App Store antitrust suit might make Supreme Court

App Store antitrust suit might make Supreme Court

U.S. Solicitor General Noel Francisco told the justices that Apple's "monopolistic overcharge" does not compel app developers to charge prices higher than the retail market would support.

Apple may soon find itself at the center of a monopoly probe before the United States Supreme Court, based on opening arguments heard on Monday.

The Supreme Court on Monday weighed whether Apple will have to face a lawsuit by consumers who say the App Store's pricing model violates antitrust laws. Both said they were skeptical of the 1970s-era rule that bars antitrust suits against manufacturers if consumers bought their products through middlemen, not directly from the maker. And now, Apple is asking the Supreme Court to overturn that decision.

Apple said that siding with the iPhone users who filed the lawsuit would threaten the burgeoning field of e-commerce, which generates hundreds of billions of dollars annually in USA retail sales.

The plaintiffs' lawyer, David Frederick, said Apple's monopoly was unique, adding that there was not a single ecommerce player who did what the company did.

Sandeep Vaheesan, legal director for the Open Markets Institute, said that a lot of tech platforms would start making the argument that consumers don't have the standing to bring antitrust suits against them. Under this long-standing legal doctrine, customers who bring in their laundry can not sue.

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In Apple's view, the antitrust laws would allow a suit only from the victims of this alleged monopoly, which could be the developers of the apps, not consumers who buy the apps. Apple says that the app developers are the ones who set the price of their apps; the plaintiffs counter that Apple is to blame because the company takes a 30% cut of an app's revenue.

Although the case began in 2011, the Supremes are considering a ruling made four years ago by the Northern California US District Court. An Oakland, California judge tossed the case based on this 1977 Supreme Court ruling.

Apple has said it is acting only as the agent for app developers who sell the apps to consumers through the App Store. Apple cited companies like ticket site StubHub, Amazon's Marketplace and eBay. The Trump administration is backing Apple at the high court. The plaintiffs are backed by the attorneys general of 30 states including California, Texas, Florida and NY. Apple is also being backed by the U.S. Chamber of Commerce business group.

Gorsuch agreed, noting that only one group can claim they are paying the "monopoly rent" that results from Apple's pricing policies.

The plaintiffs said app developers would be unlikely to sue Apple, which controls the service where they make money, leaving no one to challenge anti-competitive conduct. 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 USA antitrust law.

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