IPhone owners can sue Apple for monopolizing App Store

Apple is seen at a store in Zurich Switzerland

The U.S. Supreme Court ruled Monday that Apple iPhone customers may proceed with a class-action lawsuit against the tech giant that alleges Apple's App Store operates an illegal monopoly on iPhone apps.

They would have thrown the case out of court because in their view, iPhone users are not direct purchasers who, under the court's precedents, may bring antitrust claims. "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. This commission structure results in higher prices for consumers, the plaintiffs argued.

Gorsuch's dissenting minority opinion cited the landmark Illinois Brick Co. v. Illinois case of 1977 to say that "an antitrust plaintiff can't sue a defendant for overcharging someone else who might (or might not) have passed on all (or some) of the overcharge to him".

"It doesn't change how much apps cost, what Apple charges its developers, or whether consumers can load apps from outside the App Store", said Techsponential lead analyst Avi Greengart.

If you're completely unfamiliar with iOS, the only avenue for distributing apps on the platform is through Apple's own App Store, through which the company takes a 30% cut on all purchases. The law in question, called "the Illinois Brick doctrine", essentially rules that direct purchasers of a product (apps, in this case) can only bring lawsuits against manufacturers.

Supreme Court Justices Neil Gorsuch (left) and Brett Kavanaugh wrote opposing opinions in a high-profile case involving Apple's App Store.

Monday's ruling could imperil Apple's app marketplace and could have further implications for other large tech companies that may face lawsuits about allegations of monopolistic power.

We're proud to have created the safest, most secure and trusted platform for customers and a great business opportunity for all developers around the world.

Apple's shares were down more than 5% to $186.79 in mid-afternoon trading.

iPhone owners filed a class-action lawsuit against Apple back in 2011. However, the Supreme Court disagreed, saying the company's legal arguments were neither "persuasive economically or legally". Instead of collecting payments for apps sold in the App Store and remitting the balance (less its commission) to developers, Apple can simply specify that consumers' payments will flow the other way: "directly to the developers, who will then remit commissions to Apple".

In the statement, shared by 9to5Mac, Apple added, "the App Store is not a monopoly by any metric". It has said that if the court allowed the case to proceed, it would disrupt the e-commerce market.

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