Apple loses at US Supreme Court on iPhone app antitrust suit

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The class-action lawsuit seeks refunds on behalf of millions of users who have paid inflated prices for apps as a result of Apple's exclusionary practices.

Justice Brett Kavanaugh, who faced sexual misconduct allegations in September 2018, sided with liberal justices, rejecting Apple's claim that iPhone consumers can not sue the company because the Apple Store is merely a middleman between users and those who produce and sell apps.

A group of iPhone owners were seeking to bring a class action lawsuit against the company, and now Justice Brett Kavanaugh has said they can do so.

"The iPhone owners are not consumers at the bottom of a vertical distribution chain who are attempting to sue manufacturers at the top of the chain", Kavanaugh wrote.

Kavanaugh, appointed by President Donald Trump previous year, wrote the majority opinion that agreed the lawsuit can move forward in a lower court.

This verdict is not going to have an immediate major impact on Apple.

Apple made $11.5 billion in "services revenue" during the most recent quarter, of which the App Store is one part.

"Today's decision means plaintiffs can proceed with their case in District court".

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Following the Supreme Court decision, Apple's stock plunged by 5%.

Furthermore, justices feel that if customers had other options for purchasing apps, it would create competitive pressure on Apple to lower its commission.

Truly, the App Store was the X factor - as in, it made the the iPhone 100x more useful.

That possibility rattled investors already jittery about how the escalating trade war with China might make it even more hard for Apple to sell more iPhones.

So while it's impossible to say exactly how this will play out, there are a few areas where Apple could, eventually, be forced to change its rules.

The decision also could let consumers sue Amazon by arguing that the fees it charges third-party sellers inflate the prices of products, said Hal Singer, an economist at Econ One Research Inc. and a senior fellow at the George Washington Institute of Public Policy. "Therefore, under Illinois Brick, the iPhone owners were direct purchasers who may sue Apple for alleged monopolization". Developers set the price they want to charge for their app and Apple has no role in that. Apple will happily spend some of the billions of dollars it makes through the current system on lawyers in an effort to stretch the case out for another eight years, especially since the legal action as now structured seeks antitrust-grade triple damages.

"The problem is that the 30 percent commission falls initially on the developers", Gorsuch wrote.

Trump's lawyers disagreed on Monday, saying they need more time to gather evidence and develop their legal arguments in the lawsuit they filed. The ruling will allow customers to go forward with price-fixing lawsuits against the company.

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