Apple's App Store Under Fire in Supreme Court Case
27 November 2018 - 5:24AM
Dow Jones News
By Brent Kendall
WASHINGTON -- Apple Inc.'s exclusive market for selling iPhone
apps came under fire at the Supreme Court Monday, as justices
considered whether consumers should be allowed to proceed with a
lawsuit alleging the company has an illegal monopoly that produces
higher prices.
The plaintiffs are a group of consumers pursuing a class-action
lawsuit seeking damages on behalf of people who have purchased
iPhone apps. They argue that prices are higher than they would be
in a competitive market because Apple requires that all software
for its phones be sold and purchased through its App Store.
App developers can only reach iPhone users through Apple's
store, and the company charges the developers a 30% commission.
The case came to the high court Monday on the indirect but
critical question of who has the legal right to sue over Apple's
alleged monopoly.
The iPhone maker argues that consumers can't sue because the
company doesn't directly set app prices, a responsibility that lies
with the app developers. Apple says it only serves as a conduit,
and consumers aren't really buying apps from the company.
If anyone can sue over the alleged monopoly, Apple's lawyers
suggest, it would be the app developers themselves, since they're
the ones buying directly from the company when they pay Apple to
feature their software in its App store.
The justices, and the court system more broadly, have regularly
wrestled in recent years over how old laws should interact with new
technology, sometimes raising the question of whether current law
is adequate to address a rapidly evolving technological
landscape.
In this case, it was clear the justices had at least some
familiarity with the issue through their own iPhones.
The court's four liberal justices pushed back against Apple's
position during the hourlong oral argument. Justice Elena Kagan,
among others, said that when she buys an app on an iPhone, she is
engaging in a transaction directly with Apple.
"Here the person is transacting with the monopolist itself," she
said.
Some conservative justices also questioned Apple's position,
although at times for different reasons. Justices Samuel Alito and
Neil Gorsuch questioned the propriety of a Supreme Court precedent
from 1977 -- relied upon heavily by Apple -- that limits claims for
antitrust damages to immediate victims of the anticompetitive
conduct.
That case prohibits a purchaser from suing someone a few links
earlier in the supply chain simply because higher prices were
eventually passed on to them. Under Apple's theory, Justice Alito
noted, only the app developers themselves could sue, and he asked
whether any had done so.
No, said the lawyer representing Apple, Daniel Wall. But he
noted that government antitrust authorities haven't challenged
Apple either, suggesting the lack of legal action could reflect the
absence of any anti-competitive behavior on Apple's part.
Chief Justice John Roberts spoke most sympathetically of Apple's
position, saying the idea behind the 1977 ruling was to prevent
companies from facing lawsuits from different groups of plaintiffs
over the same behavior.
The Supreme Court hasn't explicitly said it would consider
overruling past precedent in the case -- which it generally does
when that is a possibility -- so it's not clear how Monday's
discussion will factor into the outcome. A federal appeals court
previously allowed the lawsuit against Apple to proceed, and the
Supreme Court is considering that ruling.
A decision is expected by the end of June.
Write to Brent Kendall at Brent.Kendall@wsj.com
(END) Dow Jones Newswires
November 26, 2018 13:09 ET (18:09 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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