Published: Thu, November 29, 2018
Industry | By Jeannie Evans

How much for that app? United States top court hears Apple antitrust dispute

How much for that app? United States top court hears Apple antitrust dispute

Apple is at the Supreme Court to defend the way it sells apps for iPhones against claims by consumers that the company has unfairly monopolized the market.

"The app developers. are buying a package of services which include distribution and software and intellectual property and testing", Daniel Wall, an attorney for Apple, told the Supreme Court Monday morning. A ruling against Apple, letting a lawsuit go forward, could add to pressure the company already faces to cut the 30%commission it charges on app sales.

In Apple's view, the antitrust laws would allow a suit only from the victims of this alleged monopoly, which could be the developers of the apps, not consumers who buy the apps.

However last year the San Francisco 9th US Circuit Court of Appeals last year revived the lawsuit, deciding 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.

Apple has denied it engaged in anti-competitive behaviour, saying the prices for apps were set by app developers. But the plaintiffs appealed and the Ninth Circuit Court of Appeals ruled that they had standing to sue Apple. The nine justices appeared to be open to letting the lawsuit move up to the highest court in the US and it could bring huge changes to the App Store if Apple loses.

The justices will ultimately decide a broader question: Can consumers even sue for damages in an antitrust case like this one?

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

The arguments dealt with the fruits of technology that, over the past 10 years, have made more than 2 million apps available to iPhone users, but in the courtroom there were also references to older antitrust cases involving concrete, aluminum, natural gas and shoes.

The Trump administration is siding with Apple. The states are led by Texas Attorney General Ken Paxton, a Republican, and Iowa Attorney General Tom Miller, a Democrat. At that time, Judge Yvonne Rogers ruled in favor (PDF) of Apple, reasoning that end users of the applications were indirect customers are therefore could not be the ones to sue under U.S. antitrust law. "The phrase "there's an app for that" is now part of the popular lexicon", Chief Justice John Roberts noted in a 2014 decision limiting warrantless searches of cellphones by police. 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.

This case dates back to 2011 when several iPhone buyers including lead plaintiff Robert Pepper of Chicago filed a class action lawsuit against Apple in a federal court in Oakland, California.

A decision in Apple Inc. v Pepper, 17-204, is expected by late spring.

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