The U.S. Supreme Court today ruled that iPhone users could sue Apple for antitrust violations related to the iPhone App Store.

Four iPhone users sued Apple, alleging that the consumer electronics giant illegally monopolizes the distribution of apps for the devices. According to the complaint, Apple’s 30 percent “vig” on paid apps causes direct consumer harm as that cost is passed on to consumers by app developers. And because Apple doesn’t allow app makers to distribute iPhone apps any other way, this behavior is doubly injurious as iPhone users have no other choices.

Apple’s response was a legal classic: It claimed that the iPhone users could not sue it because they weren’t purchasing Apple products directly from Apple. Instead, Apple is simply a third party that sits between the users and the app makers.

The U.S. Supreme Court disagreed, in a close 5-4 ruling. This will allow the suits to go forward, and they could result in hundreds of millions of dollars in damages. Or, more, if and when more claimants come on board, as is now expected.

“Apple’s alleged anticompetitive conduct may leave Apple subject to multiple suits by different plaintiffs,” the Court noted in its ruling.

“Apple’s line-drawing does not make a lot of sense, other than as a way to gerrymander Apple out of this and similar lawsuits,” Justice Brett Kavanaugh wrote, rejecting Apple’s defense. “In particular, we fail to see why the form of the upstream arrangement between the manufacturer or supplier and the retailer should determine whether a monopolistic retailer can be sued by a downstream consumer who has purchased a good or service directly from the retailer and has paid a higher-than-competitive price because of the retailer’s unlawful monopolistic conduct. As the Court of Appeals aptly stated, ‘the distinction between a markup and a commission is immaterial’.”

Tagged with App Store, Apple iPhone