Supreme Court to Hear Apple Antitrust Case

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"We are hopeful the Supreme Court will recognize Apple's critical role as a marketplace for apps, and uphold existing legal precedent by finding in favor of Apple and the millions of developers who sell their apps on our platform", the spokesperson said. When software developers offer their products, Apple reviews them for compatibility and malware and, once they are approved, charges the developer a 30 percent commission. A key question: Who's responsible for any overcharging - the developers, who set the price, or Apple, which levies a commission on every app sold? "From my perspective, I've just engaged in a one-step transaction with Apple", she said. Justice Sonia Sotomayor (an Obama appointee) noted how the customers could in fact show that they would have standing to sue under antitrust laws.

The Reuters report goes on to provide some key context as to why this case is so important: "Apple, also backed by the U.S. Chamber of Commerce business group, told the justices in legal papers that siding with the iPhone users who filed the lawsuit would threaten the burgeoning field of e-commerce, which generates hundreds of billions of dollars annually in U.S. retail sales".

Apple lawyer Daniel Wall of San Francisco described the company as a "pipeline" that connects consumers with app developers and that it is app developers, not Apple, making the sale. Its argument: the company is merely providing a marketplace for the apps. The company's antitrust violation, he said, was the App Store itself.

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The company was briefly overtaken recently by Microsoft as the nation's most valuable company, something referred to by Washington lawyer David Frederick, who represented the consumers who want to sue. If so, the consumer is a direct purchaser and should therefore be permitted to bring an antitrust claim. Apple's routine sales of tens of millions of iPhones and billions in App Store revenue certainly point to the idea that developers are being gouged on sales fees.

Several justices appeared skeptical of Apple's argument. In other cases, the court has ruled there must be a direct relationship between the seller and a party complaining about unfair, anti-competitive pricing.

So as Apple sees it, even if the App Store amounted to an illegal monopoly - and the company insists it isn't - only the app developers could sue, because they're the actual buyers of Apple's distribution service. However, the plaintiffs are backed by the attorneys general of 30 states including California, Texas, Florida and NY.

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The suit by iPhone users could force Apple to cut the 30 percent commission it charges software developers whose apps are sold through the App Store.

But the Ninth Circuit Court of Appeals reversed. A judge could triple the compensation to consumers under antitrust law if Apple ultimately loses the suit.

A ruling is expected in late spring.

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