Published: Thu, November 29, 2018
Tech | By Anita Cain

Are Apple apps too expensive? Supreme Court considers antitrust argument

Are Apple apps too expensive? Supreme Court considers antitrust argument

Consumers "pay the monopoly prices for apps directly to Apple through its App Store", the lawyers wrote in their Supreme Court brief. The users argued that Apple was only able to charge the 30% mark-up because it wielded monopoly power over the distribution of iPhone apps.

Though developers set the prices of their apps, Apple collects the payments from iPhone users, keeping the 30 percent commission on each purchase. "From my perspective", she said, "I've engaged in a one-step transaction with Apple".

The company is battling a group of iPhone owners who claim Apple forces them to overpay for apps by forbidding rivals to the multibillion-dollar App Store. Chief Justice John Roberts, a George W. Bush appointee, nevertheless suggested he sides with Apple and seemed concern that Apple could end up being held liable by both consumers and app developers.

App Association President Morgan Reed said the appeals court misunderstood the relationship between developers and platforms, improperly looking at platforms as distributors that buy from vendors and resell to customers, rather than as conduits that simply connect the two.

The plaintiffs' lawyer, David Frederick, said Apple's monopoly was unique, adding that there was not a single ecommerce player who did what the company did. "If there's an antitrust issue, the drivers can bring a claim but passengers do not have standing".

Apple enjoys a 30 percent cut for all sales down via the App Store and the general idea is that consumers are getting gouged since they can not purchase apps directly from developers at basically 30 percent cheaper.

Apple told the court in an appeal that the outcome of this lawsuit could affect e-commerce venues such as Google Shopping, Amazon and Facebook's marketplace.

For its part, Apple is pointing to 40-year-old case law that says that damages in anti-competitive cases can only be recouped by the direct victim.

The Trump administration is siding with Apple.

He is representing a group of consumers, led by Chicagoan Robert Pepper, that wants to show app prices would be lower if not for Apple's actions.

Plaintiffs argue that they "have been injured by Apple's anti-competitive conduct because they paid more for their iPhone apps than they would have paid" in a more competitive market where there were other places to buy apps, court documents state.

But the San Francisco-based 9th U.S. Circuit Court of Appeals revived the case a year ago, finding that Apple was a distributor that sold iPhone apps directly to consumers. The plaintiffs are backed by the attorneys general of 30 states including California, Texas, Florida and NY.

In 2013, U.S. District Court Judge Yvonne Gonzalez Rogers in the Northern District of California dismissed the lawsuit.

A ruling is expected in late spring.

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