The Apple logo is seen hanging inside the Apple store on West 66th Street on October 5, 2011 in New York City. Apple's Newton device made its public debut at CES in 1992. Marketed as a computer that fits in the palm of your hand, the device never fully took off. Apple's Fitness+ wants to take on Peloton with at-home workouts CUPERTINO, CALIFORNIA - OCTOBER 13, 2020: Apple CEO Tim Cook talking about the value of 5G for customers during a special event at Apple Park in Cupertino, California. (Photo by Brooks Kraft/Apple Inc.) Here's what you need to know about the iPhone 12 Justin Long appeared in Intel's new PC vs Mac commercial as the "PC Guy" (Source: Intel) Apple CEO Tim Cook exits the stage during Apple's Worldwide Developers Conference in San Jose, California on June 5, 2017. (Photo by Josh Edelson / AFP) (Photo credit should read JOSH EDELSON/AFP via Getty Images) NEW YORK, NY - JUNE 17: The Apple logo is displayed at the Apple Store June 17, 2015 on Fifth Avenue in New York City. The company began selling the watch in stores Wednesday with their reserve and pick up service. Previously the product could only be ordered online. (Photo by Eric Thayer/Getty Images) (CNN Business) — A group of iPhone owners who accuse Apple of violating US antitrust rules can sue the company, the Supreme Court ruled Monday. They claim Apple’s App Store is a monopoly. Justice Brett Kavanaugh, in the majority opinion, said that when “retailers engage in unlawful anticompetitive conduct that harms consumers,” people buying those companies’ products have the right to hold the businesses to account. “That is why we have antitrust law,” Kavanaugh wrote. The court’s four liberal justices joined Kavanaugh in the 5-4 decision. The Supreme Court opinion notably does not accuse Apple of violating antitrust law: It holds that consumers have the right to sue the company for monopolistic behavior, because they purchase apps directly from Apple. The ruling could have wide implications for other tech companies that operate similarly walled-off online storefronts, said Gene Kimmelman, president of the consumer advocacy group Public Knowledge and a former Justice Department antitrust official. “It definitely should make tech companies wonder how the antitrust laws will be applied going forward in an online platform environment,” said Kimmelman. The case stems from a 2011 class-action suit by iPhone owners alleging that by taking a 30% cut of app sales, Apple has encouraged app developers to raise their prices in response. Consumers have been harmed by the practice, the suit claimed, because Apple does not allow customers to download apps from any other source other than the iTunes App Store. Unlike Android, iOS customers can only get apps from that official source, which Apple says serves as kind of quality control to weed out security threats and apps that violate the company’s terms of service. That is why we have antitrust law” Justice Brett Kavanaugh Apple (AAPL) argued that the iPhone owners do not have the right to sue because Apple (AAPL) is an intermediary. But the Supreme Court held that iPhone owners have a “direct purchaser” relationship with Apple (AAPL), and may sue under a precedent known as Illinois Brick. Had Apple been allowed to set the terms of the legal fight, the court said, it would have hindered the ability of consumers to seek relief from alleged monopolists. “Apple’s line-drawing does not make a lot of sense, other than as a way to gerrymander Apple out of this and similar lawsuits,” the opinion said. Apple said it is confident it will ultimately prevail in the case now that it can proceed. “The App Store is not a monopoly by any metric,” the company said in a statement. “Developers set the price they want to charge for their app and Apple has no role in that.” The company also noted developers can build apps for other platforms, including smart TVs, rival operating systems and video game consoles. But the customers bringing the case note the iTunes App Store remains the only place Apple customers can get software for their iPhones and iPads. Antitrust experts welcomed the Court’s reasoning that allowing Apple to avoid the class-action suit “would provide a roadmap” for others to evade the law. “It’s important that we get rid of these silly, technocratic barriers to seeking relief under the antitrust laws,” said Sally Hubbard, director of enforcement strategy at Open Markets, a think tank that has criticized the tech industry as being too powerful and concentrated. What will follow will likely be years of litigation, she added. “I expect Apple will contest this heavily and fight this case for several years to come, because it’s a lot of revenue at stake.” The Supreme Court did not rule on the customers’ likelihood of success — only that they have the right to sue. Apple argued that it was not a monopoly, rather a platform for app developers who can set their own prices. It has said that if the court allowed the case to proceed, it would disrupt the e-commerce market. Apple’s stock fell 5.3% on the news. The broader market was down more than 2% Monday. – CNN’s Ariane de Vogue and Steve Vladeck contributed to this report<doc-sep>The Supreme Court on Monday said that iPhone users can proceed with a class-action lawsuit against Apple over its control of app sales in a ruling that could threaten the company's exclusive marketplace of third-party software. A group of consumers had sued Apple, claiming that the company's monopoly over its App Store led to inflated app prices. Apple disputed the legality of the suit, arguing the consumers had no standing to sue the company because it merely operated the App Store as an intermediary between users and the developers who make and sell apps. Justice Brett Kavanaugh Brett Michael KavanaughDemocrats: Roe v. Wade blow would fuel expanding Supreme