Supreme Court Allows Antitrust Suit Against Apple to Proceed

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FILE -- The Apple store in the SoHo neighborhood of New York, Aug. 2, 2018. The Supreme Court on May 13, 2019, allowed an enormous antitrust class action against Apple to move forward, saying that the plaintiffs should be allowed to try to prove that the technology giant had used monopoly power to raise the prices of iPhone apps. (Emma Howells/The New York Times)

 

 

Adam Liptak

c.2019 New York Times News Service

 

WASHINGTON — The Supreme Court on Monday allowed an enormous antitrust class action against Apple to move forward, saying that the plaintiffs should be allowed to try to prove that the technology giant had used monopoly power to raise the prices of iPhone apps.

 

The lawsuit is in its early stages and must overcome other legal hurdles. But successful antitrust plaintiffs are entitled to triple damages, meaning Apple’s exposure could be significant.

 

The vote was 5- 4, and it featured an unusual alignment of justices, with President Donald Trump’s two appointees on opposite sides. Justice Brett Kavanaugh, who joined the court in October, wrote the majority opinion, which was also signed by the court’s four more liberal justices. Justice Neil Gorsuch, who joined the court in 2017, wrote the dissent.

 

Apple charges a 30% commission to software developers who sell their products through its App Store, bars developers from selling their apps elsewhere and plays a role in setting prices by requiring them to end in 99 cents.

 

The App Store has been extraordinarily successful. It features more than 2 million apps, Apple told the court, and generated payments to developers in 2017 of more than $26 billion.

 

The legal question in the case, Apple v. Pepper, No. 17-204, was whether the suit was barred by a 1977 decision, Illinois Brick Co. v. Illinois, which allowed only direct purchasers of products to bring federal antitrust suits. Apple argued that it was an intermediary and so not subject to the suit.

 

The U.S. Court of Appeals for the 9th Circuit, in San Francisco, disagreed.

 

“Apple is a distributor of the iPhone apps, selling them directly to purchasers through its App Store,” Judge William A. Fletcher wrote for a unanimous three-judge panel of the court.