The US Supreme Court ruled Monday that a consumer lawsuit accusing Apple of illegally monopolizing the company's App Store may proceed, opening a new avenue of antitrust litigation against the iPhone maker.
Essentially, the Apple v Pepper case argues that Apple's 30% commission cut from developers in the App Store is unfair, and results in inflated prices for iOS users.
Conservative Judge Brett Kavanaugh joined with the four liberal judges in the 5-4 decision, agreeing with the plaintiffs that the 30% commissions Apple charges violate federal antitrust laws. Apple now does not impose the same levies on its own apps; a practice which some software companies allege gives the tech firm an unfair advantage and a monopoly on its own platform.
Apple explained in the same statement that developers are the one that set the price for their apps or memberships and that they have no say in that particular decision.
Apple is also under scrutiny by Dutch antitrust authorities over complaints about commissions in European markets.
Shares of Apple stock were down some 5.85% in mid-day trading following the decision. In that case, the court limited damages for anti-competitive conduct to those directly overcharged rather than indirect victims who paid an overcharge passed on by others.
As iPhone sales continue to tumble, Apple and its shareholders have been looking into improving the company's App Store revenues to compensate.More news: Kevin Durant Injures Right Calf During Game Five Against Rockets
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Consumers say Apple uses dominance to overcharge app buyers.
Apple found itself on the losing side of a Supreme Court ruling in the Apple v Pepper case earlier this morning.
"The iPhone owners purchase apps directly from the retailer Apple", he said, describing a relationship sufficient to allow the lawsuit to go forward.
The latest decision by the Supreme Court does appear to be merely a procedural win, but the fact that the case will move forward could eventually have significant implications for the App Store.
The ruling threatens to throw another monkey wrench in Apple's efforts to increase the revenue generated from its app store at a time that its iPhone sales have plunged into their deepest slump since that revolutionary product hit the market 12 years ago.
Apple doesn't agree with this as they claim that they are only providing a place for developers to sell their products and set their prices. Developers can create apps and publish them in the App Store with a $99 account. Justices ruled that the plaintiffs could continue their case against the company. If Apple loses the suit, the company will have to pay hundreds of millions in penalties.
In so doing, the justices disagreed with Apple's defense, which sought to portray the company as a mere intermediary between consumers and app developers.