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The justices will hear arguments in Apple's appeal of a lower
court's decision to revive the proposed class-action lawsuit by
a group of iPhone users. The lawsuit accused the Cupertino,
California-based technology company of violating federal
antitrust laws by requiring apps to be sold through the
company's App Store and then taking a 30 percent commission from
the purchases.
The case hinges on how the justices will apply one of its past
decisions to the claims against Apple. That 1977 ruling limited
damages for anti-competitive conduct to those directly
overcharged rather than indirect victims who paid an overcharge
passed on by others.
The iPhone users, including lead plaintiff Robert Pepper of
Chicago, filed the suit in a California federal court in 2011,
claiming Apple's monopoly leads 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, keeping a 30 percent commission
on each purchase. One area of dispute in the case is whether app
developers recoup the cost of that commission by passing it on
to consumers. Developers earned more than $26 billion in 2017, a
30 percent increase over 2016, according to Apple.
The company, backed by Republican President Donald Trump's
administration as well as the U.S. Chamber of Commerce, told the
justices in legal papers that siding with the iPhone users who
filed the lawsuit would threaten the burgeoning field of
e-commerce, which generates hundreds of billions of dollars
annually in U.S. retail sales.
The plaintiffs, as well as antitrust watchdog groups, said
closing courthouse doors to those who buy end products would
undermine antitrust enforcement and allow monopolistic behavior
to expand unchecked. The plaintiffs were backed by 30 state
attorneys general, including from Texas, California and New
York.
The plaintiffs said app developers would be unlikely to sue
Apple, which controls the service where they make money, leaving
no one to challenge anti-competitive conduct.
The company sought to have the antitrust claims dismissed,
arguing that the plaintiffs lacked the required legal standing
to bring the lawsuit. 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
revived the case last year, finding that Apple was a distributor
that sold iPhone apps directly to consumers.
(Reporting by Andrew Chung; Editing by Will Dunham)
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