US Supreme Court: App Store Tariff Competition Case May Continue

The US Supreme Court has ruled that a competition case against Apple can go ahead. The complainants are concerned with the 30 percent that developers have to pay, the alleged higher prices for customers and the question of whether this is a monopoly.

By a majority of five to four, the nine judges have ruled that the complainants have the right to sue Apple in a class action for violating competition rules. The complainants believe that Apple is abusing its monopoly in the App Store to charge relatively high prices for apps. According to them, these prices are higher than they would normally be in a more competitive market. The thirty percent is logically passed on to customers, they say. Apple believes that it is just an intermediary and that the developers set the prices.

Apple raised a defense from previous rulings that the complainants do not have the right to sue Apple directly on competition-related grounds. The doctrine is that this is not possible when it comes to ‘indirect customers’. Apple believes that customers who buy an app in the App Store are in fact entering into a purchase agreement with the developer of the app and not with Apple itself. However, a narrow majority of Supreme Court judges believe that this reasoning does not hold in this case, partly because otherwise the usefulness of having competition rules would be eroded. The judges also find that the complainants who bought apps in the App Store can be regarded as direct customers.

This current success is far from the end of the legal battle. The complainants are still in an early phase of the overarching substantive case; only then will the arguments really be examined in terms of content. Then it will have to be established whether there is a monopoly and, above all, whether there is an illegal case of monopolistic action. It is also possible that Apple will eventually settle.

In March, Spotify also lashed out at Apple, with the transfer of thirty percent specifically being a thorn in the side of the Swedish company. Digital services such as Spotify must relinquish this rate for purchases in the App Store. A complaint about this has been submitted to the European Commission. Reportedly, an EU investigation into Apple’s actions has already been launched, but that has not yet been officially confirmed.