The US Supreme Court gave the go-ahead to a lawsuit by consumers who claim Apple is breaking antitrust law. The group said customers were being overcharged by the company, claiming Apple make a 30 percent commission on purchases despite there being no alternative place to buy iPhone apps. Following the ruling, which was passed by a margin of five to four justices, shares in Apple fell 5.8 percent to $185.72. The dip came on a day when Apple shares already were already trading lower because of concerns over a full-blown US-China trade war.
Apple argued that it was only acting as an agent for app developers, who set their own prices and pay Apple’s commission.
If the complainants are successful at trial, Mark Rifkin, a lawyer representing them, said “the overcharges paid by consumers since Apple’s monopoly began will be measured in the billions of dollars”.
In a statement, Apple said: “The App Store is not a monopoly by any metric.
“Developers set the price they want to charge for their app and Apple has no role in that.
“The vast majority of apps on the App Store are free and Apple gets nothing from them.”
The company added: “We’re confident we will prevail when the facts are presented and that the App Store is not a monopoly by any metric.”
The ruling was written by Justice Brett Kavanaugh.
He wrote: “A claim that a monopolistic retailer (here, Apple) has used its monopoly to overcharge consumers is a classic antitrust claim.
“But Apple asserts that the [iOS users] in this case may not sue Apple because they supposedly were not ‘direct purchasers’.
“We disagree. The plaintiffs purchased apps directly from Apple and therefore are direct purchasers.”
The suit, filed by leading plaintiff Robert Pepper, dates back to 2011.
The dispute hinged in part on how the justices would apply a 1977 Supreme Court precedent.
In that case, the court limited damages for anti-competitive conduct to those directly overcharged rather than indirect victims who paid an overcharge passed on by others.
Apple has said the consumers were indirect purchasers because any overcharge would be passed on to them by developers.
The iPhone users who sued countered that they pay Apple – not an app developer – whenever buying an app from the App Store, and were therefore direct victims of the overcharges.
Mr Kavanaugh explained from the bench that the 1977 precedent was “not a get-out-of-court-free card for monopolistic retailers”.
He continued: “Apple’s theory would provide a roadmap for monopolistic retailers to structure transactions with manufacturers or suppliers so as to evade antitrust claims by consumers and thereby thwart effective antitrust enforcement.”
Conservative Justice Neil Gorsuch, said the decision is “not how antitrust law is supposed to work” because it gives a green light to the exact type of case that the court had previously prohibited.