Apple in court battle over App Store

28 November, 2018, 14:13 | Author: Rickey Flowers
  • WhatsApp and Facebook messenger icons are seen on an iPhone. Phil Noble Reuters  File

That's the responsibility of software developers.

U.S. Solicitor General Noel Francisco was at the hearing arguing for Apple on behalf of the Trump administration.

The iPhone users, 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.

But a group of iPhone customers filed a class action lawsuit, claiming that Apple has created a closed market for apps, allowing the company to tack on a monopoly overcharge to every sale. Judges could force it to change its pricing structure and Apple may face hundreds of millions in penalties to refund some of the commission it has taken in the past four years.

If the justices allow the case to go forward in the lower courts and Apple eventually loses, that could disrupt the App Store.

The case hinges on how the justices will apply one of its past decisions to the claims against Apple.

"I really wonder whether, in light of what has happened since then, the court's evaluation stands up", Alito said. Analysts estimate that the company made more than US$22 billion ($32.5b) from the App Store worldwide in the first half of 2018.

Apple enjoys a 30 percent cut for all sales down via the App Store and the general idea is that consumers are getting gouged since they can not purchase apps directly from developers at basically 30 percent cheaper. Since iPhone owners can only buy apps through the App Store without jailbreaking their phones and voiding their warranties, they want to be compensated for the damages incurred.

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If the justices permit the suit to go forward, a decision against Apple would nearly certainly be a blow to its business.

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

At points during the argument, Justices Neil M. Gorsuch and Kavanaugh appeared to agree. Justice Elena Kagan said that, from the consumer's perspective, buying an app is a "one-step transaction with Apple".

The entire case could hinge on a ruling from 1977. The company's lead Supreme Court lawyer, Dan Wall, declined to discuss the case in advance of the argument.

"They happen to be the largest company in the world, or at least they were some weeks ago, and they are able to extract monopoly pricing by virtue of a unique e-commerce monopoly on their App Store", said Frederick. He said the legal theory being pressed by the consumers would leave the company "subject to suit on both sides of the market" for the same conduct.

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

But consumers, he said, "are suing only for the damages that we incur". Let us know in the comments.

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