U.S. Supreme Court Rules Against Apple, Allows Antitrust Suits
- Paul Thurrott
- May 13, 2019
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59
The U.S. Supreme Court today ruled that iPhone users could sue Apple for antitrust violations related to the iPhone App Store.
Four iPhone users sued Apple, alleging that the consumer electronics giant illegally monopolizes the distribution of apps for the devices. According to the complaint, Apple’s 30 percent “vig” on paid apps causes direct consumer harm as that cost is passed on to consumers by app developers. And because Apple doesn’t allow app makers to distribute iPhone apps any other way, this behavior is doubly injurious as iPhone users have no other choices.
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Apple’s response was a legal classic: It claimed that the iPhone users could not sue it because they weren’t purchasing Apple products directly from Apple. Instead, Apple is simply a third party that sits between the users and the app makers.
The U.S. Supreme Court disagreed, in a close 5-4 ruling. This will allow the suits to go forward, and they could result in hundreds of millions of dollars in damages. Or, more, if and when more claimants come on board, as is now expected.
“Apple’s alleged anticompetitive conduct may leave Apple subject to multiple suits by different plaintiffs,” the Court noted in its ruling.
“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, rejecting Apple’s defense. “In particular, we fail to see why the form of the upstream arrangement between the manufacturer or supplier and the retailer should determine whether a monopolistic retailer can be sued by a downstream consumer who has purchased a good or service directly from the retailer and has paid a higher-than-competitive price because of the retailer’s unlawful monopolistic conduct. As the Court of Appeals aptly stated, ‘the distinction between a markup and a commission is immaterial’.”
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Conversation 59 comments
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skane2600
<blockquote><em><a href="#427767">In reply to Daekar:</a></em></blockquote><p>I would think the simplest remedy would be to allow iOS apps to be installed outside of the App Store. Then developers could decide if the services that Apple offers in the App store are more attractive then the possibly less expensive alternatives. That competition would be likely to lower average prices for the consumer and would pretty much eliminate the monopoly issue.</p>
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provision l-3
<blockquote><em><a href="#427767">In reply to Daekar:</a></em></blockquote><p>This is a civil lawsuit not a criminal lawsuit so the court won't try to "correct the violation". Civil suits handle restitution or compensation and in the case of civli antitrust the fine is automatically tripled. Forcing a change with the app store or forcibly breaking up the company would require a criminal case and the DOJ filed an amicus brief on the side of Apple so that is unlikely to happen. </p>
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provision l-3
<blockquote><em><a href="#427847">In reply to nbplopes:</a></em></blockquote><p>I’m sorry, what does this have to do with what I said?</p>
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skane2600
<blockquote><em><a href="#427800">In reply to rosyna:</a></em></blockquote><p>I believe I've mentioned before how a few of us game developers back in the day thought that the kind of lock-out that Nintendo eventually created would be illegal. But they got away with it. We weren't lawyers of course.</p>
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dontbe evil
<blockquote><em><a href="#427796">In reply to nbplopes:</a></em></blockquote><p>they don't charge 30% like crapple</p>
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Stooks
<p>If Apple is forced to allow apps from outside the store then their whole model will collapse. Their Faux-privacy stance will also fall apart. </p><p><br></p><p>Many app makers need the store for its distribution (install/updates) and payment processing. I guess they would stay and bigger app makers would leave to make more money since they wont have to pay Apple? I bet the charge the same thing for their apps, but just keep the 30% and the consumer ultimately loses because malware will come flooding in from shady apps that you can get from anywhere.</p>
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provision l-3
<blockquote><em><a href="#427801">In reply to Stooks:</a></em></blockquote><p>I think you meant faux-privacy not fo-privacy. </p><p><br></p><p>Anyway, per my comment below. This is a civil lawsuit and a criminal one. So the result of this one wouldn't be a ruling that forced Apple to allow Apps from outside the store to be installed. </p>
