The US Supreme Court ruled Monday that a consumer lawsuit accusing Apple of illegally monopolizing the company's App Store may proceed, opening a new avenue of antitrust litigation against the iPhone maker.
iPhone owners filed a class-action lawsuit against Apple back in 2011. "Instead of collecting payments for apps sold in the App Store and remitting the balance (less its commission) to developers, Apple can simply specify that consumers' payments will flow the other way: directly to the developers, who will then remit commissions to Apple". IOS users can only download apps through the App store and the tech company takes 30 percent commission on every sale. Apple also claimed that because they don't set the retail price of the apps on the store, iPhone users can not sue them. "The only instance where Apple shares in revenue is if the developer chooses to sell digital services through the App Store", they added.
The ruling could have wide implications for other tech companies that operate similarly walled-off online storefronts, said Gene Kimmelman, president of the consumer advocacy group Public Knowledge and a former Justice Department antitrust official.
"In the retail context, the price charged by a retailer to a consumer is often a result (at least in part) of the price charged by the manufacturer or supplier to the retailer, or of negotiations between the manufacturer or supplier and the retailer", Kavanaugh said. 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".
It's worth noting that the Supreme Court did not rule Apple a monopoly, but rather allowed the suit to proceed. Following the ruling, Apple shares dropped by five percent - the stock was already under pressure due to the tariff dispute between the US and China. This means that, if you're so inclined, you could bring suit against Apple for overcharging you. I suppose Apple's defense now could be that consumers already have a choice when it comes to where to buy apps: if you don't like it, you can always jump ship to Android. The iPhone owners pay the alleged overcharge directly to Apple. These consumers brought their case under federal antitrust laws, arguing that Apple's practices made it a monopoly.
Siding with the consumers, Kavanaugh, a conservative appointed by Trump, joined the court's four liberal justices to rule against Apple. A judge could triple the compensation to consumers under antitrust law if Apple ultimately loses the suit.