On Monday, “the Supreme Court ruled 5-4 against Apple, opening the door for a class action lawsuit against Apple related to the App Store,” Gene Munster and Will Thompson write for Loup Ventures. “The suit will likely take many years to litigate and we expect it to result in a ruling favorable to Apple.”
“Here’s what an anti-competitive case against Apple will look like based on the origins of Apple v. Pepper: Apple only allows iPhone owners to purchase apps through the App Store, and the company takes a 30% cut of revenue generated from sales. Because that 30% cost is passed onto the consumer via higher prices rather than absorbed by the app developer, consumers are ‘overpaying’ for apps and digital goods,” Munster and Thompson write. “Basically, the claim is that Apple’s position as the owner of the App Store and Apple’s control of the device itself has led to anticompetitive practices.”
“We do not believe Apple is engaging in anticompetitive behavior. We see the necessity for Apple to charge developers to operate and maintain a platform and ecosystem,” Munster and Thompson write. “The benefits of a single party operating that platform for developers and, ultimately, consumers, include trust, safety, security, curation, and access to customers.”
Read more in the full article here.
MacDailyNews Take: Obviously, running the App Store costs Apple some amount.
We think the ultimate ending to this legal challenge will be that developers will be able to take payments in their apps without being forced to give Apple a cut or as much of a cut as today.
Companies that currently are large enough to work around Apple and send users to their own sites for payment include Amazon and Netflix. Apple will likely need to end this practice and allow all developers to allow users to subscribe to services, buy ebooks, etc. within their apps without a 15%-30% fee. A smaller fee may be tenable, as Apple does have costs to run the App Store, of course. We’ll see after the legal gears grind glacially and eventually spit out their end results.
By the way: On every iPhone, iPod touch, iPad, and iPad mini box, the potential buyer is informed of requirements, including “iTunes X.x or later required for some features” and also that an “iTunes Store account” is required. The plaintiffs were informed of the requirements prior to purchase. If the plaintiffs didn’t like the terms that came along with Apple devices, they should have opted for a pretend iPhone from any one of a dime-a-dozen handset assemblers. Then they could blissfully infest their fake iPhones with malware from a variety of sources.
Note also that Apple doesn’t set the prices for paid apps.
Lastly, the amount by which Apple Inc. has driven down software prices across the board, on every major computing platform, makes legal actions such as this eminently laughable.
Apple’s statement regarding the U.S. Supreme Court’s decision, released yesterday:
Today’s decision means plaintiffs can proceed with their case in District court. We’re confident we will prevail when the facts are presented and that the App Store is not a monopoly by any metric.
We’re proud to have created the safest, most secure and trusted platform for customers and a great business opportunity for all developers around the world. Developers set the price they want to charge for their app and Apple has no role in that. The vast majority of apps on the App Store are free and Apple gets nothing from them. The only instance where Apple shares in revenue is if the developer chooses to sell digital services through the App Store.
Developers have a number of platforms to choose from to deliver their software — from other apps stores, to Smart TVs to gaming consoles — and we work hard every day to make our store the best, safest and most competitive in the world. — Apple Inc.
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