Apple in Supreme Court to block customers from suing for monopoly abuse

Apple stands accused of overcharging customers through its App Store

Supreme court judges appeared open to allowing customers to sue Apple for allegedly exploiting its market dominance to inflate the price of iPhone apps, dealing a blow that could wipe out a considerable revenue stream for the technology giant if it goes ahead.  

Lawyers denied that it overcharges consumers through its App Store during an hour-long hearing at the Supreme Court, California on Monday.

It is the latest in a nearly decade-long battle over whether Apple can be forced to pay damages to customers who allege the App Store  is a monopoly and that the 30pc commission it charges on apps bought through the marketplace is unlawful. 

When a user buys an app, Apple collects the money, keeps the commission and gives the rest to the developer. The company said it passed $26.5 billion on to developers last year and denies that it is overcharging customers.

The technology giant is becoming increasingly dependent on revenues from software and services as its hardware sales are stalling. Its app revenues grew by around a third last year to $38.5bn (£30bn).

Apple argues that because the developers set the price of apps in the App Store,  iPhone users are purchasing the apps from the developers directly. It is seeking to dismiss the case by appealing to a Supreme Court ruling made in 1977 that said only “direct purchasers” can seek damages for antitrust abuse. 

The app store is "really unique," said Mark Rifkin, one of the lawyers pressing the suit. "Apple has put itself in the distribution chain, and it makes us deal with Apple in a way no one else does."

Plaintiffs acting on behalf of iPhone customers argued that because Apple chooses what apps can be sold, gives developers a limited pricing structure and forces iPhone owners to use the App Store, it is operating anti-competitively. 

If the Supreme Court rules that iPhone users can bring a suit against Apple the case will be returned to a district court. Judges could force it to change its pricing structure and Apple may face hundreds of millions in penalties to refund some of the commission it has taken in the past four years. 

However, the plaintiffs would still have to convince district judges that Apple is exploiting a monopoly, and attempt to prove that the company’s 30pc commission has raised app prices. 

The Supreme Court's ruling - which could be as late as June next year - could set a precedent and have wider implications for companies that operate e-marketplaces including Facebook, eBay, Amazon and Google.