Lawyers Brand iTunes App Store A Monopoly

Apple will face a court hearing over claims its tight control of iPhone apps constitutes an unfair monopoly. The plaintiff claims Apple’s 30 percent revenue cut is effectively a “surcharge” on app buyers.

The people bringing the case say Apple effectively eliminates competition by making it difficult for app developers to sell directly to iPhone owners, both by threatening to bar developers from the iTunes store and by saying phone owners who get apps from other sources will void their warranty.

Apple told the court the claims don’t stand up because it doesn’t actually sell apps to customers. Instead it says it offers software distribution services to app developers.

A lower court had previously agreed with that argument and dismissed the case on the grounds that the plaintiffs – iPhone owners – hadn’t bought directly from Apple and thus couldn’t bring a case for damages against it.

An appeals court now says Apple’s argument isn’t strong enough to dismiss the case. In particular it questioned Apple’s analogy of being a mall owner that offers space to app developers, with the judges noting that would only stand up if the developers actually operated individual “stores.”

The ruling only means the case must be heard, not that the judges have decided on whether Apple is operating a monopoly unlawfully. They’ve also yet to grant the case a class-action status, which in theory could cover everyone who’s ever bought an app.

Even if the case appears to have a low chance of success, the sheer numbers involved may suggest why the lawyers are giving it a go. Anti-trust laws allow awards of up to triple the measurable financial damages, so with class action status the maximum awardable penalty would theoretically be 90 percent of all the money spent on iPhone apps.

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2 Responses to Lawyers Brand iTunes App Store A Monopoly

  1. Interesting. I take umbrance and the Apple statement “Apple told the court the claims don’t stand up because it doesn’t actually sell apps to customers. Instead it says it offers software distribution services to app developers.”

    As an app developer, if that was true, I should have a lot more information on the customers. Right now Apple only shares the country the app was sold in. There are some additional analytics, sales numbers, etc. But if I sold to the customer, I would know who that is.

    Google Play is more open, I get the ZIP Code of the person. But no contact information.

  2. Comparing this to the fashion industry which I worked in for a bit, if you were and online store who sold different brands to customers, it makes sense. But if I had a brand that the customer couldnt get anywhere else, and deemed it exclusive to me, then told the brand that if they tried to sell it themselves or elsewhere then I would block them, it’s pretty messed Up BUT that does indeed haplen. High end brands for example can request exclusivity eith a shop. But that comes from the brand not the seller. In this case an app developer can say we willing to give Apple excluisvity for 30% OR non exclusive for say 50%. Then it really comes down to numbers of how much you feel apple can sell your product if they got less %.