UK Edition
Apple in Supreme Court battle over App Store
Apple will head to the US Supreme Court this week to block a group of customers from suing the tech giant for monopoly abuse.
The company is battling a group of iPhone owners who claim Apple forces them to overpay for apps by forbidding any rivals to the multibillion-dollar App Store.
After the customers won the right to launch a class action lawsuit against the company last year, Apple is now appealing to the Supreme Court to have the decision overturned.
If Apple fails, the business model of the App Store, one of the company’s fastest-growing and most profitable divisions, could be threatened.
Apple makes billions each year by taking a 30pc cut of apps sold through the App Store, which are created by developers. App revenues grew by around a third last year to $38.5bn (£30bn), even as sales of Apple’s iPhones and iPads stalled.
The customers argue that its sizeable commission is evidence of the company exploiting its monopoly position over iPhone users. They argue that “ iPhone consumers nationwide have paid [Apple] hundreds of millions of dollars more for iPhone apps than they would have paid in a competitive market”.
Apple argues that because the app developers themselves set the price of apps in the App Store, not Apple, iPhone users are purchasing the apps from the developers directly. It is seeking to dismiss the case by appealing to a Supreme Court ruling made in 1977 that said only “direct purchasers” can seek damages for antitrust abuse.
Its opponents claim that because Apple sets rules about the App Store, such as the minimum price, it is effectively selling the apps on to users.
The Supreme Court is due to hear arguments on Monday, although it is likely to take months until its judges announce any decision.
If Apple fails to overturn the previous decision it is likely to face years of further legal wrangling in a case that dates back to 2011.
If they are successful in the Supreme Court, the plaintiffs would still have to convince a court that Apple is exploiting a monopoly, and attempt to prove that the company’s 30pc commission has raised app prices. “This is about ‘Are these guys permitted to go through the starting gate?’” said Peter Carstensen, a professor at the University of Wisconsin.
He said he expected the Supreme Court to side with Apple.