Published: Thu, May 16, 2019
Finance | By Kristine Clayton

US Supreme Court allows anti-trust suit against Apple

US Supreme Court allows anti-trust suit against Apple

A divided U.S. Supreme Court on Monday gave the go-ahead to an antitrust lawsuit accusing Apple Inc of forcing consumers to overpay for iPhone software applications, a decision that could lead to billions of dollars in damages and put at risk the company's lucrative way of selling apps.

The opinion written by the newest court member, Justice Brett Kavanaugh, said consumers had a right to pursue their case because they have a direct relationship with Apple. The plantiffs argue that the monopoly of the marketplace for iOS apps and Apple's cut make the developers to pass these costs on the consumers who receive a product at an inflated price as a result. The consumer plaintiffs claim Apple monopolized the market in violation of federal antitrust law by requiring that apps be sold through its App Store and extracting an excessive 30 percent commission on purchases.

Apple said it believed it would be successful in the lower court hearing the merits of the case.

Before the developers' apps make it to the App Store, Apple has to review them for compatibility and they charge a 30% commission fee.

The US Supreme Court disagreed with what Apple had to claim.

The latest decision by the Supreme Court does appear to be merely a procedural win, but the fact that the case will move forward could eventually have significant implications for the App Store.

Kavanaugh was joined by liberal justices Ruth Ginsburg, Elena Kagan, Stephen Breyer and Sonia Sotomayor and the case must now go back to a lower court for trial.

Apple has said the consumers were indirect purchasers, at best, because any overcharge would be passed on to them by developers.

"Along with Apple, the ruling was also a slap at the Trump administration, the U.S. Chamber of Commerce, and a raft of politically involved tech industry titans", King observed.

Technically, Apple only allows iPhone apps to be distributed through the App Store.

Apple doesn't agree with this as they claim that they are only providing a place for developers to sell their products and set their prices. The Dutch anti-trust agency opened an investigation in April into allegations by companies including the Sweden-based online music service Spotify over commissions and other issues. "The iPhone owners pay the alleged overcharge directly to Apple".

The recent ruling also comes from complaints that Apple App Store is the only way users can install an app on an iPhone or iPad. Apple had warned that this could pose a threat to e-commerce, a rapidly expanding segment of the USA economy worth hundreds of billions of dollars in annual sales.

The Illinois Brick decision "means that indirect purchasers who are two or more steps removed from the antitrust violator in a distribution chain may not sue", Kavanaugh said.

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