US Supreme Court rules against Apple, allows App Store-related antitrust lawsuits

Apple Shares Fall After Supreme Court Allows Consumer Lawsuit Over App Store

Apple found itself on the losing side of a Supreme Court ruling in the Apple v Pepper case earlier this morning. The decision barred Illinois' suit.

"The App Store is not a monopoly by any metric", the company said in a statement, according to CNN.

"The plaintiffs' allegations boil down to one straightforward claim: that Apple exercises monopoly power in the retail market for the sale of apps and has unlawfully used its monopoly power to force iPhone owners to pay Apple higher-than-competitive prices for apps", Kavanaugh wrote, denying the existence of an intermediary between Apple and app consumers.

Apple explained in the same statement that developers are the one that set the price for their apps or memberships and that they have no say in that particular decision.

An antitrust lawsuit against Apple would fundamentally disrupt not only the ecosystem of App Store but of other present and future electronic marketplaces. Apple takes a 30% commission fee for each transactions. Perhaps, Apple could go the Google way and enable app sideloading as Google does on Android.

The dispute hinged in part on how the justices would apply a decision the court made in 1977 to the claims against Apple. 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. So, according to the company, if anyone should be suing Apple, it should be the game developers themselves, not iOS users.

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The ruling comes amid a growing backlash against major tech companies that dominate key segments of the online economy.

The plaintiffs, including lead plaintiff Robert Pepper of Chicago, filed the suit in a California federal court in 2011, claiming Apple's monopoly leads to inflated prices compared to if apps were available from other sources. If commissions were lower, app prices also would be lowered, the plaintiffs argued.

Apple's loss in this antitrust case could expose millions of dollars of damage within the company.

If Apple can maintain the current commissions in its app store at its recent rate of growth, it will produce revenue of about $17 billion in 2020, estimates Macquarie Securities analyst Ben Schachter. Apple's stock dropped almost 6% Monday to close at $185.72.

There has been exponential growth in the availability of apps since Apple created the App Store in 2008 with 500 choices.

The outcome of the case may also significantly change the way Apple sells apps on its platform, which could potentially eat into its bottom line. The new capabilities available Monday, May 13, come ahead of Apple's plan to offer its own original shows, including ones from Oprah Winfrey and Steven Spielberg.

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