Published: Tue, May 14, 2019
Markets | By Erika Turner

IPhone Owners Can Sue Apple Over App Store Policies

IPhone Owners Can Sue Apple Over App Store Policies

Apple and its tech-industry allies said before the ruling that a decision allowing the lawsuit could lead to expensive antitrust claims against other companies that run online marketplaces, potentially affecting Alphabet Inc.'s Google, Amazon.com Inc. and Facebook Inc. The ruling "exalts form over substance", Gorsuch said in an opinion joined by Chief Justice John Roberts and Justices Samuel Alito and Clarence Thomas.

iPhone owners filed a class-action lawsuit against Apple back in 2011.

Apple takes a cut of everything you buy in the iOS App Store, but that could change. The suit charges Apple with gouging consumers through what it describes as a monopoly on apps in the App Store. However, a small majority of SCOTUS justices disagreed, meaning antitrust lawsuits against Apple can go forward.

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".

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In the case, Apple v. Pepper, four iPhone owners had sued the company saying the company unlawfully monopolizes the aftermarket for apps because the App Store charges a 30% commission to developers, resulting in inflated prices to consumers.

But Morgan Reed, president of ACT/The App Association, which represents 5,000 app makers and developers, said the ruling could open litigation floodgates. "That is why we have antitrust law", the newest Justice sitting on the Supreme Court wrote.

"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". In Apple's view, customers buy apps from developers, who in turn pay Apple a 30 percent commission for distribution services. The iPhone giant said it only acted as the intermediary, providing a storefront where consumers found and purchased the apps they later installed on their phones. Apple will happily spend some of the billions of dollars it makes through the current system on lawyers in an effort to stretch the case out for another eight years, especially since the legal action as now structured seeks antitrust-grade triple damages. The company told the high court it passed US$26.5 billion on to developers in 2017. These consumers brought their case under federal antitrust laws, arguing that Apple's practices made it a monopoly.

The Supreme Court did not rule on the customers' likelihood of success - only that they have the right to sue.

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