Apple is hoping to prevent customers from suing using old ruling

Apple is hoping to prevent customers from suing using old ruling

posted Friday Nov 30, 2018 by Scott Ertz

Apple is hoping to prevent customers from suing using old ruling

What do Apple and concrete blocks have in common? The Supreme Court has been asked to answer that exact question. In the 1970s, a group of concrete block manufacturers got together to regulate the price they all charged for their product. This guaranteed that the price of the product would be higher than if they competed against one another. The State of Illinois sued, claiming that the inflated costs of blocks would increase the price of construction projects for the state.

The case made it to the US Supreme Court, who ruled that the state could not sue for damages because damages could not be proven. The Court said that it would be impossible for any court to unravel the cost distribution from supplier to sub-contractor, sub-contractor to general contractor, general contractor to state with any meaningful way. As such, they ruled that only the direct customer of the company could sue for damages from anti-trust.

Now, how does this apply to Apple? The company is trying to use this ruling to prevent consumers from suing over anti-trust issues. Specifically, a class-action lawsuit filed in 2011, claims that Apple is using its monopoly position as the exclusive app store provider for iOS to gouge consumers on price. Apple has argued that they do not set the price for the products and provide distribution as a service to app developers, so the app developers are their customer, not the consumer.

While Apple claims that their App Store is a service for developers, and is more like being the owner of a mall rather than a store (despite its name), the Justices did not seem to buy into the argument. Justice Sonia Sotomayor said,

The first sale is from Apple to the customer. It's the customer who pays the 30 percent.

This ruling has the potential to have major repercussions throughout the industry, as legally defining who the customer of an app distribution platform is, could change the way Apple, Google, Microsoft, Amazon, and more, treat their consumers. If consumers are not customers, these companies could increase their fee to developers because they can retain a monopoly. If consumers are customers, and the lawsuit can continue, we might see alternate distribution methods appear on Apple devices.

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