Supreme Court hears arguments in Apple App Store price fixing suit

Apple approaches US Supreme Court to block customers from suing it for monopoly abuse

Apple in court over 30% app commission

A federal district judge initially ruled in Apple's favor, but a panel of the U.S. Court of Appeals for the 9th Circuit in San Francisco overruled that decision a year ago and held that consumers were direct purchasers of iPhone apps.

However, a class-lawsuit filed against Apple is seeking damages over allegations that the Cupertino, California-based company is actually violating federal antitrust laws. If the Supreme Court upholds the Ninth Circuit's decision, though, it will send the case back to a lower court, where the case will keep going; Apple will have to fight to avoid being forced to pay out hundreds of millions of dollars to consumers and perhaps even changing its App Store model. The users argued that Apple was only able to charge the 30% mark-up because it wielded monopoly power over the distribution of iPhone apps.

Apple lawyer Daniel Wall of San Francisco described the company as a "pipeline" that connects consumers with app developers and that it is app developers, not Apple, making the sale. One area of dispute in the case is whether app developers recoup the cost of that commission by passing it on to consumers.

Apple is part of an app economy that will grow from $82 billion past year to $157 billion in 2022, according to projections from App Annie, a data and analytics company.

The judges, who will begin hearing arguments on Monday, are not being asked to rule on the underlying monopoly issue, only the legality of the lawsuit.

Apple has seized upon a 1977 Supreme Court ruling that limited damages for anti-competitive conduct to those directly overcharged instead of indirect victims who paid an overcharge passed on by others.

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Apple says it doesn't own the apps or sell them. Such a move would certainly compromise the security of iPhones and iPads though.

Lawyers for the consumers urged the high court to allow the lawsuit to proceed. Apple is also being backed by the U.S. Chamber of Commerce business group. "The App Store provides a safe, secure and trusted storefront for customers to find apps from across the globe that enrich and ease their lives".

The four liberal justices suggested they were inclined to permit the suit to go forward.

The lawsuit was initially dismissed because the commission is imposed on the developers, not the purchasers who are suing.

In the case of iPhone apps, developers are "direct" purchasers, while consumers are only "indirect" purchasers - and therefore unable to sue Apple - the company contends.

Among the justices who appeared to be on the other side, Justice Elena Kagan said consumers appear to have a direct relationship with Apple. Kavanaugh pointed out that "consumers are harmed then, too". However, the 9U.S. Circuit Court of Appeals reversed the decision, stating that Apple was in fact selling apps directly to customers setting the stage for the Supreme Court showdown.

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