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Apple runs the risk of antitrust litigation in the Supreme Court



<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Like Apple (AAPL) shares the slide on material problems such as supplier cuts and additional US tariff threats on products made in China, the viability of the company's multi-billion dollar service division could pose a threat more existential, depending on the result of the next decision of the Supreme Tribunal."data-reactid =" 22 ">While Apple (AAPL) shares its actions as a result of hardware problems such as supplier cuts and additional US tariff threats on products made in China, the viability of the company's multi-billion dollar service division could pose a more existential threat, depending on the outcome of a future Supreme Court decision.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Apple's lucrative App Store, which is part of its service arm which generated $ 37.2 billion& nbsp;in fiscal year 2018, is subject to a potential antitrust class action which, if allowed to proceed, threatens to make profits for the division increasingly sought to counter the weak demand for mobile phones."data-reactid =" 23 ">Apple's lucrative App Store, part of its service arm that generated $ 37.2 billion in fiscal year 2018, is subject to a potential antitrust class action which, if allowed to proceed, threatens to make profits for the division increasingly sought to counter the weak demand for mobile phones.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The issue in dispute concerns a group of iPhone consumers who claim that the revenues from the App Store are, at least in part, the ill-gotten gains of an illegal monopoly. Consumers claim that the App Store controls retail prices by charging developers a 30% commission transferred to buyers of apps that do not have another market to buy from. iPhone applications."data-reactid =" 24 ">The issue in dispute concerns a group of iPhone consumers who claim that the revenues from the App Store are, at least in part, the ill-gotten gains of an illegal monopoly. Consumers claim that the App Store controls retail prices by charging developers a 30% commission transferred to buyers of apps that do not have another market to buy from. iPhone applications.

A loss that could cost Apple billions

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "If the Supreme Court allows the case to From the front and Apple loses at trial, this could be a blow. & Nbsp;App Store sales are expected to account for about 37 percent of the company's total annual revenue, estimated at $ 46 billion in fiscal 2019, according to a November 26 analyst report from Bank of America Merrill Lynch . In a scenario where the commissions of the App Store would only drop by 5% from the current rate of 30%, analysts are expecting a 17% decline in the business turnover of the App Store. Store, a loss of 2.8 billion dollars."Data-reactid =" 26 "> If the Supreme Court allows the case to go ahead and that Apple loses at trial, it could be a blow. App Store sales are expected to account for about 37 percent of the company's total annual revenue, estimated at $ 46 billion in fiscal 2019, according to a November 26 analyst report from Bank of America Merrill Lynch . In a scenario where the commissions of the App Store would only drop by 5% from the current rate of 30%, analysts are expecting a 17% decline in the business turnover of the App Store. Store, a loss of 2.8 billion dollars.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Regardless of whether or not the app store is an illegal monopoly, judges are faced with a more preliminary question: do iPhone users have the right or "standing" to bring the antitrust claim against Apple, in the first place.

In 1977, in the Illinois Brick v. Illinois, the Supreme Court stated that only direct purchasers, or those who were suffering immediate harm as a result of allegedly monopolistic behavior, could bring an action for damages under anti-competitive laws. "data-reactid =" 27 ">Regardless of whether or not the app store is an illegal monopoly, judges are faced with a more preliminary question: do iPhone users have the right or "standing" to bring the antitrust claim against Apple, in the first place.

In 1977, in the Illinois Brick v. Illinois, the Supreme Court stated that only direct purchasers, or those who were suffering immediate harm as a result of allegedly monopolistic behavior, could bring an action for damages under anti-competitive laws.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Apple and the app developers contend that buyers of the App Store are indirect buyers who do not have the right to sue, but if the Supreme Court authorizes the continuation of the claim, Apple will have to defend its service empire in a new antitrust landscape."data-reactid =" 28 ">Apple and the app developers contend that buyers of the App Store are indirect buyers who do not have the right to sue, but if the Supreme Court authorizes the continuation of the claim, Apple will have to defend its service empire in a new antitrust landscape.

The key question that the Supreme Court must decide

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "According to George Hay, a law professor at Cornell Law School, and a leading antitrust authority, Apple questions whether Apple sets or controls the retail price."data-reactid =" 30 ">According to George Hay, a law professor at Cornell Law School, and a leading antitrust authority, Apple questions whether Apple sets or controls the retail price.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = ""Antitrust does not impose any restrictions on the ability of a single company to charge everything it wants," Hay said. "Of course, a commission raises the price.""data-reactid =" 31 ">"Antitrust does not impose any restrictions on the ability of a single company to charge what it wants," Hay said. "Of course, a commission raises the price."

