A narrowly divided Supreme Court allows a group of consumers to proceed with a lawsuit that Apple overloads customers for App Store purchases. Apple had asked the courts to cast lawsuits, claiming that the law only allowed app developers, not customers, to bring such a case.
Litigation has been underway since 201
The plaintiffs in this case claim that Apple's 30 percent commission on app sales would not & # 39; It is not viable in a competitive app distribution market. The appeal case is seeking refunds on behalf of millions of users who have paid inflated app prices due to Apple's exclusion practices.
Today's Supreme Court does not decide the biggest question whether Apple is actually abusing control of the App Store for overcharge customers. It just means that the matter can move on. However, if the plaintiffs eventually succeed, it can not only force Apple to refund money to the company collected from users in recent years. It can also put pressure on Apple to open up the iOS platform so users can install third-party software without paying Apple for the privilege.
Apple based its case on a 1977 case of brick prices
In the 1970s, the state of Illinois sued a company called Illinois Brick, claiming that it had left the bricks used in public projects. However, the bricks had gone through various contractors during the construction process. In a 1977 decision, the Supreme Court said that only these contractors – not the state itself – could suck Illinois Brick for its high prices.
Apple claimed that the same logic applies to the App Store. In Apple's view, customers buy apps from developers, who again pay Apple a 30 percent commission for distribution services. So if Apple overloads for app distribution, only distributors, not customers, have the right to sue.
When the Supreme Court judges considered the case in November, justices quickly highlighted an obvious problem with this argument: When you buy an iPhone App, Apple is the company that charges your credit card.
"The first sale is from Apple to the customer," Justice Sonia Sotomayor said. "It is the customer who pays 30 percent."
When I first wrote the case, I described Apple's argument as "confusing and counterintuitive." The Court's four liberals seemed to agree in the November talks, and all four liberals concluded by voting against Apple in Monday's decision. They were merged by one of the Court's five conservatives, justice Brett Kavanaugh, who wrote the majority.
"It is common ground that iPhone owners bought the apps directly from Apple," Kavanaugh wrote. "Therefore, according to Illinois Brick iPhone owners were direct buyers who could suck Apple for alleged monopolization."
Kavanaugh described this as a "fair" application of antitrust law and former Supreme Court practice. 19659007] Four Conservatives Sitting With Apple
The other four conservatives of the court, on the other hand, bought Apple's argument that what ultimately applied was the fact that app developers – not Apple-based app prices. If consumers were harmed by high app prices, this just happened because app developers were able to "pass" Apple's 30 percent commission. Therefore, if Apple abused its market power, only developers could suck.
If consumers win their lawsuit against Apple, the court must estimate how much of Apple's 30 percent commission has been "transferred" to customers. It's not an easy calculation to do – and it's not a problem coming up if developers are suing Apple instead. For the four conservative justice in the minority, it was the decisive consideration.
But the majority of the court was not convinced that this was justified in leaving the simple government the Supreme Court articulated 40 years ago that customers can suck their direct suppliers. 19659004] "Apple's theory will require us to write about the rationale for Illinois Brick and to give the long-lasting line of light," Kavanaugh wrote. "Apple's line drawing doesn't make much sense, other than as a way to get Apple out of this and similar cases."