US Supreme Court To Hear Apple Appeal In App Store Monopoly Case

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

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The lawsuit over excessive App Store developer fees could have a broad impact on e-commerce platforms such as those of Amazon and eBay

The US Supreme Court said on Monday it would hear Apple’s appeal in a proposed class-action lawsuit over App Store fees, a case that could have a broad impact on the huge e-commerce industry, including market leaders such as Amazon and eBay.

Apple is appealing a lower court’s revival of the proposed lawsuit, which focuses on the large commissions Apple charges to App Store developers.

The lawsuit alleges Apple’s practice of charging developers 30 percent of their software sales, and its requirement that apps are exclusively distributed via the App Store, mean higher prices for consumers, in violation of federal antitrust laws.

Apple argues the consumers who brought the case lack legal standing, arguing that it acts as an intermediary for software developers, and charges its fees to them.

App exclusivity

A 1977 Supreme Court decision limits damages for anti-competitive conduct to those who are directly overcharged, rather than indirect victims of charges passed on by others.

An Oakland, California federal judge threw out the original 2011 case, saying consumers were not direct purchasers since the fees they paid were passed on to them by developers.

But last year a San Francisco appeals court revived the case, saying Apple is a distributor that sells apps directly to consumers, and as such must face the antitrust claims.

The case could affect other companies that operate marketplaces on behalf of third-party sellers, such as eBay, Amazon, Google and Facebook, Apple told the Supreme Court in its appeal.

‘Critical question’

“This is a critical question for antitrust law in the era of electronic commerce,” the company argued.

The lawsuit seeks class-action status, and a lawyer pressing the case has said Apple could be liable for hundreds of millions of dollars in fines.

In their filing, the lawyers pressing the case said consumers “are undoubtedly the first party in the distribution chain to buy from the monopolist”.

Apple said the App Store created a “dynamic new industry”, with developers earning more than $20 billion (£15bn) through it in 2016 alone, and more than 2 million apps on offer.

The court is to hear arguments and rule during the nine-month term beginning in October.

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