Apple in a court battle over App Store

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A legal challenge against Apple that could take a huge bite out of one of the company's biggest revenue-drivers got a hearing in front of the Supreme Court this morning, with the nation's high court - based on the questions and comments from justices - appearing to side with iPhone owners who brought the litigation in the first place.

A group of consumers have filed a new class action against Apple, claiming that the company has created a closed market for apps, allowing it to apply a monopoly surcharge to each sale.

Apple urges the Supreme Court to throw the case out, arguing that it's not actually selling anything but is instead operating a marketplace that allows app developers to sell their products.

Right now, the Supremes are weighing up whether they will hear an appeal in the case of Pepper v. Apple, an antitrust legal battle centering around Cook & Co's strict control of its iOS App Store. Justice Stephen Breyer, who used to teach antitrust law at Harvard Law School, said the consumers' case seemed straightforward and in line with a century of antitrust law. Liberal Justice Elena Kagan said that as far as she was concerned, an iOS user purchasing an app from the App Store "engaged in a one-step transaction with Apple".

But the lawsuit says the Cupertino, California-based company exerts a lot of control over the process, including a requirement that prices end in.99.

'Apple is a sales and distribution agent for developers, ' Apple's lawyers said in a Supreme Court filing.

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"They happen to be the largest company in the world, or at least they were some weeks ago, and they are able to extract monopoly pricing by virtue of a unique e-commerce monopoly on their App Store", said Frederick.

But, he said, "the only reason consumers are harmed here in the form of paying higher prices is because the app-makers decide to increase their prices in order to recoup that commission". I pay Apple directly with credit card information that I've supplied to Apple.

The arguments dealt with the fruits of technology that, over the past 10 years, have made more than 2 million apps available to iPhone users, but in the courtroom there were also references to older antitrust cases involving concrete, aluminum, natural gas and shoes.

However, a few of the justices expressed some skepticism with Apple's arguments.

Apple says it doesn't own the apps or sell them. 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 USA antitrust law.

Apple has the support of the Justice Department, which argues that Apple is simply providing a marketplace for app consumers. An appeals court reversed the dismissal in 2017, leading to the Supreme Court taking up the matter.