Apple Appeal on App Lawsuit Draws U.S. Supreme Court Query

By Greg Stohr, Bloomberg News

The Supreme Court asked the Trump administration for advice on a consumer lawsuit that accuses Apple Inc. of trying to monopolize the market for iPhone apps so it can charge excessive commissions.

The request to U.S. Solicitor General Noel Francisco suggests the justices are interested in hearing Apple’s appeal.

The company contends consumers can’t press the antitrust lawsuit because the 30 percent commission is levied on the app developers, not the purchasers.

A lawyer pressing the case previously said Apple could be on the hook for hundreds of millions of dollars if the suit succeeds.

The suit, filed in federal court in Oakland, California, accuses Apple of thwarting competition by approving apps only if the developer agrees to let them be distributed exclusively through the App Store. The practice lets Apple charge a “supracompetitive 30 percent markup,” the suing consumers said in court papers.

Apple countered that the App Store and its other innovations have “created a dynamic new industry where none had existed before.” The App Store offers more than 2 million apps to consumers and let developers earn more than $20 billion in 2016 alone, the company says.

A federal appeals court allowed the suit, which seeks class-action status. The panel said Apple can be sued because it is serving as a distributor, selling directly to consumers through its App Store and pocketing a portion of the price of each app.

The Supreme Court said in 1977 that only direct purchasers — and not those who buy a product further downstream — can sue under federal antitrust law.

The case is Apple v. Pepper, 17-204.