Apple iPhone owners can now sue for monopoly abuse if they feel they have been overcharged when buying an app for their phone, after the US Supreme court sided with consumers in a landmark ruling. They were joined by one of the court's five conservatives, Justice Brett Kavanaugh, who wrote the majority opinion.
Consumers can pursue a lawsuit complaining that iPhone apps cost too much, the Supreme Court ruled on Monday, adding to Apple's woes that already include falling iPhone sales and a European investigation.
"A "who sets the price" rule", he wrote, "would draw an arbitrary and unprincipled line among retailers based on retailers' financial arrangements with their manufacturers or suppliers".
Apple v Pepper, as the case is called, dealt with the issue of whether Apple's 30 percent revenue cut is a charge that trickles down to consumers. "It definitely should make tech companies wonder how the antitrust laws will be applied going forward in an online platform environment", he said.
The lawsuit was filed by iPhone users who must purchase software for their smartphones exclusively through Apple's App Store. In that case, the court limited damages for anti-competitive conduct to those directly overcharged rather than indirect victims who paid an overcharge passed on by others. Democratic presidential candidate Elizabeth Warren has argued that big firms such as Facebook, Google and Apple should be broken up through antitrust enforcement. Its stock dropped 5.81 percent yesterday after news of the decision (although in fairness, the entire market was down hard, and there's a lot of bad news that could have affected the price).
And Apple faces charges in Europe of abusing its platform by discriminating against rival apps, including one complaint from streaming music service Spotify. So a favorable Supreme Court ruling wouldn't just keep this particular lawsuit alive. "But Apple asserts that the consumer plaintiffs in this case may not sue Apple because they supposedly were not "direct purchasers" from Apple under our decision in Illinois Brick Co. v. Illinois, 431 U". The company said that these developers set prices, and consumers bought from the developer, not Apple.
There has been exponential growth in the availability of apps since Apple created the App Store in 2008 with 500 choices. Apple had warned that this could pose a threat to e-commerce, a rapidly expanding segment of the US economy worth hundreds of billions of dollars in annual sales.
Let's not forget that Apple does actually provide a useful service with its App Store: it screens software for malware and unpleasantness (although it occasionally abuses that approval power to its own benefit).
The court noted that the group's suit against Apple is still in an "early stage", so there's yet to be a definitive ruling on whether the tech giant unlawfully engaged in monopolistic practices.