The Supreme Court Case Against Apple’s Alleged Monopoly
Antitrust laws in the United States of America are akin to South African Competitive laws which provide prohibitions on anti-competitive conduct, restrictive practices (such as price fixing and collusive tendering) and other abuses by dominant firms.
Apple’s policy changes in 2008, was an attempt to regulate app developers by introducing an approval process and only allowed the distribution of apps through the official app store, iOS. Apple enthusiasts were discouraged from using workarounds to install apps by any other means, such as “jailbreaking”. Regarding paid apps; Apple claims a 30 percent commission on whatever revenue each app generates. Fast forward to 2011, where a group of consumers attempted to bring a class-action suit against Apple, the premise of their allegation was that Apple’s system amounted to a monopoly. The result is a case that could have wide implications for app developers that rely on commissions from third-party sales. And if the case proceeds through the courts, it could mean the end of Apple’s tyranny.
This case is still on-going, now centered on the more fundamental question: Can consumers legally blame Apple for the prices that are charged in its app store? Enter the Supreme Court, where an appeal is being heard— not whether Apple is guilty of anti-competitive practices, but whether the case is technically sound based on Constitutional Law.
The plaintiffs (Pepper) argument is that Apple has illegally monopolized the distribution of iPhone apps and that the commissions it charged to app developers inflate the prices consumers’ pay for apps. Apple’s counter-argument is that the defendant is seeking damages based on the “pass-on theory”—that it overcharged the third party and that the third party, not Apple, passed on the charge to consumers. This counter-argument would render the case moot, should the court to rule in favour of Apple.
The crux of the matter is simple, is Apple creating a monopoly through its platform and if so are developers therefore, the ones who pass on inflated prices to consumers; or if developers use Apple’s platform to create a new product that Apple then sells directly to consumers through a marketplace (that it controls a monopoly over). The confusion of technological processes have inspired previous efforts to modernize antitrust laws. So far, have these efforts have failed.
Time will tell in October 2018, when the Supreme Court will hear Pepper v. Apple.