Are Apple apps too expensive? Supreme Court considers antitrust argument

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"Apple is a sales and distribution agent for developers", Apple's lawyers said in a Supreme Court filing. Developers earned more than $26 billion in 2017, a 30% increase over 2016, according to Apple.

Plaintiffs acting on behalf of iPhone customers argued that because Apple chooses what apps can be sold, gives developers a limited pricing structure and forces iPhone owners to use the App Store, it is operating anti-competitively. Justice Elena Kagan explained that from her perspective, downloading an app is a one-step transaction with Apple.

But the company says the popularity of software for iPhones and its App Store shouldn't obscure that consumers buys apps from developers, not Apple.

Justice Stephen Breyer, who taught antitrust law, said it was a simple and long-standing principle that those with a complaint sued the monopoly.

Lawsuits against companies like these would multiply "and lead to the quagmire this court sought to avoid", Apple told the justices in a legal brief.

His comments could align him with justices who would allow the suit to proceed.

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Representing consumers, lawyer David Frederick said the monopoly Apple has over iPhone apps is unique in the digital age.

Justice Brett Kavanaugh said any ambiguity on the question of who should be able to sue should be settled by the broad language of the statute, which refers to "any person injured".

"I really wonder whether, in light of what has happened since then, the court's evaluation stands up", Alito said. Its argument: the company is merely providing a marketplace for the apps.

When iPhone users want to edit blemishes out of their selfies, identify stars and constellations or simply join the latest video game craze, they turn to Apple Inc's App Store, where any software application they buy also includes a 30% cut for Apple. Under this "shopping mall" theory, a shopper can not sue the owner of the mall by asserting he or she paid too much for a product at a store.

The outcome in Apple v. Pepper is being closely watched - not only by developers who make apps for Apple but by online vendors who sell products on other platforms like Amazon. At that time, Judge Yvonne Rogers ruled in favor (PDF) of Apple, reasoning that end users of the applications were indirect customers are therefore could not be the ones to sue under United States antitrust law.

The claims against Apple date to 2011 when several iPhone buyers including lead plaintiff Robert Pepper of Chicago filed a class action lawsuit against Apple in federal court in Oakland, California. Developers must submit their apps to Apple for approval, and if they meet all of the company's criteria (and are malware-free), they can be listed either as a free, freemium, or paid app. Both sides spoke for about an hour in total.