Apps cost too much? Court allows suit adding to Apple's woes

Apps cost too much? Court allows suit adding to Apple's woes

A group of iPhone owners accusing Apple of violating U.S. antitrust rules because of its App Store monopoly can sue the company, the Supreme Court ruled Monday.

The court's four liberal justices joined Kavanaugh, one of President Donald Trump's two high court appointees, to reject a plea from Apple to end the lawsuit at this early stage. That what it does, instead, is offer the equivalent of digital shelf space and that developers are the ones selling apps to consumers, subject to rules and terms set by Apple. The developers are charged a $99 membership fee, and Apple charges them a 30% commission on the sale of every app. The California-based company claimed that it only acts as an agent for app developers who set their own prices and pay Apple commission.

"A claim that a monopolistic retailer has used its monopoly to overcharge consumers is a classic antitrust claim".

"We all have apps on our phones: some for free and some you buy from Apple". While the Supreme Court's ruling does allow consumers to sue Apple for how it manages the App Store and controls iOS apps, it's not clear if Apple will be forced to change is business practices just quite yet. This requirement, and the lack of alternatives, can force consumers to overpay for their apps, according to the iPhone owners, who filed their class-action lawsuit against Apple in 2011. The court in that case "held that an antitrust plaintiff can't sue a defendant for overcharging someone else who might (or might not) have passed on all (or some) of the overcharge to him", Gorsuch wrote. "Unlike the consumer in Illinois Brick", it writes, "the iPhone owners here are not consumers at the bottom of a vertical distribution chain who are attempting to sue manufacturers at the top of the chain".

The Supreme Court did not rule on the customers' likelihood of success - only that they have the right to sue. That potential massive loss in revenue is behind the 5.6 percent drop in Apple's share price this morning, though we note tech stocks in general are down a few per cent today because someone's been tweeting.

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And Apple faces charges in Europe of abusing its platform by discriminating against rival apps, including one complaint from streaming music service Spotify. He said he would have overturned a lower court's decision that allowed the case to proceed, arguing the majority had imposed a "senseless" rule that courts will find impossible to implement and companies will find easy to evade.

Apple argued that the same logic applies to its App Store.

FILE PHOTO: Customers walk past an Apple logo inside of an Apple store at Grand Central Station in NY, U.S., August 1, 2018.

Apple actually won this case at the district court level, by arguing that under a 1977 Supreme Court case called Illinois Brick Co. vs. Illinois, it couldn't be sued by individual customers.

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