Supreme Court rules consumers can sue Apple over app prices

The Supreme Court is allowing consumers to pursue an antitrust lawsuit that claims Apple has unfairly monopolized the market for iPhone apps. Apple long has taken a commission on every paid app sold through its App Store, rankling some software developers that essentially see it as a tax.

Apple suffered a significant defeat at the Supreme Court on Monday, when the justices ruled that consumers could forge ahead with a lawsuit against the iPhone giant over the way it manages its App Store.

The 5-4 decision could lead to serious repercussions for one of Apple's most lucrative lines of business, and open the door for similar legal action targeting other tech giants in Silicon Valley.

Justice Brett Kavanaugh joined the liberal justices in the majority.

At the heart of the case is Apple's handling of iPhone and iPad apps created by third-party developers and made available on its heavily curated App Store. Apple long has taken a commission on every paid app sold through this portal, rankling some developers that essentially see it as a tax.

"In other words, Apple as retailer pockets a 30% commission on every app sale," said Kavanaugh, one of President Donald Trump's two high court appointees.

The policy led iPhone owners to band together in 2011 with a class-action lawsuit, led by plaintiff Robert Pepper, who argued that consumers ultimately felt the brunt of Apple's policies because developers raised the prices of their apps. These consumers brought their case under federal antitrust laws, arguing that Apple's practices made it a monopoly.

In response, Apple pointed to decades-old Supreme Court precedent that found only the "direct purchasers" of a service are eligible to bring such an antitrust lawsuit in the first place. The iPhone giant said it only acted as the intermediary, providing a storefront where consumers found and purchased the apps they later installed on their phones.

Justice Neil Gorsuch, Trump's other Supreme Court selection, wrote a dissent for four conservative justices. The consumers' complaint against Apple is the kind of case earlier high court rulings said was not allowed under federal laws that prohibit unfair control of a market, Gorsuch wrote. An organization representing other tech giants, including Amazon, Facebook andGoogle, filed legal briefs in Apple's defense, telling the Supreme Court that a decision allowing the lawsuit to proceed would put "these platform services. . . under threat."

Some of the justices initially seemed skeptical of Apple's claims. During oral arguments last year, conservative Justice Samuel Alito questioned if the precedent that Apple cited currently "stands up" in the digital ecosystem.

"From my perspective, I've just engaged in a onestep transaction with Apple," said liberal Justice Elena Kagan at one point during the proceedings.

The suit could force Apple to cut the commission it charges software developers. A judge could triple the compensation to consumers under antitrust law if Apple ultimately loses the suit.

There has been exponential growth in the availability of apps since Apple created the App Store in 2008 with 500 choices.

This report includes material from the Associated Press.

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