Antitrust suit against Apple can move forward, U.S. appeals court says

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A five-year-old lawsuit charging Apple with monopolizing the market for iOS apps will now move forward.

A U.S. appeals court ruled that Apple customers can sue the company for not letting them buy apps from any vendor other than its own App Store, breathing new life into a 5-year-old case.

Reuters reported that the 9th U.S. Circuit Court of Appeals determined that a class action lawsuit can proceed that claims the iconic company attempts to monopolize the market for iOS apps, leading to higher prices. The claim was initially brought in 2012; the new ruling reverses a 2013 ruling that sided with Apple, which claimed that it was merely renting space in the App Store to developers who set their own prices.

The appeals court rejected that claim, however, citing case law to conclude that Apple is clearly an app distributor regardless of the business model it employs with its App Store.

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“Apple does not take ownership of the apps and then sell them to buyers after adding a markup of 30%,” the court wrote in its decision (PDF). “Rather, it sells the apps and adds a 30% commission. But the distinction between a markup and a commission is immaterial. The key to the analysis is the function Apple serves rather than the manner in which it receives compensation for performing that function.

“Apple is a distributor of the iPhone apps, selling them directly to purchasers through its App Store,” the court continued. “Because Apple is a distributor, plaintiffs have standing … to sue Apple for allegedly monopolizing and attempting to monopolize the sale of iPhone apps.”

The company declined to comment to Reuters, and the ruling doesn’t address the claims of anticompetition at the heart of the case.

The legal challenge is a potentially significant threat to Apple, however, whose proprietary iOS stands in contrast to Google’s open source strategy that allows third parties (such as Amazon) to sell Android apps. Apple said last week that its App Store generated more than $28 billion for developers last year, a figure that would imply the company pocketed roughly $8.5 billion thanks to its 30% cut of revenues.

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