Supreme Court Rules Against Apple in App Store Price Fixing Case
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The Supreme Court has ruled against Apple in a long-standing case over price fixing in the App Store, in a decision that allows iPhone owners to proceed with a lawsuit against the company. The court heard arguments in the case in November, and the decision was expected sometime this spring.
The plaintiffs claim Apple has a monopoly over iOS app distribution, which it uses unfairly to pass along its 30 percent cut of app sales to consumers. Apple claimed it was a middleman for app distribution, and that developers set the price. Since developers are the ones who pay Apple's commission, and not consumers, only they should be able to file a lawsuit on the issue, the company said.
The case hinged on the question of whether people who buy iOS apps do so directly from Apple. Following a 1977 decision on the case of Illinois Brick Co. v. Illinois, only direct purchasers of products can file federal antitrust lawsuits.
Those behind the suit say that because payments go to Apple directly, and not the developers, consumers have a direct relationship with the company, and as such that makes this an antitrust case. They also claim that if consumers had other options for apps beyond the App Store, they'd pay less for them, while Apple would be under "considerable pressure" to lower its "pure profit" commission rate.
The court ruled 5-4 against Apple, with Justice Brett Kavanaugh authoring the opinion. "Apple's line-drawing does not make a lot of sense, other than as a way to gerrymander Apple out of this and similar lawsuits," he wrote.
The court agreed with the plaintiffs' assertion that people who buy apps from the App Store are doing so directly from Apple, and as such they aren't prohibited "from suing Apple under the antitrust laws." However, at this stage, the court doesn't "assess the merits of the plaintiffs' antitrust claims against Apple, nor [does it] consider any other defenses Apple might have."
It's unclear when the lawsuit will go to trial (if Apple doesn't settle first), as it's in its early stages. However, Apple could be on the hook for hundreds of millions of dollars in penalties. It may also be forced to reduce its 30 percent commission on app sales or allow consumers to access rival app marketplaces. Engadget has reached out to Apple for comment.