IPhone owners can sue Apple over App Store prices, Supreme Court rules

Apple lost its Supreme Court cases against Pepper.                  SEAN GALLUP  Getty Images

The US Supreme Court on Monday ruled against Apple in a case that could have broad implications for the e-commerce industry and which also means the door is now open for consumers to sue the iPhone maker over its App Store rules and practices.

John Lopatka, a professor of antitrust law at Penn State University, said the latest ruling does not address the merits of the lawsuit - which must go back to a lower court for trial - but adds to the pressure on companies like Apple.

"The plaintiffs seek to hold retailers to account if the retailers engage in unlawful anticompetitive conduct that harms consumers who purchase from those retailers", Kavanaugh wrote.

And it shot down Apple's legal response by arguing that if the current system was allowed to stand it would "provide a roadmap for monopolistic retailers to structure transactions with manufacturers or suppliers so as to evade antitrust claims by consumers and thereby thwart effective antitrust enforcement". But in both cases - PC games and Android apps - there are alternatives for getting the products on the platform, so it's unclear how this could affect other companies with online stores.

Dissenting from the decision, conservative Justice Neil Gorsuch, said that the decision is "not how antitrust law is supposed to work" because it gives a green light to the exact type of case that the court has previously prohibited.

Customers argued that the cut Apple takes is evidence of the company exploiting its monopoly position over iPhone users.

In a 5-4 ruling, with Donald Trump appointee Brett Kavanaugh siding with the court's four liberal justices, the decision essentially clears the way for a class action lawsuit against Apple to proceed.

Apple had tried to argue that it acted exclusively as an agent for developers.

Apple shares dropped about 5 percent after the ruling.

The case, Apple v. Pepper, was brought by iPhone users who complained that the App Store is the only place where iPhone apps are available and that, as a result, Apple has a monopoly on "the iPhone apps aftermarket".

iPhone users who must purchase software for their smartphones exclusively through Apple's App Store filed the suit. The vast majority of apps on the App Store are free and Apple gets nothing from them. Speaking from the bench, Kavanaugh said Apple's theory of the case "contradicts the text of the antitrust statute, which broadly affords any injured party a right to sue". "But if Apple does lose, one possible outcome is that Apple might be forced to allow consumers to install apps from outside the App Store".

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