Is the Apple Marketplace a Monopoly?

Is the Apple Marketplace a Monopoly?

Who’s the distributor of apps in the Apple App Store? Apple or third-party developers? The Supreme Court will consider a lower court’s ruling that named Apple the distributor and able to face antitrust claims from direct purchasers — the consumers.

As reported by Reuters, Gizmodo and others, the high court agreed in June to review the decision in Pepper v. Apple, Inc. by San Francisco-based 9th U.S. Circuit Court of Appeals that breathed new life into antitrust claims brought against Apple.

In 2011, Robert Pepper and other iPhone buyers filed a lawsuit against the company for allegedly monopolizing the sale of apps, leading to inflated prices for consumers. Per Reuters:

“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.”

The suit, reports Gizmodo, then spent time in appeals courts due to technicalities from a conspiracy charge that included AT&T but didn’t name it as a defendant. When the conspiracy complaint was removed, the Ninth Circuit Court of Appeals moved the case forward.

Some relevant stats: Apple charges a 30 percent commission from developers per app purchase. According to Apple, developers earned $20 billion in 2016. And according to government estimates, says Reuters, e-commerce hit $452 billion in U.S. retail sales in 2017.

Big money is at stake, and not just for Apple. Per Gizmodo:

“The result is a case that could have wide implications for tech businesses that rely on commissions from third-party sales. And if it is allowed to proceed through the courts, it could mean the end of Apple’s walled garden.”

The Supreme Court is scheduled to hear Pepper v. Apple, Inc. this October.

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