US Top Court Open to Antitrust Suit Against Apple App Store

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The Supreme Court will rule on whether or not the case is allowed to go ahead.

"The Services category - which includes App Store commissions, alongside other media, content and services - is now Apple's second biggest driver of revenue after iPhone sales and has been its fastest growing source of revenues", he said.

At issue is whether Apple's walled garden approach to its iOS platform - in which developers are pretty much forced to sell their iPhone and iPad software exclusively via Cupertino's official App Store and pay Apple a 30 per cent cut - is artificially raising prices and a violation of United States antitrust laws on monopoly control.

But it didn't seem to satisfy liberal members of the court.

"The first sale is from Apple to the customer". That direct relationship makes Apple the proper target of an antitrust lawsuit, they said.

Apple has always allowed you to install apps exclusively from its App Store. Apple, naturally, does not want to pay. "From my perspective, I've just engaged in a one-step transaction with Apple". Hovenkamp says that this case is different than typical antitrust cases.

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. 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.

The app store is "really unique", said Mark Rifkin, one of the lawyers pressing the suit.

A ruling against Apple could add to pressure the company already is feeling because of disappointing iPhone sales.

"The plaintiffs, as well as antitrust watchdog groups, said closing courthouse doors to those who buy end products would undermine antitrust enforcement and allow monopolistic behavior to expand unchecked". Its argument: the company is merely providing a marketplace for the apps.

The lawsuit was filed by Chicagoan Robert Pepper in 2011 saying Apple's monopoly leads to inflated prices because there's no competition. Under federal law, proving such an allegation could be worth millions of dollars, because awards are tripled for antitrust violations.

The outcome in Apple v. Pepper is being closely watched - not only by developers who make apps for Apple but by online vendors who sell products on other platforms like Amazon. They describe the iPhone as akin to a shopping mall where consumers can freely shop for apps and buy what they choose. Chief Justice John Roberts appeared to favor Apple's stance.

Though developers set the prices of their apps, Apple collects the payments from iPhone users, keeping the 30 percent commission on each purchase.

Today the Justices sat through an hour of hearings from both sides and offered some comments on the matter afterward.