pass-through" damages barred under the Supreme Court's 1977 Illinois Brick v. Illinois ruling. Apple cited companies like ticket site StubHub, Amazon's Marketplace and eBay.

When iPhone users want to edit blemishes out of their selfies, identify stars and constellations or simply join the latest video game craze, they turn to Apple Inc's App Store, where any software application they buy also includes a 30% cut for Apple. Both said they were skeptical of the 1970s-era rule that bars antitrust suits against manufacturers if consumers bought their products through middlemen, not directly from the maker. "Apple can't point to another e-commerce distributor that does what it does", Frederick said.

Justice Neil Gorsuch, appointed by President Trump, wondered, according to a Reuters report, whether a key 1977 ruling is appropriate in this case.

"What we know is what the price is in a noncompetitive market, and we will have to have experts that will assess what the damages would be in a competitive market", he said.

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