The Supreme Court ruled against Apple on Monday in an antitrust lawsuit that accused the tech company of monopolizing IOS apps and artificially inflating prices through its App Store.
Apple´s online marketplace is the sole avenue for apps for its iPhone and other mobile devices, and the company has paid out more than $100 billion to developers since launching the store a decade ago.
Apple shares were trading down $10 at 187.04 by midday.
The U.S. Supreme Court disagreed, in a close 5-4 ruling. Instead, Apple is simply a third party that sits between the users and the app makers. In that case, the court limited damages for anti-competitive conduct to those directly overcharged rather than indirect victims who paid an overcharge passed on by others.
Taken together, the plaintiffs say this constitutes an unlawful monopoly: consumers are forced to purchase apps in a digital storefront Apple controls, and end up paying higher prices because developers price in the 30 percent commission Apple collects, effectively passing the burden on to consumers.
"In the retail context, the price charged by a retailer to a consumer is often a result (at least in part) of the price charged by the manufacturer or supplier to the retailer, or of negotiations between the manufacturer or supplier and the retailer", Kavanaugh said. The group of plaintiffs argued that developers priced their apps higher than they otherwise would to account for Apple's commission.
Dissenting from the decision, conservative Justice Neil Gorsuch, said the decision is "not how antitrust law is supposed to work" because it gives a green light to the exact type of case that the court had previously prohibited.
iPhone users who must purchase software for their smartphones exclusively through Apple's App Store filed the suit.
Tom's Hardware has reached out to Apple for comment, but did not receive an immediate response. The case, Apple v. Pepper, was actually dismissed in 2013 by a California court, but the Court of Appeals for the Ninth Circuit allowed it to return in 2017.
By a 5-4 margin, the high court chose to uphold a lower court's decision to permit a lawsuit by consumers to go forward.
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