Apple Faces Supreme Court in App Store Monopoly Battle

Apple Faces Supreme Court in App Store Monopoly Battle

Apple Faces Supreme Court in App Store Monopoly Battle

The lawsuit accused the Cupertino, California-based technology company of violating federal antitrust laws by requiring apps to be sold through the company's App Store and then taking a 30 percent commission from the purchases.

An Apple spokesperson said in a statement to Fortune that the App Store "has fueled competition and growth in app development", which created millions of jobs and resulted in over $100 billion in payments to developments worldwide.

When Alito asked if damages would be triple the 30 per cent commission Apple charges for each app sale, Frederick said he did not know and that a trial would be necessary to establish how consumers were harmed. The nine justices will hear arguments in Apple's bid to escape damages in a lawsuit accusing it of breaking federal antitrust laws by monopolizing the market for iPhone apps and causing consumers to pay more than they should. Hovenkamp says that this case is different than typical antitrust cases. A key question: Who's responsible for any overcharging - the developers, who set the price, or Apple, which levies a commission on every app sold?

Apple, however, wants the Supreme Court to dismiss the suit.

Software developers say that outcome would disrupt similar online marketplaces that operate between app creators and customers. The average price of a paid app in the App Store is $1.

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Lawsuits against companies like these would multiply "and lead to the quagmire this court sought to avoid", Apple told the justices in a legal brief.

Justice Elena Kagan said she believed she was buying directly from Apple when she used her credit card on an iPhone to buy an app.

It will be several months before the justices hand down a ruling in the case. At that time, Judge Yvonne Rogers ruled in favor (PDF) of Apple, reasoning that end users of the applications were indirect customers are therefore could not be the ones to sue under U.S. antitrust law.

Plaintiffs argue that they "have been injured by Apple's anti-competitive conduct because they paid more for their iPhone apps than they would have paid" in a more competitive market where there were other places to buy apps, court documents state. "From my perspective, I've just engaged in a one-step transaction with Apple". Some liberal and conservative justices sharply questioned an attorney for Apple and U.S. Solicitor General Noel Francisco, who argued on behalf of the administration on the company's side, over their argument that the consumers were not directly affected by purchasing the apps from Apple. While Apple argued that they lacked standing, with a lower court concurring, the case was revived by the 9th Circuit Court of Appeals who found that the plaintiffs did have standing to sue by virtue of being direct Apple customers.

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