On Monday, the United States Supreme Court will hear arguments as part of an antitrust lawsuit against Apple over its App Store and app commission policies. As reported by Reuters, the issue stems from Apple’s 30 percent cut of App Store sales. Apple has previously asked the US Supreme Court to throw out this antitrust lawsuit.
Apple is appealing a lower-court decision and claims that its practices are not monopolistic. In Apple’s view, siding with the consumers who filed the lawsuit would “threaten the burgeoning field of e-commerce.” Apple cites a 1977 Supreme Court ruling as part of its defense. Reuters reports:
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. Part of the concern, the court said in that case, was to free judges from having to make complex calculations of damages.
Thus, Apple argues that it is only acting as an agent for developers who sell to consumers via the App Store, not a distributor.
The antitrust lawsuit dates back to 2011 and alleges that Apple has created a monopoly by only allowing apps to be sold through its first-party App Store. In turn, the suit also says Apple uses that monopoly to charge excessive commissions.
Originally, a federal court in Oakland, California threw out the suit and said that consumers were not direct purchasers, with the higher fees they paid being passed on to them by developers. Last year, the 9th Circuit Court of Appeals in San Francisco revived the lawsuit and said Apple acts as a distributor, selling iPhone apps directly to consumers.
As Apple appeals the lower-court decision, it is backed by the U.S. Chamber of Commerce business group, which wrote in a brief that, “The increased risk and cost of litigation will chill innovation, discourage commerce, and hurt developers, retailers and consumers alike.”
Apple’s 30 percent cut of App Store sales is nothing new, though in 2016 it did adjust the model and dropped its cut of subscription revenue to 15 percent after one year. In addition to this lawsuit, the model has drawn criticism from large digital companies such as Amazon and Spotify.
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