Apple iPhone Monopoly Suit Revived

Apple must face consumer antitrust claims that it attempted to monopolize the market for iPhone applications, a federal appeals court said Thursday in reinstating the case.

A 2012 class action could cost Apple millions of dollars in damages if it is ultimately held liable for consumer claims that they were forced to overpay for apps.

The 9th U.S. Circuit Court of Appeals rejected Apple’s claim that the consumers lacked standing to bring the lawsuit. Under antitrust law, if Apple can be considered a manufacturer or producer of apps that the plaintiffs purchased from only indirectly then they have no standing to sue. But if Apple is a distributor of apps whom plaintiffs purchased from directly, then the case may go forward.

The Apple iPhone, released in 2007, is a closed system in which Apple controls apps for such things as ringtones, instant messages, video or Internet apps. In 2008, the company launched an App Store over the internet allowing iPhone users to fine, download and buy apps. Apple creates some of these but it also allows third-party developers to create apps and sell them, but only through the App Store.

Apple takes a 30 percent commission on developer apps sold through the store and the developer takes 70 percent.

The court held this system made Apple a distributor for antitrust purposes.  “Plaintiffs are direct purchasers of iPhone apps from Apple…they therefore have standing to sue,” wrote Judge William Fletcher for the panel.

Judge Wallace Tashima and visiting Judge Robert Gettleman of the Northern District of Illinois joined Fletcher.

Case: In re Apple iPhone Antitrust Litigation, No. 14-15000

 

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