US Supreme Court will hear arguments Monday on accusations that Apple is using its market dominance to jack up prices for iPhone apps. A ruling against Apple, letting a lawsuit go forward, could add to pressure the company already faces to cut the 30 percent commission it charges on app sales.
The case turns on what happens when iPhone users buy something at the Apple App Store. In allowing the suit, a federal appeals court said the transaction is a simple one in which consumers buy directly from Apple. Apple says it’s more complicated, with the company serving as a middleman connecting app developers with users. The distinction is critical because of a 1977 Supreme Court ruling that says only direct purchasers of a product can collect damages for overpricing under federal antitrust law. That decision was designed in part to ensure companies don’t have to pay twice for the same misconduct.
Apple is part of an app economy that will grow from $82 billion last year to $157 billion in 2022, according to App Annie projections. Apple and its tech-industry allies say a decision allowing the consumer lawsuit could open other companies that run online marketplaces and platforms to expensive antitrust claims. A broad ruling could affect Alphabet Inc’s Google, Amazon. com Inc, Facebook Inc, Etsy Inc and DoorDash Inc, Apple and its supporters say.
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