Apple defends App Store fees in U.S. Supreme Court

The U.S. Supreme Court “will hear arguments Monday on accusations that Apple is using its market dominance to jack up prices for iPhone apps,” Greg Stohr and Naomi Nix report for Bloomberg. “A ruling against Apple, letting a lawsuit go forward, could add to pressure the company already faces to cut the 30 percent commission it charges on app sales.”
“The case turns on what happens when iPhone users buy something at the Apple App Store. In allowing the suit, a federal appeals court said the transaction is a simple one in which consumers buy directly from Apple. Apple says it’s more complicated, with the company serving as a middleman connecting app developers with users,” Stohr and Nix report. “The distinction is critical because of a 1977 Supreme Court ruling that says only direct purchasers of a product can collect damages for overpricing under federal antitrust law. That decision was designed in part to ensure companies don’t have to pay twice for the same misconduct.”
“Apple and its tech-industry allies say a decision allowing the consumer lawsuit could open other companies that run online marketplaces and platforms to expensive antitrust claims,” Stohr and Nix report. “A broad ruling could affect Alphabet Inc.’s Google, Amazon.com Inc., Facebook Inc., Etsy Inc. and DoorDash Inc., Apple and its supporters say. Apple gained about 1.3 percent in early trading on Monday.”
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“Consumers can choose from among more than 2 million apps, up from the 500 apps that were available when Apple created the App Store in 2008,” Mark Sherman reports for The Associated Press. “But the company says the popularity of software for iPhones and its App Store shouldn’t obscure that consumers buys apps from developers, not Apple. ‘Apple is a sales and distribution agent for developers,’ Apple’s lawyers said in a Supreme Court filing. ‘Apple’s core argument has always been that any injury to consumers necessarily depends on developer pass-through decisions, since Apple does not set apps prices.'”
Sherman reports, “A decision in Apple Inc. v Pepper, 17-204, is expected by late spring.”
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MacDailyNews Take: The U.S. Supreme Court should rule for Apple in this case.
Setting aside the security implications, the Ninth Circuit decision should be overturned simply because Apple’s App Store customers are the app developers, not the app consumers.
Apple owns the shopping mall. The developers pay Apple for space within. The end customer buys their apps from the developers. Indirect purchasers of goods or services along a supply chain cannot seek remedies over antitrust claims.
See Illinois Brick Co. v. Illinois. — MacDailyNews, October 31, 2018
SEE ALSO:
Apple defends App Store fees as U.S. Supreme Court weighs consumer suit – November 23, 2018
Apple wants U.S. Supreme Court to undo previous decision regarding an antitrust suit – October 31, 2018
U.S. Supreme Court will decide if Apple’s App Store is an anti-competitive monopoly – June 19, 2018
U.S. Supreme Court to consider Apple appeal in antitrust suit over App Store prices – June 18, 2018
US DOJ sides with Apple over App Store antitrust allegations in Supreme Court brief – May 10, 2018
9th U.S. Circuit Court of Appeals revives antitrust lawsuit against Apple – January 13, 2017
Apple App Store antitrust complaint dismissed on procedural grounds by U.S. judge – August 16, 2013