Justices skeptical of Apple in case about iPhone apps' sales

WASHINGTON — The Supreme Court seemed ready Monday to allow a lawsuit to go forward that claims Apple has unfairly monopolized the market for the sale of iPhone apps.

The court heard arguments in Apple's effort to shut down an antitrust lawsuit. Chief Justice John Roberts was alone among the nine justices who seemed prepared to agree with Apple.

The suit by iPhone users could force Apple to cut the 30 percent commission it charges software developers whose apps are sold exclusively through Apple's App Store. A judge could triple the compensation to consumers under antitrust law if Apple ultimately loses the suit.

But the issue before the high court at this early stage of the suit is whether the case can proceed at all. Justice Stephen Breyer, who used to teach antitrust law at Harvard Law School, said the consumers' case seemed straightforward and in line with a century of antitrust law.

Apple argues it's merely a pipeline between app developers and consumers.

The developers set the prices and agree to pay Apple a 30 percent commission on whatever they sell, the lawyer representing Apple said in the courtroom. If anyone should be able to sue the Cupertino, California-based company, it's a developer, Daniel Wall said. "There have been plenty of disputes, not one has gone to litigation," he said.

But Justice Elena Kagan said it appears that consumers have a direct relationship with Apple. "I pick up my iPhone, go to the Apple App Store, pay Apple directly with credit card information I supplied to Apple," Kagan said.

Justice Brett Kavanaugh said if consumers are paying more than they should, then perhaps they should be able to sue. The relevant federal antitrust law says "any person injured" can sue, Kavanaugh said.

His comments could put him on the side of justices who would allow the suit to proceed. In other cases, the court has ruled there must be a direct relationship between the seller and a party complaining about unfair, anti-competitive pricing.

Consumers can choose from among more than 2 million apps, compared with the 500 apps that were available when Apple created the App Store in 2008. "The phrase 'there's an app for that' is now part of the popular lexicon," Roberts noted in a 2014 decision limiting warrantless searches of cellphones by police. Apple has trademarked the phrase.

But the company says the popularity of software for iPhones and its App Store shouldn't obscure that consumers buys apps from developers, not Apple. Developers set the prices, though Apple requires prices to end in .99, Wall said. The Trump administration is backing Apple at the high court.

Representing consumers, lawyer David Frederick said the monopoly Apple has over iPhone apps is unique in the digital age. "Apple can't point to another e-commerce distributor that does what it does," Frederick said. Even Apple allows third parties to sell computer software directly to purchasers of its laptop and desktop computers, he said.

A trial court initially dismissed the suit. The 9th U.S. Circuit Court of Appeals revived it.

A victory for Apple could severely restrict consumers' ability to sue over antitrust violations even though Congress envisioned such suits "would form a central component of enforcement of the antitrust laws," warned 18 scholars of antitrust law in a Supreme Court filing.

A decision in Apple Inc. v Pepper, 17-204, is expected by late spring.

You may also like these

AP Explains: US targets heart of China's economic...

Apr 10, 2018

President Donald Trump's threat to hike tariffs on technology imports from China strikes at the...

China urges US to avoid damaging business...

Apr 26, 2018

China urges Washington to avoid damaging business confidence following report U.S. investigating...

Chip Wars: Tech rivalry underlies US-China trade...

May 3, 2018

Chip wars: US-China trade tensions underscore intense rivalry over key semiconductor expertise

China hikes tariffs on US soybeans, electric...

Jun 16, 2018

China fires back at Trump tariff hike by increasing duties on US soybeans, electric cars, other...

Tesla will build its 1st factory outside US in...

Jul 11, 2018

Electric car producer Tesla will build its first factory outside the United States in Shanghai,...

About Us

Science Tech Today is all about the present with what’s new in the Science and Technology world. “Keep up with today, and don’t be left behind.”

Contact us: sales[at]sciencetechtoday.com

Subscribe Now!