Apple Loses App Store Antitrust Appeal

Apple Loses App Store Antitrust Appeal
By George Khoury, Esq. on May 13, 2019 3:00 PM

The Apple App Store has been accused of being a monopoly, and the U.S. Supreme Court just agreed with the Ninth Circuit Court of Appeals, that the case should move forward against Apple.

The claim boils down to consumers being charged more for purchased apps because Apple takes a 30 percent commission on every sale, there being no readily available alternative for apps for Apple devices.

App Appeal

The SCOTUS opinion explains that Apple’s defense that the plaintiffs cannot bring the lawsuit was correctly denied by the Ninth Circuit. In short, Apple was relying on the precedent set by Illinois Brick, which explains that consumers who do not purchase directly from a company engaging in monopolistic practices cannot bring suit. In that case, a government sued a brick maker for price fixing, however, the brick maker never sold brick to the government, only to the contractors.

Apple contends that it does not sell apps, but rather that it provides the platform for independent developers to sell apps. Apple also explained that it does not control how the developers set prices, and noted that a majority of apps are offered for free (meaning Apple makes no money).

More to Come

The High Court opinion was careful to explain that their decision did not reach the merits of the claims in the underlying case. Rather, the majority opinion, drafted by rookie Justice Kavanaugh and joined by Justices Breyer, Ginsburg, Kagan, and Sotomayor, explained that App Store consumers, unlike the purchasers in Illinois Brick, purchased the apps directly from Apple's own store.

Fortunately for the still-exploding e-commerce industry, this decision might not have the effect of other platforms being exposed to a floodgate of litigation for similar conduct. Although the dissent, authored by Justice Gorsuch, and joined by Justices Alito, Thomas, and Roberts, seemed to lament that the majority was "whittling away" Illinois Brick rather than affording it "full effect."

Apple released a statement explaining that the App Store is not a monopoly and that it plans to continue fighting this battle in court.

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