Antitrust, the App Store, and Apple

Amy Howe (via Jason Snell):

The Supreme Court heard oral argument this morning in a dispute between technology giant Apple and a group of iPhone users over the sale of apps from Apple’s App Store. The iPhone users are seeking massive damages from Apple, complaining that the company is violating federal antitrust laws by requiring the users to buy apps exclusively from the App Store. But as it comes to the justices, the case is about whether the iPhone users can bring their lawsuit at all: Apple contends that they cannot, because it is only selling the apps at the prices set by app developers.

[…]

Frederick insisted that the iPhone users and the app developers would have different claims against Apple: The iPhone users would be suing to recover the difference between the price that they paid and the price that they would have paid in a competitive market for apps, while the developers would be seeking lost profits.

Ben Thompson (Hacker News):

Along those lines, Apple argues that developers set the price of their apps, which determines Apple’s 30% cut, and to the extent developers set prices higher to compensate for that cut they are passing on alleged harm to consumers — which means consumers don’t have standing to sue.

[…]

I believe that Apple has power over developers (supply) precisely because it has all of the consumers (demand); it follows, then, that it is far more likely that developers are pricing according to what the consumer market will bear and internalizing the App Store fee, as opposed to pricing their products artificially high in order to pass the cost of that fee on to customers.

[…]

The plaintiff’s case only makes sense in a world where there are a scarcity of apps with pricing power such that consumers are forced to bear 100% of Apple’s add-on; the reality is that apps are already as cheap as can be and it is developers that are being directly harmed by Apple’s policies.

[…]

To that end, one of the more humorous aspect of yesterday’s oral arguments was the way discussion presumed that Apple was an abusive monopoly; this was a matter of convenience, as the question at hand was if Apple were an abusive monopoly, then who was harmed directly — which means it was easier to discuss the the latter question while assuming the former was true. To be frank, though, the language felt appropriate: Apple is an abusive monopoly in terms of iOS apps.

Daniel Pasco:

First: drive prices into the ground by encouraging devs to go as low as possible, universal apps, and giving away your own apps.

Then: claim prices are set by the devs

Matt Drance:

I am really conflicted on this case as it is being argued. It seems to fundamentally misunderstand everything you’ve laid out.

The plaintiffs are asserting that app prices could and should be lower if not for the App Store’s walled garden.

And the dev-advocate passage about “lost profits” is regarding the compulsory 70/30 cut, not the race to the bottom.

Steve Troughton-Smith:

I very much hope that Apple loses its App Store antitrust cases. It is unacceptable that Apple can be allowed to unilaterally block completely legit, valid, desired apps from respected devs, like Valve’s Steam Link, from their platforms. They should not get to make those calls

App Review’s ruleset needs 3rd-party oversight. Most of its restrictions are totally OK. Many points would absolutely not hold up to outside audits. None of this “you can make coding apps but they have to be education-focused and not take more than 80% of the screen” bullshit

Previously: That 30% App Store Tax.

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