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Supreme Court says iPhone users can sue Apple for excessive prices on its App Store

Supreme Court says iPhone users can sue Apple for excessive prices on its App Store

The Supreme Court ruled on Apple's pricing policy for apps on its exclusive App Store.(Photo: SASCHA STEINBACH, EPA-EFE)

WASHINGTON – The Supreme Court opened the door Monday for iPhone users to sue Apple over excessive prices on its exclusive App Store.

Associate Justice Brett Kavanaugh wrote the 5-4 opinion and was joined by the court's four liberal justices. The other four conservatives dissented.

The question before the justices was whether consumers' beef over prices is with Apple directly or the app developers who pass along the tech giant's 30 percent commission, as well as its rule that prices end in .99.

At oral argument in November, the court's four liberal justices clearly were skeptical of Apple's monopoly, and they were joined at points by several conservative colleagues.

"It just seems to me that when you're looking at the relationship between the consumer and Apple, that there is only one step," Associate Justice Elena Kagan said, referring to the way iPhone users buy apps.

David Frederick, the lawyer representing consumers, agreed that "there's no middleman in this particular transaction," as Apple had maintained. The company's antitrust violation, he said, was the App Store itself.

But company attorney Daniel Wall contended that under Supreme Court precedent, the app developers are the ones setting prices charged consumers. If the commission affects those prices, he said, that's between Apple and the developers.

A federal district judge initially ruled in Apple's favor, but a panel of the U.S. Court of Appeals for the 9th Circuit in San Francisco overruled that decision last year and held that consumers were direct purchasers of iPhone apps.

Chief Justice John Roberts warned during oral argument that both consumers and app developers should not be able to sue the company for the same alleged violation. Associate Justice Neil Gorsuch said only one of those groups can be paying what he called the "monopoly rent."

But Kagan said the two groups suffer different losses – consumers through higher prices and developers through reduced sales.

The company heralds the App Store for fueling "competition and growth in app development, leading to millions of jobs in the new app economy and facilitating more than $100 billion in payments to developers worldwide."

The Trump administration sided with Apple, as did the U.S. Chamber of Commerce and several computer and software industry groups. On the other side were 31 states and groups opposed to antitrust activities.