Apple Gets U.S. Supreme Court Review on iPhone App Fee Suit
U.S. Supreme Court agrees to hear Apple’s bid to kill an antitrust lawsuit over the market for iPhone apps.
(Bloomberg) -- The U.S. Supreme Court agreed to hear Apple Inc.’s bid to kill an antitrust lawsuit over the market for iPhone apps in a case that could shield e-commerce companies from consumer claims over high commissions.
The lawsuit accuses Apple of monopolizing the app market so it can charge excessive commissions of 30 percent. Apple, backed by the Trump administration, says it can’t be sued because the commission is levied on the app developers, not the purchasers who are suing.
A victory for Apple could insulate companies that run online marketplaces and interact with consumers on behalf of third-party sellers. Companies that could be affected include Alphabet Inc.’s Google, Amazon.com Inc. and Facebook Inc., Apple told the Supreme Court in its appeal.
"This is a critical question for antitrust law in the era of electronic commerce," Apple argued.
The suit accuses Apple of thwarting competition by approving apps only if the developer agrees to let them be distributed exclusively through the App Store.
The suit, filed in federal court in Oakland, California, seeks class action status. A lawyer pressing the case has said Apple could be on the hook for hundreds of millions of dollars.
A federal appeals court let the suit go forward. The panel said Apple is serving as a distributor, selling directly to consumers through its App Store and pocketing part of the price of each app.
The Supreme Court said in 1977 that only direct purchasers -- and not those who buy a product further downstream -- can sue under federal antitrust law. The court said that rule was necessary to avoid "duplicative recoveries."
The lawyers pressing the case say the consumers who filed the lawsuit meet that test. They "are undoubtedly the first party in the distribution chain to buy from the monopolist," the group said in court papers.
Apple said it ultimately charges the commission to the developers, making consumers "indirect purchasers" who are precluded under the 1977 ruling from suing. The appeals court "expressly opened the door to duplicative recoveries by different plaintiff groups," Apple argued.
Apple credited the App Store and with helping create a "dynamic new industry." In 2016 alone, developers earned more than $20 billion through the App Store, which offers more than 2 million apps to consumers, the company said.
The court will hear arguments and rule in the nine-month term that starts in October. The case is Apple v. Pepper, 17-204.
To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net
To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Laurie Asséo, Justin Blum
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