Software developers say that outcome would disrupt similar online marketplaces that operate between app creators and customers.
A group of consumers have filed a new class action against Apple, claiming that the company has created a closed market for apps, allowing it to apply a monopoly surcharge to each sale. Judges could force it to change its pricing structure and Apple may face hundreds of millions in penalties to refund some of the commission it has taken in the past four years. And iPhone apps are only available through the App Store.
The case hinges on how the justices will apply one of its past decisions to the claims against Apple.
The lawsuit was initially dismissed because the commission is imposed on the developers, not the purchasers who are suing. Even though the average price of an app is just over one dollar, the App Store generated an estimated $11 billion in revenue for the company in 2017.
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The question was whether consumers have the right to sue Apple directly for overcharges, or whether their beef is with app developers who pass along Apple's 30 percent commission and insistence that prices end in $0.99. The plaintiffs want Apple to open up iOS so apps can be installed from sources other than the App Store.
If the justices permit the suit to go forward, a decision against Apple would nearly certainly be a blow to its business. A judge could triple the compensation to consumers under antitrust law if Apple ultimately loses the lawsuit.
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.
Justices Neil Gorsuch and Samuel Alito raised the issue that app developers, reliant on Apple for sales, would be reluctant to sue over inflated prices. The case was originally brought up way back in 2011, so when you hear that "the wheels of justice turn slowly" you can start to understand what that means. The company is emphasising services, so apps are critical for its future. But the San Francisco-based 9th US Circuit Court of Appeals revived the case a year ago, finding that Apple was a distributor that sold iPhone apps directly to consumers. The lawsuit accused the Cupertino, California-based technology company of violating federal antitrust laws by requiring apps to be sold through the company's App Store and then taking a 30 percent commission from the purchases.
A decision in Apple Inc. v Pepper, 17-204, is expected by late spring.