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SCOTUS liberals and Kavanaugh say iPhone owners can sue Apple over App Store over "alleged monopolization"

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A majority of justices disagreed with Apple's argument that app buyers aren't direct customers of Apple. Instead, the court ruled in a 5-4 decision in Apple v. Pepper that the "iPhone owners were direct purchasers who may sue Apple for alleged monopolization." The plaintiffs in the original case have accused Apple of overcharging for apps through its tight control over the App Store.


"The iPhone owners here are not consumers at the bottom of a vertical distribution chain who are attempting to sue manufacturers at the top of the chain," Justice Brett Kavanaugh wrote in the court's majority opinion. He called the Supreme Court's conclusion "straightforward." 


The court's decision doesn't mean that Apple is a monopoly or that it has to change how the App Store operates. Instead, it means the plaintiffs can sue Apple. The case now will go to a lower court to determine if Apple's business practices are legal and will take at least a year to make its way through the court process. 


Apple said in a statement that it's "confident" it'll win the case and noted "the App Store is not a monopoly by any metric."


The case stems from complaints that Apple's App Store -- the only way to purchase apps for iPhones, iPads and Apple Watches -- is effectively a monopoly that overcharges people for software. Under Apple's model, Apple charges developers a $99 annual membership fee, lets them set the retail price of their apps and then takes a 30% cut for each sale. For subscriptions, Apple charges a 15% commission after the first year.


Apple prohibits developers from selling iPhone apps outside the App Store, and Apple device users can't download software to their phones unless it comes from the App Store. Google's Android phones, by contrast, make apps available in a variety of places. Along with Google's official Play Store, people can download apps from stores operated by Samsung and Amazon. Some developers have also offered apps directly to consumers. 


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  • 2 weeks later...

The Vergecast had the lawyer suing Apple on and they were talking about the implications of this ruling for other platforms, specifically using the Xbox as an example.It seemed like the lawyer said that because you could buy physical Xbox games from different stores, that wouldn't fall under the same category as this ruling. When the hosts brought up the all digital Xbox, the conversation shifted, but it occured to me that you can still buy digital codes for games from other stores.


It seems to me that alone satisfies the issue at hand. Even though only a single distribution channel remains, what this case is effectively litigating is the retail channel. As long as the potential for different stores to set prices exists, they would no longer have a monopoly on the sale of apps. Such a system should also satisfy Apple's requirements of security, as all apps would still go through their store.


It would be interesting if they win this case and it effectively means that you either have to allow multiple stores on your platform (a-la Android), or you have to allow codes to be sold by third parties. From what I gather, this ruling certainly applies to the Xbox and Playstation (in that it would allow customers to sue), but it's less clear if it could apply to the Epic Store.


This ruling also doesn't really address the fees that Apple charges developers. Separate lawsuits will determine that, even if they might be after kinda the same thing.

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