The End Of The App Store Era - Apple To Face Lawsuit
Written by Mike James   
Wednesday, 15 May 2019

In October of last year we reported on Apple's appeal to the Supreme Court Of The United States to dismiss a lawsuit claiming that the App Store is a monopoly. SCOTUS has now granted permission for the suit to proceed and Apple is almost sure to lose. This could be the end of the era of the walled garden of app stores.

I don't think there is anyone who would seriously argue that Apple's control of iOS is anything but a monopoly. You might argue that it is a good monopoly and the law should ignore it.

If, as a developer you are making lots of profit from it then perhaps the only thing you might have against it is Apple's 30% tax on your earnings. This also happens to be the objection that fuels Apple v Pepper, but in this case that the 30% results in developers over-charging consumers for their products. Along the way the argument is that the App Store is a monopoly, and this is the reason that developers cannot shop around for a lower commission rate and so cannot offer end users a better price.

appledev

Back in October the Supreme Court was asked to rule on whether the case should proceed. Even Apple isn't deluded enough to argue that the App Store isn't a monopoly. instead the argument made to the court was that “the Illinois Brick doctrine” got it off the hook. The argument was that Apple, just like the Brick company in the doctrine, wasn't the seller to the end user - that was the developer. If this was accepted then the lawsuit would have to be with the developers, not Apple.

After deliberating, the Supreme Court has come down 5 to 4 in favor of letting the suit continue.  Supreme Court Justice Brett Kavanaugh wrote:

In this case, unlike in Illinois Brick, the iPhone owners are not consumers at the bottom of a vertical distribution chain who are attempting to sue manufacturers at the top of the chain. There is no intermediary in the distribution chain between Apple and the consumer. The iPhone owners purchase apps directly from the retailer Apple, who is the alleged antitrust violator. The iPhone owners pay the alleged overcharge directly to Apple

You can read the full judgment (pdf):

 

Even though the Supreme Court has not ruled on the case, it has just allowed the case to proceed, things don't look good for Apple. General opinion seems to be that Apple is likely to lose and if so it is also likely that it will be forced to allow other ways of installing iOS apps. Put simply, unless Apple has another devious plan, the days of the monopoly app store are over.

I can't see how this can be done without also unlocking the iPhone to any developer wanting to install apps on it. Apple cannot keep control of the phone and allow other app stores to exist - or can it? It is never safe to underestimate Apple's ability to keep control of its technology.

The situation is ever more critical to Apple as its revenue stream slows as the world reaches peak iPhone. The solution is for Apple to move to being a services company. Losing its monopoly and the guaranteed 30% revenue stream would dent its future plans quite a lot.

What of other app store?

There are only two worth considering as Microsoft's Windows Store isn't much used by comparison. The situation with Android apps is quite different - Google's Play and Amazon's Fire store are alternatives and you can find others so there is no monopoly to the same degree.

I wonder if we will look back on 2018 or thereabouts as the moment the app store experiment began to unravel because the fact that it was a monopoly was finally noticed.

appstoreicon

More Information

full judgment (pdf)

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Last Updated ( Wednesday, 15 May 2019 )