Supreme Court Rules Against Apple, Allows Users to Sue Over Pricing

Supreme Court rules Apple will face antitrust suit for its iPhone apps

Fox News senior judicial analyst Andrew Napolitano expressed shock on Monday after conservative Supreme Court Justice Brett Kavanaugh sided with the nation's top court's liberal justices in a ruling allowing iPhone users to sue Apple over high prices on its exclusive App Store. It insisted that App Store customers were those of third-party developers using the download store to sell their titles, rather than direct Apple customers. To put an app on the App Store, developers must pay Apple a $99 annual membership fee plus 30 per cent commission on every app sale. Apple had argued that it was an intermediary, and that app developers set pricing.

He added, "The consumers here purchased apps directly from Apple, and they allege that Apple used its monopoly power over the retail apps market to charge higher-than-competitive prices".

"Apple's theory would provide a roadmap for monopolistic retailers to structure transactions with manufacturers or suppliers so as to evade antitrust claims by consumers and thereby thwart effective antitrust enforcement", Kavanaugh wrote.

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

The court's decision today is far from a final ruling, so we will have to wait to see how this plays out.

The legal setback for Apple comes as investors are looking to the company's services business, including its App Store, to fuel growth as iPhone sales slow. It took more than two years for this issue of whether Apple can even be sued to work its way through appeals.

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Apple actually won this case at the district court level, by arguing that under a 1977 Supreme Court case called Illinois Brick Co. vs. Illinois, it couldn't be sued by individual customers.

And Apple faces charges in Europe of abusing its platform by discriminating against rival apps, including one complaint from streaming music service Spotify. I suppose Apple's defense now could be that consumers already have a choice when it comes to where to buy apps: if you don't like it, you can always jump ship to Android.

Indeed, another Trump appointee - Justice Neil Gorsuch - wrote in the dissenting opinion about this ruling that app developers have more legitimate standing to contend with Apple, not consumers.

Apple's stock tumbled nearly six percent after the ruling, but it is hardly the end of its financial concerns in the matter. Now, this doesn't mean that Apple violated antitrust laws. It also claimed that allowing the case to proceed could pose a threat to the burgeoning e-commerce segment of the USA economy. Unfortunately for Apple, it's not good news for the firm.

The court noted that the group's suit against Apple is still in an "early stage", so there's yet to be a definitive ruling on whether the tech giant unlawfully engaged in monopolistic practices.

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