Apple in court over 30% app commission

Pauline Obrien
November 29, 2018

The justices are hearing arguments Monday in Apple's effort to end an antitrust lawsuit that could force the iPhone maker to cut the 30 percent commission it charges software developers whose apps are sold exclusively through Apple's App Store.

On Cyber Monday, things at the Supreme Court did not go particularly well for Apple.

However, a class-lawsuit filed against Apple is seeking damages over allegations that the Cupertino, California-based company is actually violating federal antitrust laws.

In 2014, the complaint against Apple was dismissed, but in early 2017, the Ninth Circuit Court of Appeals reversed that decision and Apple Inc. v. Pepper was back on.

At the heart of Jobs' Mob's arguments is a 1977 Supreme Court ruling that limited damages for anti-competitive conduct to those directly overcharged instead of indirect victims who paid an overcharge passed on by others.

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Apple was backed by Republican President Donald Trump's administration.

A group of iPhone owners brought the suit and accuse Apple of forcing customers to over-pay for apps, which can only be purchased through its store. "[This] enables the App Store to collect a higher price than if Apple were forced to entice app seekers in a competitive market".

According to Reuters, Chief Justice John Roberts seemed to agree with Apple's position.

The app store is "really unique", said Mark Rifkin, one of the lawyers pressing the suit. A key question: Who's responsible for any overcharging - the developers, who set the price, or Apple, which levies a commission on every app sold?

"Apple's revolutionary App Store unleashed a wave of innovation in software development, providing consumers with unrivaled choice and access to services that previously did not exist", said a spokesperson in an emailed statement.

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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 U.S. retail sales.

"Apple's intentionally closed system prevents competition", said David Frederick, who is a lawyer representing the customers filing the class-action lawsuit. "The plaintiffs were backed by 30 state attorneys general, including from Texas, California and NY".

But Apple's critics say its control over the App Store makes it unlike other internet marketplaces.

All four liberal justices clearly were skeptical of Apple's monopoly and were joined at points by three conservatives: Associate Justices Samuel Alito, Neil Gorsuch and Brett Kavanaugh.

Apple intends to argue that they are legally permitted to take the commission because they provide developers with access to users.

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The justices will ultimately decide a broader question: Can consumers even sue for damages in an antitrust case like this one?

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