Apple faces customer lawsuit over app store

A group of US consumers has been given the go-ahead by the Supreme Court to sue Apple over app prices.

The iPhone users argued that there is no alternative place to buy an iPhone app, but that Apple takes a 30% commission on every sale, so therefore they are being overcharged.

They claim that this puts Apple in breach of anti-trust laws.

Apple said that it was an agent for app developers and that it neither owned nor sold the apps itself.

However, while app developers set their own prices, Apple collects the payments.

One of the judges who ruled against Apple was President Donald Trump’s controversial appointment, Brett Kavanaugh.

“Leaving consumers at the mercy of monopolistic retailers, simply because upstream suppliers could also sue the retailers, would directly contradict the long-standing goal of effective private enforcement in anti-trust cases.”

Brett Kavanaugh said

The suit, filed by leading plaintiff Robert Pepper, dates back to 2011.

According to statistics portal Statista, US customers spent $46.6bn (£36bn) on a combination of in-app purchases, subscription and premium apps in 2018.

Services at risk?                        

Apple, which became the US’ first trillion-dollar company last year, has been struggling in recent months. The company makes about two-thirds of its revenue from the iPhone, but people just aren’t buying as many smartphones.

They’re holding onto their devices longer, and in places like China, they’re increasingly opting for phones from Apple’s rivals like Huawei and Oppo. That means Apple has to grow its operations beyond the iPhone, and it’s counting on its services operations to become an even bigger business.

During a call last month to discuss its earnings with analysts, Apple executives repeatedly touted the growing services business, saying the company had 390 million paid subscribers at the end of March, though they didn’t specify which services had the most subscribers.

Finance chief Luca Maestri said these paid subscriptions should surpass 500 million by 2020. Services revenue in the March quarter reached an all-time high of $11.5 billion, up 16%.

The App Store is a major part of that business. Anything that threatens the App Store could hurt Apple’s push to become a services powerhouse. The Supreme Court’s decision, and the likely subsequent lawsuits that will emerge, could change the way apps are sold.

Apple also could be on the hook for a large monetary hit if suits alleging it’s a monopoly are successful. 

Edited Source: BBC