Supreme Court may let iPhone users sue Apple over App Store terms


If the justices allow the case to go forward in the lower courts and Apple eventually loses, that could disrupt the App Store. Apple says it's more complicated, with the company serving as a middleman connecting app developers with users.

The case hinges on how the justices will apply one of its past decisions to the claims against Apple. "We are hopeful the Supreme Court will recognize Apple's critical role as a marketplace for apps, and uphold existing legal precedent by finding in favor of Apple and the millions of developers who sell their apps on our platform", Apple said in a statement on the trial. Hovenkamp says that this case is different than typical antitrust cases.

In the case of iPhone apps, developers are "direct" purchasers, while consumers are only "indirect" purchasers - and therefore unable to sue Apple - the company contends.

"The Ninth Circuit is home to a disproportionate share of the nation's e-commerce companies, and its erroneous decision creates uncertainty and a lack of uniformity about the proper application of Section 4 (awarding treble damages based on the antitrust law) to this increasingly common business model", it said. Its argument: the company is merely providing a marketplace for the apps. The average price of a paid app in the App Store is $1.

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But it was not just the court's liberals who seemed skeptical of Apple's argument. 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 U.S. antitrust law. This is due to the 30 per cent commission that Apple keeps on each purchase made through its store, making some vendors redirect users to the browser to complete purchases. I pay Apple directly with credit card information that I've supplied to Apple.

Apple was backed by Republican President Donald Trump's administration. Developers must submit their apps to Apple for approval, and if they meet all of the company's criteria (and are malware-free), they can be listed either as a free, freemium, or paid app. They said that app developers would be unlikely to sue because they would not want to bite the hand that feeds them, leaving no one to challenge anti-competitive conduct. Apple decides what apps can be sold, gives developers a limited number of prices they can charge and tells users the App Store is the only place they can get apps, lawyers pressing the suit say.

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. An appeals court reversed the dismissal in 2017, leading to the Supreme Court taking up the matter.