ibusinesslines.com December 09, 2018

Apple in court over 30% app commission

28 November 2018, 02:12 | Jodi Jackson

Apple approaches US Supreme Court to block customers from suing it for monopoly abuse

Apple,iPhone app fees,Apple iPhone App Fee Lawsuit

They argue that "iPhone consumers nationwide have paid (Apple) hundreds of millions of dollars more for iPhone apps than they would have paid in a competitive market".

In 2013, U.S. District Court Judge Yvonne Gonzalez Rogers in the Northern District of California dismissed the lawsuit.

Apple's pricing policies for iPhone apps bought on its exclusive App Store ran into trouble Monday at the Supreme Court.

The monopolistic practice in question is the "walled garden" App Store that every iOS and iDevice user is forced into using in order to obtain applications for their phone or tablet (or watch).

"Apple is a sales and distribution agent for developers", Apple's lawyers said in a Supreme Court filing. At issue now is only whether the antitrust suit against Apple can proceed to further hearings and a trial on whether Apple wields monopoly power. Although the average price of an app is just over a dollar, the App Store generated sales of about $11 billion in 2017 alone.

The plaintiffs argued that, although developers set the prices of their apps, by charging them a 30 per cent commission on each purchase, and by allowing iOS apps only to be sold through its App Store, Apple has inflated the price of apps for consumers.

Apple says it doesn't own the apps or sell them.

Liberal justices Sonia Sotomayor and Stephen Breyer seemed certain that the iPhone buyers' claims should go forward.

"This is a critical question for antitrust law in the era of electronic commerce", Apple said at the time.

At points during the argument, Justices Neil M. Gorsuch and Kavanaugh appeared to agree. In this case, the direct victims would be the app developers, not the customers (who would we considered indirect victims). Its argument: the company is merely providing a marketplace for the apps. Justice Elena Kagan said that, from the consumer's perspective, buying an app is a "one-step transaction with Apple". Although the consumers say they pay for the commissions through higher app prices, Apple says those are the type of "pass-through" damages barred under the Supreme Court's 1977 Illinois Brick v. Illinois ruling.

Chief Justice John Roberts was the most supportive of Apple in his questioning.

"Apple's revolutionary App Store unleashed a wave of innovation in software development, providing consumers with unrivaled choice and access to services that previously did not exist", said a spokesperson in an emailed statement. Both sides spoke for about an hour in total.

Most states already allow downstream purchasers to collect damages, and the group says courts have been able to ensure that companies don't have to double-pay.

"What we know is what the price is in a noncompetitive market, and we will have to have experts that will assess what the damages would be in a competitive market", he said.

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