Supreme Court weighs antitrust dispute over Apple App Store

Case against Apple over app commission likely to proceed

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Consumers 'pay the monopoly prices for apps directly to Apple through its App Store, ' the lawyers wrote in their Supreme Court brief.

The Justice Department is supporting Apple, although Solicitor General Noel Francisco acknowledged that Apple exploits its powerful position in the market by imposing the 30 percent commission.

When a user buys an app, Apple collects the money, keeps the 30%commission and gives the rest to the developer. "I've engaged in a one-step transaction with Apple", she said.

U.S. Supreme Court justices on Monday will take up Apple Inc's (AAPL.O) effort to bury a lawsuit seeking damages from the company for allegedly monopolizing the market for iPhone software applications and forcing consumers to overpay.

The plaintiffs argue that Apple's developers would be unable to sue Apple due to the firm controlling their means of revenue, which leaves the consumers as the only one who can challenge the firm in court. Its argument: the company is merely providing a marketplace for the apps. And iPhone apps are only available through the App Store. Part of the concern, the court said in that case, was to free judges from having to make complex calculations of damages.

The plaintiffs argued that, although developers set the prices of their apps, by charging them a 30 per cent commission on each purchase, and by allowing iOS apps only to be sold through its App Store, Apple has inflated the price of apps for consumers.

But it was not just the court's liberals who seemed skeptical of Apple's argument.

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The plaintiffs' lawyer, David Frederick, said Apple's monopoly was unique, adding that there was not a single ecommerce player who did what the company did. If so, the consumer is a direct purchaser and should therefore be permitted to bring an antitrust claim.

Apple has seized upon a 1977 Supreme Court ruling that limited damages for anti-competitive conduct to those directly overcharged instead of indirect victims who paid an overcharge passed on by others.

The suit by iPhone users could force Apple to cut the 30 percent commission it charges software developers whose apps are sold through the App Store.

Apple is supported by President Donald Trump's administration.

He is representing a group of consumers, led by Chicagoan Robert Pepper, that wants to show app prices would be lower if not for Apple's actions. The plaintiffs are backed by the attorneys general of 30 states including California, Texas, Florida and NY.

But the Ninth Circuit Court of Appeals reversed. At that time, Judge Yvonne Rogers ruled in favor (PDF) of Apple, reasoning that end users of the applications were indirect customers are therefore could not be the ones to sue under USA antitrust law. A ruling is expected to come by June at the latest.

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