Supreme Court Rules Apple Anti-Trust Lawsuits May Move Forward

Tuesday, 14 May, 2019

By passing the cost of Apple's 30% cut onto consumers, iPhone users argue that it is an unfair use of monopoly power.

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. Four iPhone owners sued the company in a case titled Apple v. Pepper, which alleges that Apple has illegally monopolized the app aftermarket for iPhones as the company's App Store charges a 30 percent commission to developers that wish to publish iPhone apps. They were joined by one of the court's five conservatives, Justice Brett Kavanaugh, who wrote the majority opinion.

The decision also could let consumers sue Amazon by arguing that the fees it charges third-party sellers inflate the prices of products, said Hal Singer, an economist at Econ One Research Inc. and a senior fellow at the George Washington Institute of Public Policy.

In a statement, Apple said, "We're confident we will prevail when the facts are presented and that the App Store is not a monopoly by any metric".

So what does this Supreme Court decision mean for those of us who buy apps in the App Store? In that case, the court limited damages for anti-competitive conduct to those directly overcharged rather than indirect victims who paid an overcharge passed on by others.

To the question of whether Apple could now be subject to lawsuits from different plaintiffs - by consumers who are downstream in the sales process, and by suppliers who are further upstream - Kavanaugh wrote, "A retailer who is both a monopolist and a monopsonist may be liable to different classes of plaintiffs".

"It just seems to me that when you're looking at the relationship between the consumer and Apple, that there is only one step", Kagan said, seemingly referring to the simple tap being all that's required to buy apps.

In dissent, Justices Neil Gorsuch, John Roberts, Clarence Thomas and Samuel Alito said court precedent should have blocked the lawsuit. Gorsuch also was appointed by Trump. The broader market was down more than 2% Monday.

Spotify filed a complaint against Apple in the European Union, and the EU has launched an antitrust investigation into Apple's App Store commission practices. The court's three-judge panel unanimously ruled for Apple with Judge William A. Fletcher writing "Apple is a distributor of the iPhone apps, selling them directly to purchasers through its App Store". Today, they handed down a 5-4 decision, with the majority opinion being that the anti-trust laws don't apply. It has said that if the court allowed the case to proceed, it would disrupt the e-commerce market.

The suit, which was first filed in 2011, was supported by 30 state attorneys general, including from Texas, California and NY. Apple had moved to dismiss the lawsuit, stemming from litigation dating back a decade, arguing the iPhone customers couldn't sue because they weren't direct purchasers from Apple.