U.S. Supreme Court of justice on Monday will take up Apple Inc’s (AAPL.O) struggle to hide a lawsuit in search of damages from the company for supposedly monopolizing the market for iPhone software applications and compelling consumers to overpay.
The justices will listen to arguments in Apple’s appeal of a lower court’s decision to restore the suggested class-action lawsuit by a group of iPhone users. The lawsuit accused the Cupertino, California-based technology company going against federal antitrust laws by demanding apps be sold through the company’s App Store and then taking a 30 percent commission from the purchases.
The case links how the justices will apply one of its past decisions to the claims against Apple. That 1977 ruling limited damages for anti-competitive conduct to those plainly overcharged contrary to indirect victims who paid an overcharge passed on by others.
The iPhone users, along with lead plaintiff Robert Pepper of Chicago, filed the suit in a California federal court in 2011, asserting that Apple’s monopoly resulted to inflated prices when compared to if apps were available from other sources.
Although developers decide the prices of their apps, Apple takes the payments from iPhone users, retaining a 30 percent commission for each purchase. One area of debate in the case is whether app developers recover the cost of that commission by giving it to consumers. Developers got more than $26 billion in 2017, a 30 percent increase over 2016, according to Apple.
The company, supported by Republican President Donald Trump’s administration so also the U.S. Chamber of Commerce, revealed to the justices in legal papers that taking sides with the iPhone users who filed the lawsuit would threaten the growing field of e-commerce, which generates hundreds of billions of dollars annually in U.S. retail sales.
The plaintiffs, also the antitrust watchdog groups, said closing courthouse doors to those who buy end products would weaken antitrust enforcement and allow monopolistic behavior to expand uncurbed. The plaintiffs were supported by 30 state attorney generals, including from Texas, California and New York.
The plaintiffs noted that app developers would likely sue Apple, which controls the service where they make money, leaving no one to rival anti-competitive conduct.
The company desired having antitrust claims discharged, disputing that the plaintiffs did not have the needed legal standing to bring the lawsuit. A federal judge in Oakland, California turned down the suit, stating the consumers were not direct purchasers because the higher fees they paid were passed on to them by the developers.
Yet the San Francisco-based 9th U.S. Circuit Court of Appeals restored the case last year, discovering that Apple was a distributor that sold iPhone apps directly to consumers.