What happens if Apple loses its Supreme Court App Store antitrust appeal?

Earlier this week, the Supreme Court officially picked up the long-running antitrust case Apple v. Pepper . The court will decide whether iPhone users can sue Apple for blocking the iOS ecosystem, which the plaintiffs say is creating an anti-competitive monopoly.

Apple v. Pepper could theoretically affect how technology companies can build walled gardens around their products. The Supreme Court is not going to make a call on that specific problem but its decision could affect the relationship of people with all kinds of digital platforms. This is what is at stake when the Supreme Court case begins, which should happen sometime next year.

Apple Inc. v. Robert Pepper is the latest salvo in a legal fight over Apple's iOS app store. A group of iPhone buyers claim that Apple's locked ecosystem artificially inflates app prices because all developers must go through a single store that requires a reduction in revenue. Shoppers argue that Apple has established an illegal monopoly over iOS apps, and are asking the courts to make Apple allow third-party iOS apps, in addition to paying every iOS user who has overcharged in the past.

Apple v. Pepper began as a broader antitrust complaint in 2011. Robert Pepper and three other iPhone owners claimed that Apple had stifled competition and raised prices on their iPhone, partly by blocking third-party applications and partly by signing up. a five-year contract. exclusivity deal with AT & T. A court filed this last claim in 2013. Since then, the class action case has focused exclusively on the App Store.

In 2014, Apple won a lawsuit against Pepper, and the lawsuit was dismissed. But the Ninth Circuit Court of Appeals reversed that decision in early 2017, allowing the case to move forward. Now, Apple is asking the Supreme Court to reject it again.

The central dispute is relatively simple: Apple only allows iOS users to install applications through their App Store. Any third-party store requires jailbreaking your phone and voiding the warranty. Apple also has a commission of 30 percent on the applications that are sold through the App Store. Pepper's complaint concludes that developers are logically passing that cost to consumers.

The lawsuit says that iPhone users have paid "hundreds of millions of dollars more for the applications" than they would have paid in a competitive market. "That's a claim that could be challenged in court, but There are real examples of applications that cost customers, Spotify, for example, charged iTunes subscribers a higher fee before simply disabling that payment option.

Apple denies the claim that closed ecosystem is an illegal monopoly, says that users can buy applications on other platforms and that, by definition, opening the App Store in 2008 created new competitive opportunities. [19659010] But courts have not yet called this argument, instead focusing on whether iPhone users can sue Apple at all.

In 1977, the Supreme Court established what It is known as the Illinois Brick doctrine, which says that "indirect buyers" can not sue a company for antitrust damages. Pepper's lawsuit shows Apple selling iOS apps directly to users in a markup. But Apple says that iOS users are basically buying applications from developers, who are buying Apple's software distribution services, which would make developers the only direct buyers with the right to sue Apple.

If Apple convinces the Supreme Court that this is correct, it does not even have to worry about the monopoly issue. Sure, a developer could sue the company later, but the developers have a strong incentive to remain friendly with Apple, and actually benefit from the hostile and anti-piracy system of iOS.

Yes, according to the 2017 resolution that Apple is attractive. The Ninth Circuit Court of Appeals did not take Apple's arguments into account, such as the fact that it is taking a commission from developers instead of adding a fee to user transactions, such as an abrupt division. Determined that regardless of who makes the applications or set the exact prices, Apple acts as a distributor, which gives a direct relationship with their customers.

But a lower court did not agree with that interpretation, and there is no guarantee that the Supreme Court will do so.

Nothing – yet. If a court rules that Apple has an illegal monopoly, Apple could pay hundreds of millions of dollars or even change its App Store model. However, if the Supreme Court upholds the Ninth Circuit's decision, it will simply send the case to a lower court, where the fight will continue.

But the decision will also affect the amount of power that consumers have over digital platforms. In 1998, a major ruling by the appeals court knocked down concertgoers who sued Ticketmaster for raising ticket prices, saying that Ticketmaster was actually selling distribution services to concert halls. The opinion of the Ninth Circuit says explicitly that the decision was incorrect. Then, a favorable ruling by the Supreme Court would not only keep this particular lawsuit alive. It could make other powerful online stores or, in Reuters less charitable estimate, "toll operators", more accountable to their users.