Apple Faces Skepticism at Supreme Court in Bid to Stop Antitrust Suit

(Bloomberg) —
(AP Photo/Patrick Semansky, File)

U.S. Supreme Court justices appeared inclined to allow an antitrust lawsuit that accuses Apple Inc. of using its market dominance to artificially inflate prices at its App Store.

Hearing arguments Monday in Washington, justices from across the court’s ideological spectrum suggested skepticism about Apple’s contention that the consumers pressing the suit can’t collect damages.

A ruling against Apple could add to pressure the company already faces to cut the 30 percent commission it charges on app sales. Lawyers pressing the case have said they will seek hundreds of millions of dollars in damages.

Apple says the consumers can’t press the suit because it centers on the commissions the company charges to app developers. Past Supreme Court decisions have said only direct purchasers can sue for damages.

Apple has seen a steep decline in its share price since early October amid concerns about weak demand for iPhones, and it was briefly overtaken Monday by Microsoft as the most valuable U.S. company based on market capitalization.

The consumers in Monday’s case say they pay for commissions through higher app prices, and the court’s four liberal justices signaled they would let those claims go forward. Justice Elena Kagan said that, from the consumer’s perspective, buying an app is a “one-step transaction with Apple.”

Two of the court’s conservatives — Justices Neil Gorsuch and Samuel Alito — suggested they weren’t sure the consumers qualified as direct purchasers, but both indicated they were open to allowing the lawsuit through a more sweeping ruling. Both questioned the Supreme Court’s 1977 Illinois Brick decision, which says only direct purchasers of a product can collect damages for overpricing under federal antitrust law.

“Why should we build on Illinois Brick?” Gorsuch asked Apple’s lawyer, Daniel Wall. “Shouldn’t we question Illinois Brick perhaps?” he added, pointing to a brief filed by 30 states and the District of Columbia asking the court to overturn the ruling.

Alito said he wasn’t sure the reasoning behind the 1977 ruling “stands up.”

Only Chief Justice John Roberts suggested clear support for Apple. He said the legal theory being pressed by the consumers would leave the company “subject to suit on both sides of the market” for the same conduct.

Apple is part of an app economy that will grow from $82 billion last year to $157 billion in 2022, according to projections from App Annie, a data and analytics company. Apple says that last year alone, developers earned more than $26 billion through the App Store, which offers more than 2 million apps to consumers.

Apple and its tech-industry allies say a decision allowing the consumer lawsuit could open other companies that run online marketplaces and platforms to expensive antitrust claims. A broad ruling could affect Alphabet Inc.’s Google, Inc., Facebook Inc., Etsy Inc. and DoorDash Inc., Apple and its supporters say.

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