Court Klobuchar offers tribute to her father, who died Wednesday Conservative justices split in ruling for immigrant fighting deportation MORE wrote the opinion for the 5-4 decision, surprising many by breaking with his conservative colleagues and siding with the court's liberal justices. ADVERTISEMENT The Supreme Court had ruled in the 1977 case Illinois Brick Co. v. Illinois that only "direct purchasers" of products have standing to bring antitrust lawsuits. In his decision, Kavanaugh rejected Apple's argument that it was the app developers, and not the company operating the App Store, that sold the programs directly to users. "Apple’s theory would provide a roadmap for monopolistic retailers to structure transactions with manufacturers or suppliers so as to evade antitrust claims by consumers and thereby thwart effective antitrust enforcement," Kavanaugh wrote. Leading the dissent for the four conservatives was Justice Neil Gorsuch — who, like Kavanaugh, is a Trump appointee. Gorsuch argued that if Apple's App Store practices are indeed monopolistic, then it would be the app developers who are harmed and have standing to sue and not the consumers. Gorsuch was joined by Chief Justice John Roberts and Justices Samuel Alito and Clarence Thomas. Apple charges developers a 30 percent fee for sales through the App Store but allows the developers to set the prices. The plaintiffs argued that the arrangement makes apps on Apple's marketplace more expensive than they would be in a more competitive environment. The justices did not address the merits of the plaintiffs' case against Apple, but the ruling allows the case to advance through a federal district court. “In this case, unlike in Illinois Brick, the iPhone owners are not consumers at the bottom of a vertical distribution chain who are attempting to sue manufacturers at the top of the chain,” Kavanaugh wrote. “There is no intermediary in the distribution chain between Apple and the consumer. The iPhone owners purchase apps directly from the retailer Apple, who is the alleged antitrust violator," he continued. "The iPhone owners pay the alleged overcharge directly to Apple.” The four plaintiffs, led by Robert Pepper, filed their lawsuit in 2011. The Justice Department filed a brief in support of Apple last year, arguing that an appellate decision siding with consumers "creates uncertainty" for the entire e-commerce industry. Apple in a statement denied that the App Store was a monopoly. “Today's decision means plaintiffs can proceed with their case in District court. We’re confident we will prevail when the facts are presented and that the App Store is not a monopoly by any metric," the company said in a statement to The Hill. "We’re proud to have created the safest, most secure and trusted platform for customers and a great business opportunity for all developers around the world. Developers set the price they want to charge for their app and Apple has no role in that," the statement added. "The vast majority of apps on the App Store are free and Apple gets nothing from them. The only instance where Apple shares in revenue is if the developer chooses to sell digital services through the App Store." Ed Black, the president and CEO of the Computer & Communications Industry Association, a trade group which filed a brief in support of Apple, called the ruling “disappointing.” “We are concerned that the outcome of this ruling expands a previous ruling (Illinois Brick’s), and increases liability risks for multi-sided business models,” Black said in a statement. “The decision may unintentionally expose businesses offering digital platform services to unintended liability.” The decision comes as Apple and other tech companies face growing antitrust scrutiny over the way they operate their platforms. The high court provided a rare win for antitrust reformers, who see large tech companies as a unique threat to competition and consumers. “I think it’ll have clear implications for tech companies,” said Sandeep Vaheesan, the legal director at the Open Markets Institute, which filed an amicus brief in the case in support of Pepper. Vaheesan applauded the majority opinion for recognizing that the Sherman Act of 1890, the nation’s first federal antitrust law, gave consumers the right to bring lawsuits against alleged monopolies. Apple, Vaheesan said, is “really the giant sitting between the two ends of the market.” The music streaming service Spotify filed an antitrust complaint against Apple in the European Union alleging that the company’s 30 percent commission on app sales is effectively a tax on a company that is competing with Apple Music, its own streaming service. “Apple operates a platform that, for over a billion people around the world, is the gateway to the internet,” Spotify CEO Daniel Ek said in a blog post in March. “Apple is both the owner of the iOS platform and the App Store—and a competitor to services like Spotify. "In theory, this is fine," Ek added. "But in Apple’s case, they continue to give themselves an unfair advantage at every turn.” Apple did not immediately respond when asked for comment. Apple shares were down more than 5 percent for the day. Updated at 4 p.m.