WASHINGTON (Reuters) – The US Supreme Court judges on Monday appeared open to filing a lawsuit against Apple Inc. (AAPL.O) that he has accused of breaking federal antitrust laws by monopolizing the iPhone software application market and causing consumers to pay more than they should.
A woman uses her cell phone, an Apple iPhone 6 in central Munich, Germany, on January 27, 2016. REUTERS / Michaela Rehle
The nine judges listened to an hour of discussions in an appeal by the Cupertino-based technology company, based in California, of the lower court's decision to revive the proposed legal action in federal court in California in 2011 by a group of iPhone users looking for monetary damage.
The lawsuit said Apple violated federal antitrust laws requiring that the app be sold through the company's App Store and then withdrawing a 30% commission from purchases.
The case may depend on how the courts apply one of the court's past decisions to claims against Apple. The 1977 precedent limited the damages for anticompetitive behavior to those directly overloaded rather than to indirect victims who paid a surcharge transmitted by others.
Apple was supported by the administration of the Republican president Donald Trump. Some liberal and conservative judges have abruptly questioned a lawyer for Apple and the general of US lawyers Noel Francisco, who discussed on behalf of the administration on the side of the company, on their argument that consumers were not directly interested in 39; purchase of Apple's app.
The liberal Justice Elena Kagan, who explains how a purchase is managed in the App Store, said: "From my point of view, I have just engaged in a transaction in a single phase with Apple."
Some conservative judges, including Neum Gorsuch, appointed by Trump, wondered if the 1977 ruling was still valid in a modern market.
Conservative judge John Roberts's questions suggested that he be in agreement with Apple's position. Roberts expressed concern that, for a single price increase, Apple could be held responsible by both consumers and app developers.
IPhone users, including leading plaintiff Robert Pepper of Chicago, have claimed that Apple's monopoly leads to inflated prices compared to if the apps were available from other sources.
Although developers determine the prices of their apps, Apple collects payments from iPhone users, keeping the commission 30% on every purchase. An area of controversy in the case is whether app developers recover the cost of that commission by transferring it to consumers. The developers have earned over $ 26 billion in 2017, a 30% increase over 2016, according to Apple.
Apple spokesperson Rachel Wolf Tulley said in a statement after the arguments that the App Store fueled the competition and promoted innovation in software development, leading to millions of jobs in the industry.
"We hope the Supreme Court recognizes Apple's critical role as an app market and supports existing legacy law by finding it in favor of Apple and the millions of developers who sell their apps on our platform," said Tulley.
CLOSING DOORS OF THE COURTHOUSE
Apple, also supported by the US Chamber of Commerce business group, has claimed that a decision made by iPhone users who brought the case would threaten the burgeoning e-commerce sector, which generates hundreds of billions of dollars in # 39; year in the US retail sales.
The plaintiffs, as well as antitrust control groups, said closing the court doors to those who purchase end products would undermine antitrust enforcement and allow monopolistic behavior to expand without control. The plaintiffs were backed by 30 state attorneys general, including Texas, California and New York.
The plaintiffs said that app developers could hardly sue Apple, which controls the service they earn, without anyone being able to challenge anti-competitive conduct.
Together with Gorsuch, conservative judge Samuel Alito has raised the reluctance of app developers to sue Apple in the previous 1977.
Judge Brett Kavanaugh, another conservative Trump deputy, rejected Francisco's argument that Apple's actions are not the direct cause of higher prices for consumers, because app makers have set final prices. Kavanaugh stressed that "even consumers are damaged".
Later, Kavanaugh suggested that plaintiffs would have a clearer right to sue if Apple had bought the app from the developers and sold it to consumers with a 30% commission.
Apple said it only acts as an agent for app developers who sell apps to consumers through the App Store.
Liberal judges Sonia Sotomayor and Stephen Breyer seemed certain that the claims of iPhone buyers should go on.
"They are claiming that their injury is a suppression of a lower price," said Sotomayor to Apple's lawyer, Daniel Wall.
The company sought to reject antitrust requests, arguing that the applicants lacked the legitimacy required to bring the case. A federal judge in Oakland rejected the case by saying that consumers were not direct buyers because the largest commissions paid were passed on to them by developers.
The Court of Appeals of the 9th Circuit in the United States with headquarters in San Francisco restored the case last year, discovering that Apple was a distributor that sold iPhone apps directly to consumers.
Reporting by Andrew Chung; Editing by Will Dunham