Photo: AP / Apple On Monday, Apple finally had its highly anticipated hearing before the United States Supreme Court. Since…
Photo: AP / Apple
On Monday, Apple finally had its highly anticipated hearing before the United States Supreme Court. Since 2011, tech giant has been fighting anti-trust disputes claiming that App Store policy constitutes an unfair monopoly. Those who were present at today’s hearing say the case’s performance does not look good for Apple.
The case with Pepper v Apple Inc. has taken a complex road to the highest court in the country (as we previously covered), but the most important thing to know is that lower courts have not agreed whether Robert Pepper and three other Apple users who joined a class action suit were entitled to sue the iPhone manufacturer. Pepper claims that by forcing iOS users to get apps from Apple’s App Store and charging developers 30 percent reduces their revenue, the company creates a system where no one can compete and higher prices are picked up by the consumer. Apple refers to precedents like Illinois Brick and Hanover Shoe to claim that it simply acts as an intermediary between app developers and users and therefore can not be legally blamed for any “forwarded” fees. The company claims that if consumers have a problem with the prices of apps, they should need to address it with individual developers.
The case does not matter, regardless of how it turns, to take down Apple’s iOS-walled garden – but it could force the company to install at least one door.
After seven years of remaining in the system, the Supreme Court will now decide if Pepper has the right to sue Apple … or at least it will make a decision sometime in the next few months. Currently, all we have is a print of hearing and impressions from those who could attend the hearing personally. Let’s take a look at these impressions first:
Los Angeles Times:
Trump administration lawyers joined Apple to appeal to the Supreme Court to throw the case, but they ran into skeptical questions from most justice.
The four liberal judges suggested that they were inclined to allow the costume to move on.
Chief Justice John Roberts was solitary among the nine justice who seemed willing to agree with Apple.
] USA Today:
All four liberal judges were clearly skeptical of Apple’s monopoly and united on points of three conservatives: Associated Justices Samuel Alito, Neil Gorsuch and Brett Kavanaugh.
The reports that come from the courtroom are almost universally agreed that the laws did not appear to be Apple’s argument, and almost everyone used the term “skeptical”. But skeptical questioning could simply be a product of keeping a thorough hearing.
After the Revenue Wife transcript, it seems clear that Justice Sonia Sotomayor leaned strongly against Apple. She explained to Apple’s lawyer, Daniel Wall, that the existence of Illinois Brick does not seem to apply as he thinks it does.
The case found that customers could not match a brick monopoly because they were not direct buyers of the bricks. Customers bought the brick bricks that acted as intermediaries. As a direct buyer of the bricks, the masons were the only ones who had a legal standing to sue against the murmuring monopoly. Establishment of the direct buyer like the one entitled to sue in an antitrust case was intended to prevent multiple groups from raising a company for the same offense. “This is not true,” said Sotomayor Wall. “This is dramatically different. This is a closed loop.”
According to Apple, a commission is paid to allow developers to create an app that is then directly sold by developers to users through the App Store. Sotomayor and others rejected the idea that iOS users are buying directly from the developer. “Apple took 30 percent from the customer, not from the developer,” said Sotomayor. Wall drove back and said that even the Ninth Circuit, as previously ruled against Apple’s overall case, agreed that “the payment flow is indispensable for the Illinois Brick issue”. Justice Stephen Breyer interjected at that time to say, “I would not think it’s true, even if they ended it.”
Breyer presented his view of the arrangement with an analogy:
If Joe Smith buys from Bill , which bought from the monopolist, we have something indirect. But if Joe Smith bought from the monopolist it’s straight. It’s a simple theory.
Now I can not find anything that conflicts with it, in substance or in laws or in something that I have ever learned in antitrust. And what I want is to tell me what?
The exchange was the case with Wall-complicated things, and Breyer insisted on returning it to just illustrations of who is and is not the “direct buyer”.
If all this sounds confusing, do not worry, it’s confusing. Simply put, the auditors who gave Wall’s hardest time did not seem to buy the argument that Apple did not immediately sell their apps to users. At one point, Sotomayor simply said: “I’m sorry, the first sale is from Apple to the customer.”
But what might be the most exciting part of the hearing was that this argument might have given us a preview of the actual antitrust case if the Supreme Court allows it to move on. When Wall tried to say that the case claims that the 30 percent commission represents the official damage to consumers, Sotomayor insisted that the alleged damage is actually a suppression of a cheaper price. “They must go out and prove at the next step how they would have paid less, without this monopoly,” she said. “It can be as little as a-one penny or nothing or it can be anything more.”
Chief Judge John Roberts appeared to be the only one in court who was convinced that Apple’s case was sound and said, “To the extent that Apple can be said to be a two-sided market, they are busted on both sides of market for a single antitrust price increase which they claim to have introduced. ” In other words, Roberts said that Apple was vulnerable to the outcome that Illinois Brick was designed to prevent – two separate parties sued the same crime. Justice Elena Kagan said the argument is wrong because the damage in each situation is completely different. Kagan insisted that users could sue because they pay too much and developers could sue because of lost profits.
Today’s hearing will not solve anything about walled gardens in technology except consumers right to sue, but it gave us some remarks that one could argue that developers and users have different complaints they can potentially take for the court. But you think this case is going to shake out, the argument that Apple may be sued for its iOS monopoly seems relatively strong.
[Supreme Court of the United States]