US Top Court Open to Antitrust Suit Against Apple App Store

The U.S. Supreme Court in session for 229 years will be where this issue’s fate is decided

The U.S. Supreme Court in session for 229 years will be where this issue’s fate is decided

U.S. Supreme Court justices heard an hour of arguments for an anti-trust lawsuit against Apple today.

However, a class-lawsuit filed against Apple is seeking damages over allegations that the Cupertino, California-based company is actually violating federal antitrust laws. Analysts estimate that the company made more than US$22 billion ($32.5b) from the App Store worldwide in the first half of 2018.

Apple said it's hopeful the Supreme Court will uphold existing legal precedent by finding in favor of the company and recognizing its critical role as a marketplace for apps.

Plaintiffs acting on behalf of iPhone customers argued that because Apple chooses what apps can be sold, gives developers a limited pricing structure and forces iPhone owners to use the App Store, it is operating anti-competitively. Justice Sonia Sotomayor (an Obama appointee) noted how the customers could in fact show that they would have standing to sue under antitrust laws.

Apple is arguing that it has no direct connection with consumers and is merely a conduit between the app developers and those who purchase the apps. He said both consumers and app developers should not be able to sue the company for the same alleged violation. In its friend of court brief, the Justice Department said it would be particularly hard to figure out whether the App Store overcharges, since the prices are set by tens of thousands of app developers.

Justice Elena Kagan said she believed she was buying directly from Apple when she used her credit card on an iPhone to buy an app.

But it was not just the court's liberals who seemed skeptical of Apple's argument.

Apple is supported by President Donald Trump's administration. Apple is "trying to make it harder for injured parties to assert their rights under federal antitrust law", said Mark Rifkin, an attorney for the plaintiffs.

"As a result, iPhone owners paid Apple more for apps than they would have paid in a competitive retail market".

The lawsuit was filed by Chicagoan Robert Pepper in 2011 saying Apple's monopoly leads to inflated prices because there's no competition.

But the San Francisco-based 9th U.S. Circuit Court of Appeals revived the case past year, finding that Apple was a distributor that sold iPhone apps directly to consumers. They said that app developers would be unlikely to sue because they would not want to bite the hand that feeds them, leaving no one to challenge anti-competitive conduct.

In 2013, U.S. District Court Judge Yvonne Gonzalez Rogers in the Northern District of California dismissed the lawsuit.

The Justice Department is supporting Apple, although Solicitor General Noel Francisco acknowledged that Apple exploits its powerful position in the market by imposing the 30 percent commission.

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