Supreme Court rules Apple will face antitrust suit for its iPhone apps

Supreme Court rules Apple will face antitrust suit for its iPhone apps

For a bit of background here, the 9th U.S. Circuit Court of Appeals ruled in January 2017 that Apple sells its apps directly to consumers and that they can move forward with an antitrust suit on these grounds. Kavanaugh highlights this, writing that "a$3 t this early pleading stage of the litigation, we do not assess the merits of the plaintiffs' antitrust claims against Apple, nor do we consider any other defenses Apple might have".

And it shot down Apple's legal response by arguing that if the current system was allowed to stand it would "provide a roadmap for monopolistic retailers to structure transactions with manufacturers or suppliers so as to evade antitrust claims by consumers and thereby thwart effective antitrust enforcement".

The ruling could lead to other lawsuits against tech companies that act as platforms for other products or services. "We merely hold that the Illinois Brick direct-purchaser rule does not bar these plaintiffs from suing Apple under the antitrust laws". 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 Supreme Court's majority opinion was written by Justice Brett Kavanaugh - a conservative Trump appointee - joined by the court's four liberal-leaning judges, Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elia Kagan. Hence, if Apple was abusing its market power, only developers could sue.


Apple stock is down over five percent Monday at the time of publication. 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".

Apple's App Store marketplace has always been a target of some consumers and developers because the company takes a commission of up to 30% on sales, the so-called "Apple Tax". If an app is overpriced, the fault lies with developers and not Apple, the iPhone maker claimed.

Apple said the consumers were indirect purchasers, at best, because any overcharge would be passed on to them by developers. Apple, which was backed by the Trump administration and the US Chamber of Commerce business group, sought to dismiss the case, arguing that the plaintiffs lacked the required legal standing to bring the lawsuit.

The former judge recounted that Kavanaugh had said during his controversial confirmation hearings a year ago that he was "not a monolithic anything" and that he listened to the facts and then decided how the law should apply.

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