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US Supreme Court to Hear Apple App Store Antitrust Arguments

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The US Supreme Court today is hearing arguments from Apple that call into question who can bring an antitrust case against the company: app developers or App Store customers.

According to a new report from Reuters, the Cupertino company is battling a group of iPhone owners who claim Apple forces them to overpay for apps by forbidding any rivals to the multibillion-dollar App Store.

A key issue in the case is the 30% cut that Apple takes from apps sold on the App Store which has resulted in higher prices for some applications. Based on a 1977 ruling, Apple says that only those directly overcharged have a right to damages for anti-competitive conduct. The judges will decide if consumers are able to sue Apple for damages even though they are indirect victims who paid an overcharge passed on by developers.

The Supreme Court has previously ruled that only “the overcharged direct purchaser, and not others in the chain of manufacture or distribution” have the right to bring antitrust cases. The class-action plaintiffs, in this case, argue that they’re the direct purchasers since they pay Apple directly for the apps, which then passes on their payments to the developers.

“Apple, which is appealing a lower court decision that revived the proposed consumer class-action lawsuit, says no, citing a decades-old Supreme Court precedent,” reads the report. “The Cupertino, California-based technology company said 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 urges the Supreme Court to throw the case out, arguing that it’s not actually selling anything but is instead operating a marketplace that allows app developers to sell their products. A key question in the case is whether Apple, who levies a commission on every app sold, is responsible for any overcharging, or if it’s the developers, who set the price.

The case narrowly avoided being thrown out because existing antitrust laws may only apply to the App Store if consumers are considered direct purchasers. One federal judge from Oakland, California had previously ruled that consumers are not directly buying from developers and that the higher fees being paid were the fault of developers, not Apple’s 30 percent fee for using the App Store.

Apple has said that a ruling against the company could be a threat to the entire e-commerce industry and would open the doors for consumers to file dozens of suits against other businesses.

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