<doc-sep>The Supreme Court ruled 5-4 on Monday that a small group of iPhone users have the right to pursue a major antitrust lawsuit against Apple over its App Store. Justice Brett Kavanaugh, who wrote the majority decision, was joined by the court's four more liberal justices. President Trump's other Supreme Court appointee, Justice Neil Gorsuch, wrote the dissent, joined by Chief Justice John Roberts and fellow conservatives Samuel Alito and Clarence Thomas. The decision could open Apple up to enormous future damages. The iPhone users contend that Apple is using its role as sole marketplace for iPhone apps to charge higher prices than those apps would get in a free market, on the theory that the 30 percent commission Apple charges developers gets passed along to consumers, NPR explains. Kavanaugh stressed that the court was not taking any position on the merits of the lawsuit, but wrote that "ever since Congress overwhelmingly passed and President Benjamin Harrison signed the Sherman Act in 1890, 'protecting consumers from monopoly prices' has been 'the central concern of antitrust.'" In his dissent, Gorsuch said iPhone customers have no standing to bring an antitrust suit because the "pass on" theory fails to make them direct consumers. The only parties who could sue Apple on antitrust grounds, he said, are the app developers. "The truth is, the app developers are too scared to sue Apple, because Apple can just cut them off," Josh Davis, a law professor at the University of San Francisco, tells The Associated Press. "So the real bottom line here is: Someone gets to sue, someone gets to find out: Did Apple violate the antitrust laws, and through that violation, charge purchasers of apps more than they could have in a competitive market?" Watch his brief summary of the case below. Peter Weber<doc-sep>
WASHINGTON – The Supreme Court opened the door Monday for iPhone users to sue Apple over excessive prices on its exclusive App Store. Associate Justice Brett Kavanaugh, the court's newest member, wrote the 5-4 antitrust opinion and was joined by the court's four liberal justices. The other four conservatives dissented. The question before the court was whether consumers' beef over prices is with Apple directly or the app developers who pass along the tech giant's 30 percent commission, as well as its rule that prices end in .99. "Our cases have consistently stated that direct purchasers from alleged antitrust violators may maintain a suit against the antitrust violators," Kavanaugh wrote. "Ever since Congress overwhelmingly passed and President Benjamin Harrison signed the Sherman Act in 1890, protecting consumers from monopoly prices has been the central concern of antitrust," he said. "That is why we have antitrust law." The ruling theoretically could affect millions of iPhone app purchasers, but it's not clear how many would qualify as plaintiffs. It's also not clear how the law's triple damages for antitrust violations would be apportioned if Apple loses. President Donald Trump's other high court nominee, Associate Justice Neil Gorsuch, wrote the dissent. He said app developers, not purchasers, have the more legitimate claim against the tech giant. "If the commission is in fact a monopolistic overcharge, the developers are the parties who are directly injured by it," Gorsuch wrote. "Plaintiffs can be injured only if the developers are able and choose to pass on the overcharge to them in the form of higher app prices that the developers alone control." Associate Justice Ruth Bader Ginsburg, the senior justice in the majority, presumably chose Kavanaugh to write the opinion. He noted from the bench that after more than a decade, iPhone apps now let iPhone owners watch videos, order food, donate to charities and more. "'There's an app for that' has become part of the 21st-century American lexicon," Kavanaugh said. Apple released a statement in which the company expressed confidence it eventually will prevaile. The App Store, it said, "is not a monopoly by any metric." "Developers set the price they want to charge for their app, and Apple has no role in that," it said. "The vast majority of apps on the App Store are free, and Apple gets nothing from them. The only instance where Apple shares in revenue is if the developer chooses to sell digital services through the App Store." At oral argument in November, the court's four liberal justices clearly were skeptical of Apple's monopoly. "It just seems to me that when you're looking at the relationship between the consumer and Apple, that there is only one step," Associate Justice Elena Kagan said, referring to the way iPhone users buy apps. More from the court:Strict state anti-abortion laws aimed at Supreme Court, justices not eager to consider them David Frederick, the lawyer representing consumers, agreed that "there's no middleman in this particular transaction," as Apple had maintained. The company's antitrust violation, he said, was the App Store itself. But company attorney Daniel Wall contended that under Supreme Court precedent, the app developers are the ones setting prices charged consumers. If the commission affects those prices, he said, that's between Apple and the developers. In his ruling, Kavanaugh rejected that argument. He said it would allow lawsuits when retailers mark up manufacturers' prices but not when manufacturers charge commissions to retailers, though the result may be the same higher price. Apple also claimed that calculating damages would be complicated, but Kavanaugh said that should not be a "get-out-of-court-free card for monopolistic retailers." A federal district judge initially ruled in Apple's favor. But a panel of the U.S. Court of Appeals for the 9th Circuit in San Francisco overruled that decision last year and held that consumers were direct purchasers of iPhone apps. The Supreme Court's ruling upheld that verdict. Chief Justice John Roberts, who joined the dissent, had warned during oral argument that both consumers and app developers should not be able to sue the company for the same alleged violation. Gorsuch said only one of those groups can be paying what he called the "monopoly rent." But Kagan said the two groups suffer different losses – consumers through higher prices and developers through reduced sales. The company heralds the App Store for fueling "competition and growth in app development, leading to millions of jobs in the new app economy and facilitating more than $100 billion in payments to developers worldwide."