Think Apple is a monopoly that charges too much for iPhone games and premium dating apps?
You’ll have an easier time taking legal action on that complaint under a Supreme Court ruling on Monday rejecting Apple’s argument that it’s protected from such lawsuits because its App Store is merely an intermediary for software developers who set their own prices.
The 5-4 decision, written by Justice Brett Kavanaugh and supported by more liberal justices including Ruth Bader Ginsburg, Sonia Sotomayor, and Elena Kagan, allows a lawsuit filed by four iPhone owners nearly a decade ago to move forward while heightening the vulnerability of tech companies to growing claims of anticompetitive behavior.
The iPhone owners, one of whom purchased the device shortly after its 2007 introduction, argued in a lawsuit suit filed in federal court in San Francisco in 2011 that Cupertino, Calif.-based Apple had created a monopoly by allowing the purchase of apps only through its virtual store, where it claimed a 30% commission on each sale that artificially inflated prices.
The company convinced the trial court judge to dismiss the action under a 1977 precedent set by the Supreme Court in Illinois Brick Co. v. Illinois, in which justices barred the state from recovering damages from a concrete-block maker for high prices charged by general contractors constructing buildings. Only the direct purchaser of the blocks was entitled to sue, the justices said then.
The difference between the two cases is that “there is no intermediary in the distribution chain between Apple and the consumer,” the justices ruled. “The iPhone owners purchase apps directly from the retailer, Apple, who is the alleged antitrust violator. The iPhone owners pay the alleged overcharge directly to Apple.”
The Open Markets Institute, an organization fighting anticompetitive behavior by U.S. companies that filed a brief supporting the iPhone users, praised the decision for rejecting “Apple’s specious attempt to exempt itself” from antitrust suits.
“This is an important win in the public’s fight against monopoly in the tech sector and elsewhere,” said Sandeep Vaheesan, the organization’s legal director.
The ruling was handed down amid a surge in antitrust complaints against Silicon Valley stalwarts such as Facebook, Amazon, and Google, which was fined $5.1 billion last year over practices related to its Android apps.
European regulators said Google required phonemakers who used the company’s open-source Android operating system to install the Google Search and Google Chrome apps on devices in order to connect to the Google Play app store and barred phonemakers from preinstalling Google apps on any devices if they also offered products running Android software developed without the company’s approval.
“Google has used Android as a vehicle to cement the dominance of its search engine,” Margrethe Vestager, the European Union’s commissioner for competition, said at the time. “They have denied European consumers the benefits of effective competition in the important mobile sphere.”
Sen. Elizabeth Warren, D-Mass., a 2020 presidential candidate who has campaigned on breaking up companies including Amazon, which competes with some of the retailers that use its e-commerce platform, said she would do the same for Apple, largely because of its App Store.
“It’s got to be one or the other,” she told the Verge, a tech publication, in March. “Either they run the platform or they play in the store. They don’t get to do both at the same time.”
Apple plunged 5.8% to $185.72 after the decision, a drop exacerbated by a broader market sell-off due to an escalating trade war between the U.S. and China.
[Also read: Cory Booker calls to enforce antitrust laws but dodges on which companies]
