Is Apple an App Store Monopolist?

The Supreme Court ruled against Apple on Monday, allowing an antitrust suit against the iPhone maker to proceed. The company had been sued by four iPhone owners for allegedly monopolizing the app market and driving up prices by charging a 30 percent commission on app purchases made through its own App Store, the only place where iPhone users can lawfully buy apps.

Apple had tried to get the case dismissed before it went to court by arguing that users were technically buying apps from developers rather than from Apple itself, which, according to a 1977 Supreme Court ruling (Illinois Brick), would have shielded Apple from antitrust suits from end users. In Monday’s ruling, the Supreme Court rejected Apple’s efforts to dismiss the suit, arguing that app buyers are buying directly from Apple and are thus not barred from suing the company under antitrust laws. The court did emphasize that the decision has nothing to do with the merits of the plaintiffs’ antitrust claims against Apple, but merely allows them to go forward with their suit. In a statement, Apple expressed its confidence of prevailing in court, arguing that “the App Store is not a monopoly by any metric” and that the company has no role in how developers set the prices for their apps.

In case Apple loses in court, the company may be forced to reduce its App Store commission in the future, which would be a significant blow to its flourishing services business. App Store fees comprise a large portion of Apple’s growing services revenue, which also includes revenue from Apple Music, Apple Pay, Apple Care and the iTunes Store. As of January 2019, Apple had paid out more than $120 billion to app developers after taking its cut. Assuming a 30 percent commission, the company has made more than $50 billion through the App Store since its inception. In 2018 alone, App Store fees may have contributed between $10 and $15 billion to Apple’s revenue, considering that the company paid $34 billion to developers between January 2018 and 2019.