Apple could lose commission on App Store sales after antitrust violations

Oscar PerryMay 16, 2019

In a major blow to Apple, the US Supreme Court has ruled that consumers can pursue their anti-trust lawsuit and sue the company for forcing them to buy apps exclusively from it through its App Store.

Conservative Judge Brett Kavanaugh joined with the four liberal judges in the 5-4 decision, agreeing with the plaintiffs that the 30% commissions Apple charges violate federal antitrust laws.

In a reply on the matter, Apple spoke to 9to5Mac saying "The App Store is not a monopoly by any metric".

Apple argued that app purchasers are indirect purchasers because the app developers set prices.

Justice Neil Gorsuch, Trump's other high court pick, wrote a dissent for four conservative justices, saying that the consumers' complaint against Apple is the kind of case that a 42-year-old decision, in Illinois Brick Co. v. Illinois, was meant to prevent. Perhaps, Apple could go the Google way and enable app sideloading as Google does on Android. The ruling came on a day when Apple shares already were trading lower because of concerns over a full-blown U.S. 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.

The legal setback for Apple comes as investors are looking to the company's services business, including its App Store, to fuel growth as iPhone sales slow.

The latest decision by the Supreme Court does appear to be merely a procedural win, but the fact that the case will move forward could eventually have significant implications for the App Store. Developers set the price they want to charge for their app and Apple has no role in that.

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An antitrust lawsuit against Apple would fundamentally disrupt not only the ecosystem of App Store but of other present and future electronic marketplaces.

"Plaintiffs can be injured only if the developers are able and choose to pass on the overcharge to them in the form of higher app prices that the developers alone control", he wrote.

"We are extremely disappointed in the decision from the US Supreme Court to reward trial lawyers rather than developers", Reed said.

This issue originally started in 2011 when some iPhone users claimed that App Store prices would be lower in an open market.

Kavanaugh cautioned that the Apple case was at an early stage, and that the court was not assessing the merits of the plaintiffs' antitrust claims.

The justices at the time ruled that the state could not bring an antitrust lawsuit against Illinois Brick because the state had not purchased concrete blocks directly from the company. The lawsuit, along with complaints over App Store policies to European officials from rivals such as streaming music Spotify, could draw Apple into the broader public debate over the market power of large tech companies.

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