Supreme Court rules Apple will face antitrust suit for its iPhone apps

Apple Shares Fall After Supreme Court Allows Consumer Lawsuit Over App Store

US Supreme Court Rules Against Apple, Allows Antitrust Suits

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 opinion notably does not accuse Apple of violating antitrust law: It holds that consumers have the right to sue the company for monopolistic behavior, because they purchase apps directly from Apple.

"It is undisputed that the iPhone owners bought the apps directly from Apple", Kavanaugh wrote.

Apple had argued that consumers aren't entitled to sue, since prices are ultimately set by the developers building the apps, not Apple itself.

Apple said that it was an agent for app developers and that it neither owned nor sold the apps itself.

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Apple sought to block the lawsuit, asserting that it had not set the prices on the apps and thus the iPhone owners had no standing to sue.

"It just seems to me that when you're looking at the relationship between the consumer and Apple, that there is only one step", Associate Justice Elena Kagan said at the time, referring to the way iPhone users purchase apps. It only ruled that lawsuits may go forward.

The dissent was also anxious that simple contractual changes could see companies use the decision to their advantage - but in the opposite direction: "To evade the Court's test, all Apple must do is amend its contracts".

Those companies, which include Facebook, Google and Amazon, were on Apple's side during the Supreme Court deliberation, and may be affected by the outcome of the antitrust suit.

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Antitrust experts also welcomed the Court's reasoning that allowing Apple to avoid the class-action suit "would provide a roadmap" for others to evade the law.

"Apple's line-drawing does not make a lot of sense, other than as a way to gerrymander Apple out of this and similar lawsuits", Justice Brett Kavanaugh wrote in the majority opinion.

The U.S. Supreme Court disagreed, in a close 5-4 ruling. "But if Apple does lose, one possible outcome is that Apple might be forced to allow consumers to install apps from outside the App Store". These consumers brought their case under federal antitrust laws, arguing that Apple's practices made it a monopoly.

The Supreme Court further added that "this is not a case where multiple parties at different levels of a distribution chain are trying to recover the same passed-through overcharge initially levied by the manufacturer at the top of the chain".

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