US SC deals blow to Apple in anti-trust case

According to the complaint, Apple's 30 percent "vig" on paid apps causes consumer direct harm as that cost is passed on to consumers by app developers.

Basically, in the Apple antitrust lawsuit, Apple is trying to say that the company is not responsible for app markup, because Apple is essentially purchasing the games from the developers.

In those cases, Apple charges a commission of 30%, a practice that the lawsuit contends unfairly drives up the price for the apps. This represented an unfair use of App Store space which was classified as an unlawful case of monopoly. The shares of Apple went down by nearly 6% to the news.

As a pivotal point in a decade-long legal battle, Justice Brett Kavanaugh sided with the court's liberal minority and rejected the company's claim that end-users can not sue for monopolistic practices.

As iPhone sales continue to tumble, Apple and its shareholders have been looking into improving the company's App Store revenues to compensate.

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

"Apple's alleged anticompetitive conduct may leave Apple subject to multiple suits by different plaintiffs", the Court noted in its ruling.

"The iPhone owners purchase apps directly from the retailer Apple", he said, describing a relationship sufficient to allow the lawsuit to go forward.

The plaintiffs, including lead plaintiff Robert Pepper of Chicago, filed the suit in a California federal court in 2011, claiming Apple's monopoly leads to inflated prices compared to if apps were available from other sources.

The outcome of the case may also significantly change the way Apple sells apps on its platform, which could potentially eat into its bottom line.

Justice Brett Kavanaugh wrote for the majority, joining with the court's four liberal justices in the decision. According to this "Illinois brick doctrine", only direct purchasers of the products are entitled to sue for antitrust damages.

The dispute hinged in part on how the justices would apply a 1977 Supreme Court precedent.

The lawsuit could have major implications for the tech giant's handling of the more than 2 million apps in Apple's App Store, where users get much of the software for their smartphones.

"Plaintiffs can be injured only if the developers are able and choose to pass on the overcharge to them in the form of higher app prices that the developers alone control", Gorsuch wrote. 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. 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.


Popular

CONNECT