Taking A Bite Out Of Apple
On Monday, May 13, the Supreme Court allowed an immense lawsuit against Apple to proceed. A group of iPhone owners are accusing Apple of breaching antitrust rules and they argue that the App Store is a monopoly. The court stated that customers hold the right to attempt to prove that the powerhouse technology company raised the prices of iPhone apps using monopoly power. While the antitrust class action suit must overcome other legal obstacles and is still in its beginning phase, it draws attention to the power that Apple has through its App Store. The store includes over two million apps and produced more than 26 billion dollars in payments to developers in 2017. Additionally, the App Store is arguably the difference between an iPhone to any other type of mobile phone, as without it, huge companies like Uber, Lyft, Instagram, and Postmates would not exist. Competitors like Spotify, Netflix, and Amazon have encouraged their users to subscribe to them directly, seeking to avoid the fee they’d have to pay to Apple for their app, but smaller app makers would have difficulty gaining a large enough following to stand on their own without the influx of customers the App Store brings. Apple has also restricted or blocked apps that provide parental controls or track time spent on a phone, leaving rival companies to argue that by doing this, the Apple had targeted them.
The 5-to-4 verdict split the court into unusual groups, with President Trump’s two appointees holding different opinions. Justice Brett M. Kavanaugh wrote the majority opinion, which was signed by the four more liberal justices of the court, while Justice Neil M. Gorsuch wrote the dissent and was joined by Chief Justice John G. Roberts Jr., Justice Clarence Thomas, and Justice Samuel A. Alito.
Apple made a statement explaining that it was “confident [it] will prevail when the facts are presented and that the App Store is not a monopoly by any metric.” However, this case originated from a similar class-action suit in 2011 by iPhone owners who claimed that by taking a 30% portion of app sales, Apple has pushed app developers to raise their prices. The suit asserted that consumers had been harmed by this, as Apple does not provide a way for customers to download apps from anywhere other than the iTunes App Store. Apple maintained that the App Store makes it so that apps that violate the company’s terms of service or pose security threats can be easily identified and eradicated, but other phone companies, such as Android, allow buyers to safely access apps from multiple sources.
The news of the lawsuit caused Apple’s stock to fall 5.3%, causing the market as a whole to go down more than 2%. While the Supreme Court did not rule on the likelihood of a successful outcome in this case, they did determine that the customers have a right to sue. If just the prospect of a lawsuit was enough for Apple’s stock to decrease, this could do some serious damage to the company in the future.
By Rose Sanders