A seven-year old antitrust monopoly lawsuit against Apple’s App Store is scheduled to go before the Supreme Court today, Reuters reports, in a case which is expected to answer a bigger question as to whether consumers can sue the intermediate suppliers and distributors in an online economy for damages in antitrust cases. Apple, for its part, is citing a relatively ancient Supreme Court precedent from 1977 in its defence, which limited damages for anti-competitive conduct to those who were overcharged directly, rather than simply those who paid an overcharge passed on by others. On this basic, Apple is arguing that it is simply acting as an agent, and it is the developers that set the prices, which Apple simply passes on through its storefront. Lawyers for the plaintiffs, however, are arguing that Apple’s 30 percent cut for selling apps on the App Store forces developers to charge higher prices than they otherwise would, thereby passing Apple’s costs on directly to the consumers. A competitive landscape, they suggest, would allow for developers to charge lower prices on other App Stores.
The lawsuit was originally filed in 2011, and accused Apple of maintaining a monopoly on the sale of iPhone apps in order to drive up the prices of apps, thereby increasing its own 30 percent cut of app revenue. Apple asked for the suit to be dismissed in early 2013, arguing that Apple doesn’t have a monopoly because the company doesn’t set prices, and charging a fee for distribution doesn’t violate antitrust laws. The suit was actually dismissed later that same year, but for an entirely different reason, with a U.S. District Judge ruling that the plaintiffs couldn’t continue the lawsuit simply because they hadn’t actually purchased any of the apps in question, and therefore couldn’t claim that they had “personally suffered an injury-in-fact based on Apple’s alleged conduct.” However, the court ruling didn’t prevent the case from being refiled, and it was resurrected in early 2017 when the 9th U.S. Circuit Court of Appeals ruled that plaintiffs did in fact have the right to sue Apple directly since that is where the apps are purchased from.
Apple’s lawyers are also arguing that siding with the plaintiffs could “threaten the burgeoning field of e-commerce, which generates hundreds of billions of dollars annually in U.S. retail sales,” suggesting that the decision could have widespread effects to companies such as ticket site StubHub, Amazon’s Marketplace and eBay. On the other side, plaintiffs and antitrust watchdog groups have raised the concern that if consumers themselves aren’t allowed to bring claims against service providers such as Apple and Uber, “monopolistic conduct could expand unchecked.” Sandeep Vaheesan, legal director for the Open Markets Institute, a Washington-based antitrust advocacy group, notes that “A lot of tech platforms will start making the argument that consumers don’t have standing to bring antitrust suits against [them],” saying for example that a company like Uber could claim to just be providing communication services to the individual drivers, preventing passengers from having any standing for bringing an antitrust claim against the company.
The far-reaching implications of a potential Supreme Court ruling have resulted in U.S. Federal and State governments and other major organizations taking sides, with Apple being supported by President Donald Trump’s administration and the U.S. Chamber of Commerce, while the plaintiffs are backed by the attorneys general of 30 states including California, Texas, Florida and New York. The Chamber of Commerce filed an amicus brief, stating that “The increased risk and cost of litigation will chill innovation, discourage commerce, and hurt developers, retailers and consumers alike.” While developers who sell through the App Store would still have the right to sue Apple, plaintiffs and anti-monopoly groups such as suggest that this is no consolation, as most would not want to “bite the hand that feeds them” and risk being blackballed by Apple, which means that anti-competitive conduct would go unchecked. Mark Rifkin, an attorney for the plaintiffs, added that Apple is “trying to make it harder for injured parties to assert their rights under federal antitrust law.”