Apple: Whose App Store is it, anyway?
Apple went to the Supreme Court last week to defend itself from an antitrust suit, said Rhett Jones in Gizmodo.com, and “it’s not looking great” for the tech giant. The lawsuit, brought by a group of consumers, claims Apple’s insistence that “all apps on its iOS mobile operating system be sold through its own App Store,” with Apple taking a 30 percent cut of developers’ revenue, creates a monopoly that forces up prices for users. “Apple is trying to shut the lawsuit down by arguing that consumers shouldn’t be allowed to sue at all,” said Timothy Lee in ArsTechnica.com. The high court won’t rule on the ultimate question of whether Apple is a monopoly. Instead, the core issue before the justices in this complex case is who has the right to sue over the App Store in the first place. While Apple decides which apps can be featured in its store, the company argues that consumers are buying apps from the developers, not Apple itself. So according to Apple, “only the developers—not ordinary iPhone users—have standing to sue Apple.”
Most of the justices were skeptical of Apple’s argument, said Brett Kendall in The Wall Street Journal. Justice Elena Kagan, a liberal, said it seems pretty clear to consumers that when they purchase apps on their iPhones, they’re dealing with Apple. “I pick up my iPhone. I go to Apple’s App Store. I pay Apple directly with the credit card information that I’ve supplied to Apple,” Kagan said. “From my perspective, I’ve just engaged in a one-step transaction with Apple.” Three conservative justices questioned Apple’s reliance on a 1977 precedent that limits antitrust damages to immediate victims of anticompetitive behavior, suggesting “that 40 years of economic evidence has undermined the logic of the court’s earlier ruling.”
If the justices allow the case to proceed to a full trial and Apple loses, it could be “a punishing blow,” said Alexis Keenan in Yahoo.com. Next year, the App Store is expected to generate $17 billion in revenue for Apple. The company has also long insisted that its control over the store benefits consumers by keeping out malware. “Interestingly, the app industry seems to be coming out on the side of Apple,” despite the hefty fees app makers pay. Few of the players in tech really want changes to the status quo. A ruling that allows “individual consumers to sue a company for charges that get passed along to them could be extremely disruptive to the digital economy,” said Brian Fung in The Washington Post. A loss by Apple would set a dramatic precedent and open the door to the use of antitrust law as a “tool for reining in tech platforms such as Google and Facebook.”