Apple May Again Face App Store Antitrust Lawsuit, Supreme Court Signals in Hearing
The Supreme Court signaled Apple could face a revived antitrust lawsuit over its price control of the iPhone and iPad App Store. Apple v. Pepper, the outcome of a federal lawsuit filed in 2011, alleged that Apple’s total control over which apps may be sold and its mandatory 30-percent commission violated antitrust rules.
A majority of Supreme Court justices in oral arguments on Nov. 26 appeared to side with plaintiffs over a technical issue of law that would send the case back to a trial court.
Six justices from both liberal and conservatives wings pushed back against statements by Apple attorneys and the solicitor general, according to Reuters. The solicitor general spoke in favor of Apple’s position for the government as the Trump administration has taken the company’s side. Chief Justice John Roberts appeared to favor Apple’s stance.
The lawsuit filed in 2011 was dismissed in 2014 because a lower court relied on a 1977 Supreme Court precedent that found a company or group of firms can only sued for price fixing by those who directly purchase its products. In that 1977 decision, the court said that a reseller shouldn’t be liable for the price it charges if it’s dependent on the price it pays.
Apple claimed that its relationship is solely with an app developer, who it charges a commission, and that app purchasers buy directly from the developer. An appeals court reversed the dismissal in 2017, leading to the Supreme Court taking up the matter.
An Apple spokesperson said in a statement to Fortune that the App Store “has fueled competition and growth in app development,” which created millions of jobs and resulted in over $100 billion in payments to developments worldwide. “We are hopeful the Supreme Court will recognize Apple’s critical role as a marketplace for apps, and uphold existing legal precedent by finding in favor of Apple and the millions of developers who sell their apps on our platform,” the spokesperson said.
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.
Justice Brett Kavanaugh said consumers experience harm through higher prices, but also noted that plaintiffs’ basis to sue is murky, because Apple doesn’t purchase apps from developers and then resell them to consumers. Apple has said it acts as an agent, collecting a commission.
While questions in oral arguments may give hints about a final decision by the court, it’s no guarantee, as judges often engage in devil’s advocacy to push attorneys to provide clarification.