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US Supreme Court greenlights lawsuit over App Store monopoly

The U.S. Supreme Court on Monday voted 5 to 4 to allow an antitrust lawsuit against Apple to proceed, one accusing the company of maintaining a monopoly on iOS apps via the App Store.

iOS 12 App Store



The ruling, with an opinion authored by Justice Brett Kavanaugh, relates to a 2011 case arguing that with the App Store being the only sanctioned place for iOS downloads, that's led to artificially inflated prices. The company claims a 30 percent cut from most transactions, shrinking to 15 percent only for subscriptions active for over a year.

The case, Apple v. Pepper, was actually dismissed in 2013 by a California court, but the Court of Appeals for the Ninth Circuit allowed it to return in 2017. Apple's pushback brought the matter to the Supreme Court, though only to decide whether the case can continue, not its final outcome.

Apple has argued that developers are the ones who set prices, and that it's not in violation of any antitrust laws. It has moreover claimed that by paying its commission, developers are "buying a package of services which include distribution and software and intellectual property and testing."

The Justice Department filed an amicus in support of the company, but that wasn't enough to sway the court.

In an earlier hearing, Justices Stephen Breyer, Elena Kagan, and Sonia Sotomayor questioned Apple's reference to the Illinois Brick doctrine, relating to direct versus indirect purchasers. From their perspective people on the App Store are "engaged in a one-step transaction with Apple," said Kagan.

Pro-Apple Justices included Samuel Alito and Neil Gorsuch, both of whom hinted that Illinois Brick should be re-examined. Alito pointed out that "tens of thousands" of app developers have yet to launch antitrust actions.

Apple has frequently faced criticism for its tight control of iOS apps, however. That may be coming to a head not just through Apple v. Pepper, but a European Commission investigation sparked by Spotify. The Swedish streamer's main complaint is that Apple Music enjoys an unfair advantage since it's not only integrated across Apple devices, but exempt from any commission. Spotify did at one point offer in-app Premium subscriptions, but at a higher price than via the Web as a way of compensating for Apple's take. It ultimately dropped the in-app option.

Should Apple lose the case it might be forced not just to allow third-party app stores, but to pay up to triple in damages as a deterrent.