Supreme Court rules against Apple in lawsuit targeting App Store

Apple lost its Supreme Court cases against Pepper.                  SEAN GALLUP  Getty Images

The case, Apple v. Pepper, was actually dismissed in 2013 by a California court, but the Court of Appeals for the Ninth Circuit allowed it to return in 2017.

The Supreme Court ruled 5-4 that iPhone and iPad owners directly purchase the apps from Apple, thus allowing them to sue Apple. The majority decision was reached by Justice Brett Kavanaugh, joined by Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan. The App Store is the only way to legally purchase iPhone apps, but Apple charges developers an annual $99 fee to operate on the digital marketplace.

The Google Play store, Apple's chief rival to the App Store, takes a similar cut of up to 30 per cent from developers for app sales. But ordinary iPhone users-those who are unwilling or unable to jailbreak or use developer tools-have no way to install apps other than through the official App Store.

"Apple posits that allowing only the upstream app developers - and not the downstream consumers - to sue Apple would mean more effective antitrust enforcement", the Supreme Court said in the decision.

iPhone owners say Apple's 30 percent commission on sales made through the App Store results in developers passing that charge to consumers.

"Developers have a number of platforms to choose from to deliver their software - from other apps stores, to Smart TVs to gaming consoles - and we work hard every day to make sure our store is the best, safest, and most competitive in the world". The company did not immediately respond to an AFP query on the court decision.

There has been exponential growth in the availability of apps since Apple created the App Store in 2008 with 500 choices.

And that argument split the Supremes this time around, with the dissent insisting that the Illinois Brick case holds because it explicitly rejected a "pass-on theory" identical to the plaintiffs in this Apple case. "That is why we have antitrust law", the newest Justice sitting on the Supreme Court wrote. 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.

Justice Brett Kavanaugh, appointed by President Trump past year, wrote the decision for himself and the court's four liberal justices. Other antitrust experts were excited by the Supreme Court's decision, especially those who criticize the tech industry for being too powerful with such power in the hands of only a few giant companies.