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Apple’s App Store Is the Monopoly You Want

June 3, 2018

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It’s not perfect, but neither is the case against it.

Consumers on iOS

Class-action lawsuits do not always represent the will or best interest of the people. Such is the case with Apple Inc. v. Pepper, a several years old antitrust case against Apple that simply refuses to die. A loss for Apple in this case would mean greater confusion and worse options for consumers on iOS.

Some quick background: In 2011, Robert Pepper and a few other iPhone customers sued Apple, alleging it was monopolizing control of the app market via the iOS App Store. If you have an iPhone, that App Store is the only way to purchase and download new apps without jailbreaking your device. As the lawsuit sees it, Apple used that control to essentially force a 30 percent markup on all paid apps because the company takes a 30 percent commission on each App Store transaction. This commision makes apps on iOS more expensive than they would otherwise be in an open app market, the argument goes.

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Initially, that case didn’t go so well. A district court ruled in favor of Apple, which argued that while it offers apps on behalf of developers, those developers are the ones setting the prices and putting them up for sale in the iOS App Store. Though Apple may take a commission on the sale of apps and any in-app purchases, it’s not engineering a price markup.

But a couple of years ago, the Ninth Circuit Court of Appeals got a hold of the case when Pepper and Co. continued to appeal the lower court’s ruling and decided that consumers could sue after all. The court saw a direct seller-buyer relationship between Apple and its app consumers. Last week, the case made its way to the Supreme Court, which must decide if consumers are buying from Apple or the app developers who use its platform. The former would mean that consumers have the right to sue Apple.

If this goes Pepper and Co.’s way, Apple could be in a position to get sued by both App Store consumers and app developers. The latter, which literally have no choice but to offer their iOS apps in Apple’s App Store, would have a decent antitrust case. As a counterexample, Android  —  iOS’s primary competitor  —  allows consumers to download apps directly from the open web if they so choose.