Supreme Court takes Apple's App Store commissions in antitrust case
U.S. top court mulls Apple's App Store commissions in
antitrust case
By Andrew Chung June 18, 2018
WASHINGTON (Reuters) - The U.S. Supreme Court on Monday
agreed to take up Apple Inc's bid to escape a lawsuit accusing it of breaking
federal antitrust laws by monopolizing the market for iPhone software
applications and causing consumers to pay more than they should.
The justices said they would hear Apple's appeal of a
lower court's ruling that revived the proposed class-action lawsuit by iPhone
buyers over commissions that the Cupertino, California-based technology company
receives through its App Store.
The case could expand the threat of antitrust damages
against companies in the rapidly growing field of electronic commerce, which
generates hundreds of billions of dollars annually in U.S. retail sales.
President Donald Trump's administration backed Apple and
urged the justices to take the case.
Businesses that potentially could be threatened by such
consumer litigation are electronic marketplaces like the App Store, ticket site
StubHub, Amazon's Marketplace and eBay where individual sellers set prices.
The antitrust claims against Apple date back to a 2011
lawsuit by several iPhone buyers in California federal court, including lead
plaintiff Robert Pepper of Chicago, according to court papers. The plaintiffs
said Apple has monopolized the sale of apps like messaging programs and games,
leading to inflated prices compared to if apps were available from other
sources.
Though developers set the prices of their apps, Apple
collects the payments from iPhone users, charging developers a 30 percent
commission on each purchase. Developers earned more than $20 billion in 2016,
according to Apple.
The company sought to have the antitrust claims
dismissed, saying the plaintiffs did not have the needed legal standing to
bring the lawsuit.
The case hinges on a 1977 U.S. Supreme Court decision
that limited damages for anti-competitive conduct to those directly overcharged
rather than indirect victims who paid an overcharge passed on by others.
A federal judge in Oakland, California threw out the
suit, saying the consumers were not direct purchasers because the higher fees
they paid were passed on to them by the developers.
But the San Francisco-based 9th U.S. Circuit Court of
Appeals in 2017 revived the litigation, saying Apple was a distributor that
sold iPhone apps directly to consumers and must face the antitrust claims.
E-commerce reached $452 billion in U.S. retail sales in
2017, according to U.S. government estimates.
(Reporting by Andrew Chung; Editing by Will Dunham)
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