Apple faces customer lawsuit over app store

Yolanda Curtis
May 13, 2019

The company relied on a Supreme Court precedent from 1977 which said only "direct purchasers" may sue a company under the antitrust laws.

The ruling will allow iPhone users to pursue an antitrust lawsuit against the company, which could lead to a decision that forces Apple to change its App Store purchase model and policies.

iPhone owners say Apple's 30 percent commission on sales made through the App Store results in developers passing that charge to consumers. Apple has argued that developers are the ones who set prices, and that it's not in violation of any antitrust laws. Given Apple's size and reach, it is well positioned to make a lot of money from its App Store regardless of how the litigation goes; however, following the Supreme Court ruling, the growth argument for Apple shares just became a little harder to make.

Justice Neil Gorsuch, writing for the Court's conservative dissenters, argued that the majority relied on "convoluted pass-on theories" in which damages to the consumer that are actually inflicted by the app developers can be passed on to a third party, namely Apple.

"Leaving consumers at the mercy of monopolistic retailers, simply because upstream suppliers could also sue the retailers, would directly contradict the long-standing goal of effective private enforcement in anti-trust cases", he said.

An organization representing other tech giants, including Amazon, Facebook and Google, filed legal briefs in Apple's defense, telling the Supreme Court that a decision allowing the lawsuit to proceed would put "these platform services... under threat".

Apple cancels plans for its AirPower charging mat because it reportedly didn't meet the company's standards; Walgreens will reportedly test tobacco-free stores in the US but doesn't plan to quit selling cigarettes entirely. If an app is overpriced, the fault lies with developers and not Apple, the iPhone maker claimed. "In other words, Apple as retailer pockets a 30% commission on every app sale", said Kavanaugh, one of President Donald Trump's two high court appointees.

The case is Apple Inc. v Pepper, 17-204.

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