Apple App Store Antitrust Suit
Written by Lucy Black   
Wednesday, 28 November 2018

It is obvious that Apple has a monopoly on iOS apps, but it is using a very slippery argument to thwart the current class action being brought against it for being said monopoly.

We first reported reported on the lawsuit back in June, 2018. The reason was that the Supreme Court had, unusually for the type of case, got involved when it didn't have to. The argument is that the App Store is a monopoly and this doesn't seem to be at issue. It clearly is a monopoly and it sets 30% as its cut, more or less the standard percentage taken by all other app stores. Only Microsoft's app store offers a bigger cut to developers and then only if a range of conditions is met. Is the App store distorting the market?  Probably. If you look at Android, where there are other competing stores, you will find that percentages can be much lower, but the leading App stores stay close to the 30% take.

The case Apple Inc. v. Pepper has asked the government to break up the monopoly. Lower courts have heard similar cases and are in agreement not to proceed, but the Supreme Court has decided to get involved and make a final ruling. Notice that the final ruling here is whether or not the case can proceed to trial, not a final final outcome.

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Nine Justices have now been exposed to an hour of arguments from Apple and what is strange is that the main argument being used is not that the App store isn't a monopoly, although no admission has been made that it is, but that a 1977 precedent protects it.  The argument is that even if a monopoly overcharges, what is the point of a monopoly if you can't use it to squeeze extra money out of people, it is only the direct victims that can sue. For example, if a Chinese parts manufacturer had a monopoly on making parts for iPhones and you were being charged 50% more than a reasonable market value for the phone, it isn't you who could sue. You are an indirect customer of the parts company and only Apple, the direct customer, could sue.

Sounds reasonable and you can see that the intent is to avoid a sort of double jeopardy for a single price hike. The problem here is who is the direct customer? Apple is arguing that it is the developer who is paying for the right to sell apps in the App store, not the end user who ends up paying for the whole thing. Given that Apple devs earned $26 billion in 2017, according to Apple, it seems unlikely that they are going to bite the hand that feeds them for a few dollars more. Also given that Apple's draconian rules mean that any developer complaining to the press gets kicked out of the App store, what do you think would happen to any group of devs seeking to sue Apple?

So I guess the conclusion is that the App store is a monopoly, and might be increasing prices, but it is only the developers that can sue.

At the moment the Court doesn't seem to have reached a clear decision, but it looks as if it is moving in the direction of allowing the lawsuit to proceed.

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More Information

U.S. top court leans towards allowing Apple App Store antitrust suit

 

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Last Updated ( Wednesday, 28 November 2018 )