Supreme Court to hear antitrust case over sale of iPhone apps

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Apple may have to lower its slice of app revenue, or give customers easier ways to find apps outside the App Store. The Trump administration is backing Apple at the high court.

This is against a group of iPhone owners who claim Apple forces them to overpay for apps by forbidding rivals to the App Store.

During arguments in a case that could have enormous consequences for the tech giant, justices across the ideological spectrum seemed to think consumers had the right to move forward with a fledgling class-action lawsuit saying Apple's App Store has an unfair monopoly that is raising the price of iPhone apps. Judges could force it to change its pricing structure and Apple may face hundreds of millions in penalties to refund some of the commission it has taken in the past four years.

The monopolistic practice in question is the "walled garden" App Store that every iOS and iDevice user is forced into using in order to obtain applications for their phone or tablet (or watch).

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Thirty-one states support the consumers, urging the Supreme Court to allow the lawsuit and also to eliminate the direct-purchaser requirement altogether by overturning the Illinois Brick decision. At issue now is only whether the antitrust suit against Apple can proceed to further hearings and a trial on whether Apple wields monopoly power.

The company released a statement Monday in which it heralded the App Store for fueling "competition and growth in app development, leading to millions of jobs in the new app economy and facilitating more than $100 billion in payments to developers worldwide". Moreover, iOS device owners can only buy apps through the App Store unless they "jailbreak" their phone.

If the justices permit the suit to go forward, a decision against Apple would nearly certainly be a blow to its business. What remains unclear is how many purchasers would qualify as plaintiffs, and how the law's triple damages for antitrust violations would be apportioned if Apple loses.

Apple denies the claims and wants the Supreme Court to dismiss the case, arguing that it does not technically sell the apps and the problem lies with developers. The case was originally brought up way back in 2011, so when you hear that "the wheels of justice turn slowly" you can start to understand what that means.

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Apple claimed that its relationship is exclusively with an app developer, who it charges a commission, and that app purchasers buy directly from the developer. That direct relationship makes Apple the proper target of an antitrust lawsuit, they said. The company is emphasising services, so apps are critical for its future. Chief Justice John Roberts appeared to favor Apple's stance.

However last year the San Francisco 9th US Circuit Court of Appeals last year revived the lawsuit, deciding that Apple was a distributor that sold iPhone apps directly to consumers.

When a user buys an app, Apple collects the money, keeps the 30%commission and gives the rest to the developer.

A ruling is expected in late spring.

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