U.S. appeals court revives antitrust lawsuit against Apple

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By Stephen Nellis and Dan Levine | SAN FRANCISCO

SAN FRANCISCO iPhone app purchasers may sue
Apple Inc over allegations that the company monopolized
the market for iPhone apps by not allowing users to purchase
them outside the App Store, leading to higher prices, a U.S.
appeals court ruled on Thursday.

The 9th U.S. Circuit Court of Appeals ruling revives a
long-simmering legal challenge originally filed in 2012 taking
aim at Apple’s practice of only allowing iPhones to run apps
purchased from its own App Store. A group of iPhone users sued
saying the Cupertino, California, company’s practice was
anticompetitive.

Apple had argued that users did not have standing to sue it
because they purchased apps from developers, with Apple simply
renting out space to those developers. Developers pay a cut of
their revenues to Apple in exchange for the right to sell in the
App Store.

A lower court sided with Apple, but Judge William A.
Fletcher ruled that iPhone users purchase apps directly from
Apple, which gives iPhone users the right to bring a legal
challenge against Apple.

Apple declined to comment.

The courts have yet to address the substance of the iPhone
users’ allegations; up this point, the wrangling has been over
whether they have the right to sue Apple in the first place.

But if the challenge ultimately succeeds, “the obvious
solution is to compel Apple to let people shop for applications
wherever they want, which would open the market and help lower
prices,” Mark C. Rifkin, an attorney with Wolf Haldenstein Adler
Freeman & Herz representing the group of iPhone users, told
Reuters in an interview. “The other alternative is for Apple to
pay people damages for the higher than competitive prices
they’ve had to pay historically because Apple has utilized its
monopoly.”

The case is Pepper et al v. Apple Inc., case number
4:11-cv-06714 in the U.S. District Court for the Northern
District of California.



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