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The US Supreme Court will today hear the arguments in the Apple v Pepper case, which states that the company deliberately created a monopoly on the App Store. The claim is that Apple has also used this monopoly to increase application prices.
The case was originally filed in 2011 with plaintiffs who were originally suing Apple and AT & T, who was originally the exclusive distributor of the iPhone. The arguments against AT & T were subsequently withdrawn from the case and a lower court then ruled that the plaintiffs were not allowed to sue.
However, in January 2017, the Ninth Court overturned this decision and authorized the class action before the Supreme Court.
What is it?
The case arises or falls on the one to whom you buy an application when you download one on your iOS device. If the courts decide that you are buying directly from Apple, that company can then be charged with antitrust behavior and sanctioned accordingly. If so, we can say that Apple has created a monopoly and takes advantage of it by artificially increasing the price of applications beyond what could be sold without the central application store.
However, if the court agrees with Apple that the company is a distributor, everything changes. In this position, Apple connects users with application developers and charges fees.
The ninth court did not feel that there is a difference between Apple and its sellers or distributors.
"The distinction between an increase and a commission is irrelevant", judged the Ninth Court. "The key to the analysis lies in the function performed by Apple rather than in the way it receives compensation for the performance of this function."
It is this opinion that explains why the case was brought before the Supreme Court, which should ultimately decide by June 2019.
transmit
Even though Apple is perceived as a distributor and therefore does not bill its customers itself, there is still an argument that Apple allegedly overloaded the app developers. These application developers may then have passed on or passed on these additional charges to the customers.
Apple's lawyers call this a "pass-through", but they cite a 1977 legal case in which it was called a "pass-on". In the case of Illinois Brick Co v. Illinois, the Supreme Court ruled that only direct buyers could seek redress.
He did so partly because of what the court feared then to have profound and complex consequences. This would create "a serious risk of multiple liability for the defendants," the court ruled. In the current situation, this could have meant that the class could have sued Apple and the developers of the apps. "The overlapping recoveries would certainly result from both lawsuits," the court said.
Headquarters of Illinois Bric Co in 2011 (Source: Google Maps)
Apple maintains that its case is essentially the same as that of 1977 and that in its legal deposit, it even advances its argument "A simple application of the claim for damages from Illinois Brick companies."
Applicants do not agree
Consumers led by Robert Pepper were joined by 31 states, which urge the Supreme Court to allow both this lawsuit and cancel Illinois Brick.
In their supporting legal documents, these states argue: "The predictions of Illinois Brick [of overlapping lawsuits] The Illinois Brick diet is becoming increasingly difficult to apply in the modern world, with the growing trade of intangible rights via new platforms. "
The attorney Mark Rifkin, who was working for the plaintiffs, told Bloomberg that it was a unique situation "Apple's put in the distribution chain", he said, "and this forces us to deal with Apple as nobody does."
Apple also enjoys significant support, including the Department of Justice who in May 2018 filed a brief supporting the company.
What happens next?
If Apple wins it, it convinces the court that it can not be subject to this type of damage, but that only application developers can do it. In theory, the developers of applications could be pursued. In practice, it is unlikely that anyone will try to sue hundreds, even thousands of individual application companies, but these developers could sue Apple if they feel they have been overloaded.
A decision against Apple will result in unspecified damages, but more importantly, the likelihood of further lawsuits being filed against online and technology-based companies in similar positions – and this would change the nature of the distribution of 39 applications if Apple, Google, Facebook and others decided not to be faced with this kind of responsibility. This will likely trigger a decade or more of lawsuits, counter-suits and appeals.
Whatever the case may be, the decision made at one point in 2019 is not the end of the story.
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