Supreme Court Justices Hear Apple Antitrust Appeal

Supreme Courts Justices Open to Apple Lawsuit

Apple’s attempt to get the Supreme Court to toss out a lawsuit over allegations of antitrust actions with its App Store could be souring, amid reports that the court justices seemed open to letting the suit proceed.

According to a report in Reuters, the nine justices heard an hour of arguments on Monday (Nov. 26) in an appeal by Apple, which is appealing a lower-court decision that sided with the iPhone users who filed a class-action lawsuit. The users contend that Apple violated the law by monopolizing sales of apps that consumers had to pay for, which in turn raised the prices compared to apps that were available outside of the App Store. The question is whether the developers will recoup the 30 percent commission they pay Apple by passing it onto the consumer in the form of a higher price. Developers made $26 billion last year, which was up 30 percent from the prior year.

According to Reuters, the proceeding of the case could come down to how the justices apply one of the court’s past decisions against Apple. As the report noted, Apple was backed by President Donald Trump’s administration, while liberal and conservative justices questioned the Apple Attorney and U.S. Solicitor General Noel Francisco during the hearing. Francisco argued on behalf of the administration on the company’s side, over arguments that the consumers were not directly affected by purchasing the apps from Apple.

Apple Spokeswoman Rachel Wolf Tulley said in a statement after the arguments that the App Store has sparked competition and driven innovation in the software market, which has resulted in millions of jobs. “We are hopeful the Supreme Court will recognize Apple’s critical role as a marketplace for apps and uphold existing legal precedent by finding in favor of Apple and the millions of developers who sell their apps on our platform,” Tulley told Reuters.

Separately, CNBC noted that the Supreme Court decision will not in fact decide the underlying issues related to antitrust, but will rule on whether the iPhone owners are allowed to bring a case in the first place. A previous "doctrine" established by the Court found that only the direct purchasers of a good may collect damages tied to antitrust. The tech giant has argued that only app developers – as implied by the aforementioned doctrine, known as the "Illinois Brick Doctrine" – would be cleared to bring an antitrust suit against the company. Apple has argued it is an agent of the developers who, as CNBC reported, set their own prices as the direct sellers.

The site said that a number of liberal justices, among them Elena Kagan, Sonia Sotomayor and Stephen Breyer, "took issue" with the aforementioned doctrine.

"I pick up my iPhone. I go to Apple's App Store. I pay Apple directly with the credit card information that I've supplied to Apple," Kagan said, per CNBC. "From my perspective, I've just engaged in a one-step transaction with Apple."

The newest member of the bench, Justice Brett Kavanaugh, stated that "consumers are harmed" alongside the app makers.

Beyond the confines of the Supreme Court hearing, Monday also saw additional news surrounding Apple. As reported by The Wall Street Journal, President Donald Trump said in an interview with the publication that tariffs could be levied on iPhones and laptops imported from China.

Shares of Apple finished trading Monday up 1.3 percent to $174.62.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.