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "For their part, iPhone consumers suing Apple in court argue that its price categories requiring a price close, for example in increments of 99 cents, equate to a control of the retail selling price. & Nbsp;"This seems to be due to the fact that Apple does not just charge the developer a commission, which it is allowed to do, but somehow controls the retail process and the retail price," he said. said Hay."data-reactid =" 32 ">For their part, iPhone consumers filing lawsuits against Apple claim that its price categories requiring a price close, for example in increments of 99 cents, equate to a control of the retail selling price. "This seems to be due to the fact that Apple does not just charge the developer a commission, which it is allowed to do, but somehow controls the retail process and the retail price," he said. said Hay.

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Interestingly, the application industry – which is charging 30% commission – seems to come from Apple's side. & nbsp;The App Association, which represents over 5,000 Apple and Android apps, & nbsp;filed an amicus brief in support of Apple, and its president, Morgan Reed, claimed that Apple did not actually control the price of applications. He noted, as evidence of this lack of control, that Apple allowed developers to offer free apps in the store."data-reactid =" 33 "> It is interesting to note that the application sector, which is billed the commission of 30%, seems to be on the side of Apple. The App Association, which represents more than 5,000 Apple and Android apps, filed an amicus brief for Apple, and its president, Morgan Reed, claimed that Apple was not controlling the price of applications. He noted, as evidence of this lack of control, that Apple allowed developers to offer free apps in the store.

<p class = "canvas-atom text-canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In addition, nIn the beginning, all the application developers represented by the App Association are sold on both platforms, said Reed. Despite the fact that, according too a study of Sensor, App Store reports nearly double the revenue of its closest competitor, Google Play, says Reed, & nbsp;"There is no dominant monopoly in the handset or the tablet.""data-reactid =" 34 "> Moreover, nIn the beginning, all the application developers represented by the App Association are sold on both platforms, said Reed. Despite the fact that, according too a study of Sensor, Reed claims that the App Store has nearly doubled the revenue of its closest competitor, Google Play "There is no dominant monopoly in the handset or the tablet."

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = ""It's very easy to talk to a leading company like Apple, to see it as a big company and therefore dictate its terms," ​​said Reed, pointing out that developers are a powerful community of hundreds of thousands of people who can act against Apple. if he decides that the commission "the rent is simply too high". Apple customers, he says, are more likely to initially pay for apps than Android users."data-reactid =" 35 ">"It's very easy to talk to a leading company like Apple, to see it as a big company and therefore dictate its terms," ​​said Reed, pointing out that developers are a powerful community of several hundred thousands of people who can act against Apple if it decides that the commission "the rent is simply too high". Apple customers, he says, are more likely to initially pay for apps than Android users.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "According to Reed, developers receive benefits in return for commissions charged by Apple and Google Play, such as reduced overhead, prevention of lawsuits, protection of copyright and intellectual property, platform that users trust to secure their data and credit card processing. They play a role of "convener," said Reed, which promotes efficiency and reduced costs for developers and consumers."data-reactid =" 36 ">According to Reed, developers receive benefits in return for commissions charged by Apple and Google Play, such as reduced overhead, prevention of lawsuits, protection of copyright and intellectual property, platform that users trust to secure their data and credit card processing. They play a role of "convener," said Reed, which promotes efficiency and reduced costs for developers and consumers.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Reed said that the advent of application-based software had lowered the average initial price of software from about $ 50 for boxed software to about $ 3. He explains that the costs for developers would skyrocket if they were forced to design solutions and marketing plans for dozens of apps stores."data-reactid =" 41 ">Reed said that the advent of application-based software had lowered the average initial price of software from about $ 50 for boxed software to about $ 3. He explains that the costs for developers would skyrocket if they were forced to design solutions and marketing plans for dozens of apps stores.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = ""If the result was a breakdown of the App Store catastrophic for developers," said Reed. "Now you would be a developer and an island on the Internet.""data-reactid =" 42 ">"If the result was a breakdown of the App Store catastrophic for developers," said Reed. "Now you would be a developer and an island on the Internet."

Now that the case has been debated in the Supreme Court, judges could render a decision at any time until the end of his term this summer. If the High Court allows action in a class action, it may take years before a final decision is made. Nevertheless, Apple risks being victim of a triple harm if the customer loses the potential cause.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Alexis Keenan is a NYC-based journalist for Yahoo Finance. Previously, she produced live information for CNN and was a former litigation lawyer.& nbsp;Follow her on Twitter at& nbsp;@alexiskweed
"data-reactid =" 44 ">Alexis Keenan is a NYC-based journalist for Yahoo Finance. Previously, she was producing live information for CNN and was a former litigator. Follow her on Twitter at @alexiskweed

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