Published: Thu, November 29, 2018
Industry | By Kenny Hampton

Case against Apple over app commission likely to proceed

Case against Apple over app commission likely to proceed

Apple's legal team could soon be headed to the U.S. Supreme Court to face an anti-trust case being levied against the company.

A decision in Apple Inc. v Pepper, 17-204, is expected by late spring. Developers earned more than $26 billion in 2017, a 30 percent increase over 2016, according to Apple. Instead Robert Pepper and the other iPhone owners in the class-action lawsuit have an issue with the 30 percent commission that Apple takes on app sales.

Although the case began in 2011, the Supremes are considering a ruling made four years ago by the Northern California US District Court.

Wall countered that the first sale was between the app creator and Apple, when making pricing decisions. That direct relationship makes Apple the proper target of an antitrust lawsuit, they said.

"I mean, I pick up my iPhone". Users of the iPhone have to buy apps through Apple, she said, and that at least looks like a monopoly arrangement. Apple, naturally, does not want to pay. Hovenkamp says that this case is different than typical antitrust cases. A federal judge in Oakland threw out the suit, saying the consumers were not direct purchasers because the higher fees they paid were passed on to them by the developers.

Generally speaking, liberal justices were more eager to move forward with the protection of consumers in mind, while the more conservative Justices, especially Trump-appointees, were afraid that this precedent would hinder future e-commerce growth. And iPhone apps are only available through the App Store.

A ruling against Apple could add to pressure the company already is feeling because of disappointing iPhone sales.

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The plaintiffs, as well as antitrust watchdog groups, said that if the justices close courthouse doors to those who buy consumer products, monopolistic conduct could expand unchecked. Its argument: the company is merely providing a marketplace for the apps. At that time, Judge Yvonne Rogers ruled in favor (PDF) of Apple, reasoning that end users of the applications were indirect customers are therefore could not be the ones to sue under U.S. antitrust law.

So as Apple sees it, even if the App Store amounted to an illegal monopoly - and the company insists it isn't - only the app developers could sue, because they're the actual buyers of Apple's distribution service. 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".

Chief Justice John Roberts was alone among the nine justices who seemed prepared to agree with Apple.

Today the Justices sat through an hour of hearings from both sides and offered some comments on the matter afterward.

David Frederick, the lawyer representing consumers, argued that "there's no middleman in this particular transaction" as Apple maintained.

But consumers, he said, "are suing only for the damages that we incur".

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