US Supreme Court greenlights lawsuit over App Store monopoly
The U.S. Supreme Court on Monday voted 5 to 4 to allow an antitrust lawsuit against Apple to proceed, one accusing the company of maintaining a monopoly on iOS apps via the App Store.
The ruling, with an opinion authored by Justice Brett Kavanaugh, relates to a 2011 case arguing that with the App Store being the only sanctioned place for iOS downloads, that's led to artificially inflated prices. The company claims a 30 percent cut from most transactions, shrinking to 15 percent only for subscriptions active for over a year.
The case, Apple v. Pepper, was actually dismissed in 2013 by a California court, but the Court of Appeals for the Ninth Circuit allowed it to return in 2017. Apple's pushback brought the matter to the Supreme Court, though only to decide whether the case can continue, not its final outcome.
Apple has argued that developers are the ones who set prices, and that it's not in violation of any antitrust laws. It has moreover claimed that by paying its commission, developers are "buying a package of services which include distribution and software and intellectual property and testing."
The Justice Department filed an amicus in support of the company, but that wasn't enough to sway the court.
In an earlier hearing, Justices Stephen Breyer, Elena Kagan, and Sonia Sotomayor questioned Apple's reference to the Illinois Brick doctrine, relating to direct versus indirect purchasers. From their perspective people on the App Store are "engaged in a one-step transaction with Apple," said Kagan.
Pro-Apple Justices included Samuel Alito and Neil Gorsuch, both of whom hinted that Illinois Brick should be re-examined. Alito pointed out that "tens of thousands" of app developers have yet to launch antitrust actions.
Apple has frequently faced criticism for its tight control of iOS apps, however. That may be coming to a head not just through Apple v. Pepper, but a European Commission investigation sparked by Spotify. The Swedish streamer's main complaint is that Apple Music enjoys an unfair advantage since it's not only integrated across Apple devices, but exempt from any commission. Spotify did at one point offer in-app Premium subscriptions, but at a higher price than via the Web as a way of compensating for Apple's take. It ultimately dropped the in-app option.
Should Apple lose the case it might be forced not just to allow third-party app stores, but to pay up to triple in damages as a deterrent.
The ruling, with an opinion authored by Justice Brett Kavanaugh, relates to a 2011 case arguing that with the App Store being the only sanctioned place for iOS downloads, that's led to artificially inflated prices. The company claims a 30 percent cut from most transactions, shrinking to 15 percent only for subscriptions active for over a year.
The case, Apple v. Pepper, was actually dismissed in 2013 by a California court, but the Court of Appeals for the Ninth Circuit allowed it to return in 2017. Apple's pushback brought the matter to the Supreme Court, though only to decide whether the case can continue, not its final outcome.
Apple has argued that developers are the ones who set prices, and that it's not in violation of any antitrust laws. It has moreover claimed that by paying its commission, developers are "buying a package of services which include distribution and software and intellectual property and testing."
The Justice Department filed an amicus in support of the company, but that wasn't enough to sway the court.
In an earlier hearing, Justices Stephen Breyer, Elena Kagan, and Sonia Sotomayor questioned Apple's reference to the Illinois Brick doctrine, relating to direct versus indirect purchasers. From their perspective people on the App Store are "engaged in a one-step transaction with Apple," said Kagan.
Pro-Apple Justices included Samuel Alito and Neil Gorsuch, both of whom hinted that Illinois Brick should be re-examined. Alito pointed out that "tens of thousands" of app developers have yet to launch antitrust actions.
Apple has frequently faced criticism for its tight control of iOS apps, however. That may be coming to a head not just through Apple v. Pepper, but a European Commission investigation sparked by Spotify. The Swedish streamer's main complaint is that Apple Music enjoys an unfair advantage since it's not only integrated across Apple devices, but exempt from any commission. Spotify did at one point offer in-app Premium subscriptions, but at a higher price than via the Web as a way of compensating for Apple's take. It ultimately dropped the in-app option.
Should Apple lose the case it might be forced not just to allow third-party app stores, but to pay up to triple in damages as a deterrent.
Supreme Court App Store Apple Ruling by Mike Wuerthele on Scribd
Comments
I don't agree. There are alternatives to the iPhone, but not the App store if you're an iPhone user. I'm not saying I agree it's an illegal monopoly (I lean towards thinking its not), but there is at least an argument there. It's not ridiculous at all, or SCOTUS wouldn't have allowed it. It means there is at least some substantial chance the plaintiffs will prevail.
Do these developers remember the days of having to put your software on a disc and into a Box and sell it in the store? All that was a bigger cut than Apple's 30%. The same 30% that Google and Amazon charge in their own App stores.
Apple only has about 20% of the Global Market anyway. They are far from some Monopoly.
If I have satellite TV service, do I have a right to access all of the programming a competing cable company may have?
If I fill my gas tank at a Shell gas station, do I have a right to demand they also carry a cheaper brand of gas?
Maybe Apple just has a bunch of really dumb lawyers, but there’s no excuse this case should have gone forward.
When Apple censors content – and that is not only happening to some US "right wing" groups and individuals, but it happens across all the countries in which they have a presence, it is time to let others have equal opportunity to bring content to the platform, just like they can on macOS.
It is up to the individual to decide how they use, and what content the device will carry, the minute the device is no longere Apple property. Apple is currently blocking this from happening (without possibly jailbreaking the device), and that cannot stand.
Which Apple dismissed early on in the life of the original iPhone, so no, that is no argument.