Apple Must Face Antitrust Suit Over App Pricing, Supreme Court Rules

Siding against Apple, the Supreme Court Monday ruled 5-4 that the company must face a lawsuit by consumers who say the company monopolizes app distribution for iPhones.

The battle centers on Apple's app-store business model, which generally calls for a 70-30 revenue split with developers. (Two years ago, Apple tweaked its formula to allow developers who offer subscriptions to retain 85% of their app's revenue after the first year.)

In a lawsuit brought in 2011, a group of iPhone users alleged Apple's 30% commission from developers gets passed on to consumers. The users argued that Apple was only able to charge the 30% mark-up because it wielded monopoly power over the distribution of iPhone apps.

Apple said the lawsuit should be dismissed, arguing that app purchasers shouldn't be able to bring antitrust claims stemming from deals between Apple and app developers. Apple drew on a 1977 Supreme Court decision that only “direct” purchasers can sue over antitrust violations.

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The Supreme Court rejected Apple's argument, finding that the consumers were entitled to sue because they purchased the apps directly from Apple.

“There is no intermediary in the distribution chain between Apple and the consumer,” Justice Brett Kavanaugh wrote for the majority. “The iPhone owners purchase apps directly from the retailer Apple, who is the alleged antitrust violator.”

Kavanaugh was joined by the Justices John Roberts, Sonia Sotomayor, Ruth Bader Ginsburg and Elena Kagan. The ruling affirmed a decision issued in 2017 by the 9th Circuit Court of Appeals.

Justice Neil Gorsuch dissented in an opinion joined by Justices John Roberts, Samuel Alito and Clarence Thomas.

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