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Stooks
<blockquote><em><a href="#427808">In reply to provision l-3:</a></em></blockquote><p>Fixed, mean Faux. I know it is civil but there was stuff in their about monopoly specifically about only being able to buy apps from Apple.</p><p><br></p><p>Personally I think it would be a mistake. I specifically choose Apple because of its locked down store. I wish I could choose my default apps, like I can on Android but right now the security of the store and getting updates is more important.</p>
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provision l-3
<blockquote><em><a href="#427942">In reply to Stooks:</a></em></blockquote><p>Right, but assuming the outcome is that the App Store is found to be a monopoly and that Apple is found to be abusing that monopoly there is a limit to the what the outcome can be because it is a civil trial. Being forced to allow apps outside of the App Store isn’t one of those outcomes. That would require a criminal trial. They outcome in this case would be compensation and at the estimated damages. The other possible outcome would be for Apple</p><p>to settle in which case they could offer to modify App Store restrictions or pricing rather than paying the full compensation amount. </p>
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provision l-3
<blockquote><em><a href="#427973">In reply to MikeGalos:</a></em></blockquote><p>You have a serious reading comprehension problem. I have said this would be a civil antitrust lawsuit. And because it is a civil antitrust suit rather than a criminal antitrust suit the result wouldn't be Apple being forced to allow apps to be installed by anything other than the app store as the original poster suggested. That is the fundamental difference between civil and criminal suits. A civil suit's judgment would be limited to restitution or compensation. For a court to force a change to Apple's business practices or break Apple up or whatever it would require a criminal antitrust lawsuit. The chances of a criminal lawsuit don't seem super likely given that the DOJ filed an amicus brief siding with Apple and suggesting that customers don't have legal standing to sue. Clearly the SCOTUS disagreed and ruled that they did. A ruling I personally agree with, but it doesn't look good for a criminal suit if the DOJ is arguing against it. The FTC could disagree and file a criminal suit but I honestly think we would need an administration change for the government to become more interested in antitrust. </p><p><br></p><p><br></p>
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skane2600
<blockquote><em><a href="#427839">In reply to curtisspendlove:</a></em></blockquote><p>I can't believe how some tech people are so fixated on the processing cost of checking for updates or otherwise missing that update with the UI change you may hate. Many programs just check for updates on launch and ask you if you want to update and then the cost drops to zero. Of course average users don't get excited about this stuff.</p>
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skane2600
<blockquote><em><a href="#427898">In reply to curtisspendlove:</a></em></blockquote><p>Obviously it isn't really the same code just a similar function. </p><p><br></p><p>Is there some kind of Steve Jobs magic that makes 1gb game a quicker download from Apple's store compared to a third-party's? </p>
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skane2600
<blockquote><em><a href="#427959">In reply to curtisspendlove:</a></em></blockquote><p>If the app code isn't what you have to worry about, why did you bring it up?</p><p><br></p><p>Of course there's no guarantee that a third-party downloader is more buggy than an Apple one. </p>
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skane2600
<blockquote><em><a href="#427964">In reply to curtisspendlove:</a></em></blockquote><p> "If a 1gb game update didn’t occur overnight,"</p><p><br></p><p>So yes, you absolutely did bring up an app.</p><p><br></p><p><br></p><p><br></p><p><br></p>
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skane2600
<blockquote><em><a href="#428006">In reply to curtisspendlove:</a></em></blockquote><p><br></p><p>"You suggested if an update doesn’t occur, no big deal, just launch the App Store and it will update."</p><p><br></p><p>Actually, that's not what I said. I said many <em>programs</em> check for updates when they are launched, <em>not</em> app stores and then if so, <em>ask you</em> if you want to update. So, if there's a bandwidth issue at that time of day you just answer "no" and nothing is downloaded.</p><p><br></p><p>I still think the importance of this issue is exaggerated but I don't expect you to agree.</p><p><br></p><p><br></p>
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dontbe evil
<p>finally… apple thurrot fanboys are upset</p>