Apple vs Pepper: Supreme Court green-lights App Store monopoly lawsuit

Carly Page
@CarlyPage_
14 May 2019

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THE US SUPREME COURT has ruled that consumers can sue Apple for allegedly violating antitrust laws with its "monopolistic" App Store.

The case, Apple vs Pepper, dates back to 2011 when several iPhone buyers, including lead plaintiff Robert Pepper, filed a complaint alleging that Apple "illegally monopolised the distribution of iPhone apps and that the commissions charged to app developers inflate the prices consumers ultimately pay for apps."

The plaintiffs claimed that, although developers set the prices of their apps, by charging them a 30 per cent commission on each purchase and allowing iOS apps only to be sold through its App Store, Apple has inflated the price of apps for consumers.

Apple, on the other hand, argued that iOS users were technically buying apps from developers, while developers themselves were Apple's App Store customers.

This argument was thrown out on Monday, with the Supreme Court ruling in a 5-4 decision that consumers could sue Apple for allegedly driving up app prices.

"Apple's line-drawing does not make a lot of sense, other than as a way to gerrymander Apple out of this and similar lawsuits," wrote Justice Brett Kavanaugh.

"A claim that a monopolistic retailer has used its monopoly to overcharge consumers is a classic antitrust claim. But Apple asserts that the iOS users, in this case, may not sue Apple because they supposedly were not 'direct purchasers'", writes Kavanaugh.

"We disagree. The plaintiffs purchased apps directly from Apple and therefore are direct purchasers."

Apple, naturally, responded with a statement defending its App Store, which it claims is "not a monopoly by any metric.

"We're proud to have created the safest, most secure and trusted platform for customers and a great business opportunity for all developers around the world," a spokesperson said.

"We're proud to have created the safest, most secure and trusted platform for customers and a great business opportunity for all developers around the world. Developers set the price they want to charge for their app and Apple has no role in that. The vast majority of apps on the App Store are free and Apple gets nothing from them. The only instance where Apple shares in revenue is if the developer chooses to sell digital services through the App Store.

"Developers have a number of platforms to choose from to deliver their software — from other apps stores, to Smart TVs to gaming consoles — and we work hard every day to make our store the best, safest and most competitive in the world."

It's unclear when the lawsuit will go to trial, if at all. However, Apple could be forced to hand over millions of dollars in penalties if found guilty, and could also be forced to reduce its 30 per cent commission on app sales or allow consumers to download apps from rival app stores.

It's not just consumers who have a problem with the iOS App Store. The firm also faces legal action here in Europe after Spotify filed an antitrust complaint about the 30 per cent 'Apple Tax' it levies on developers. µ