The logo of Amazon can be seen on the apps on a smartphone.
Monika Skolimowska | Zentralbild/dpa | picture alliance | Getty Images
The Supreme Court on Monday allowed a number of iPhone users to move forward with an antitrust suit against Apple after a years-long legal battle.
The dispute concerned whether iPhone users are entitled to bring a suit challenging Apple’s alleged monopolistic behavior with its App Store, or if only app makers could do so.
The decision is a disappointing setback for the iPhone maker. If the iPhone users prevail in the underlying antitrust suit, Apple could be on the hook for hundreds of millions of dollars in penalties, and it may have to re-tool the way it sells apps on its platform, although any verdict in the case is probably still years away.
The court, in an opinion authored by Justice Brett Kavanaugh and joined by the court’s four liberals, made it clear that users of electronic marketplaces can bring antitrust suits against companies that operate online stores even if they are buying from a third-party seller.
“Before this case, it wouldn’t have been clear if I, as a consumer, went on Amazon and purchased something from a third party seller, that I could sue Amazon for anticompetitive damages related to that sale,” said Valarie Williams, a partner at the law firm Alston & Bird. “But that’s clear now.”
The decision is not expected to lead to a flood of new litigation.
But, experts said that companies operating online stores are likely taking careful note of the court’s opinion, particularly as attention on the market power of big tech companies escalates in Washington and around the globe.
“I think [other technology companies] have to be watching it very, very closely,” said John Roberti, the head of the antitrust practice at the law firm Allen & Overy.
“When you talk about monopolization claims, the main issue is exclusion, unfair exclusion,” Roberti said. “So all these companies are going to be asking themselves: Is there anything we are doing that is excluding competitors?”
On that front, Apple’s competitors may be better positioned to fend off antitrust challenges. For instance, iPhone users can only purchase apps through Apple’s App Store, while users of Android, Google’s phone software, can use a variety of alternatives.
Google already treats Android “like an open system, whereas Apple is a walled garden,” said Marty Puranik, the CEO of the cloud computing firm Atlantic.Net, who has followed the case closely.
But Puranik said the outcome of the App Store case “could be big,” especially as courts attempt to draw a line between tech companies excluding their competitors unfairly versus providing a service through the curation of the apps available on their devices.
Apple has said that its control of the App Store allows it to ensure that apps are safe and virus-free, and do what they say they will do.
“When does the phone transition from being a device to being an experience? Is it when you turn on the phone? Is it when you download the app?” Puranik said.
Jeremy Heep, a partner at the law firm Pepper Hamilton, said that if he were advising Google, he would tell them that Monday’s ruling does not alter the fundamental question they should be asking themselves: Whether their behavior is anti-competitive.
“I think there are always going to be potential plaintiffs lurking out there,” Heep said. “You shouldn’t let your actions be driven by which class of plaintiff could potentially sue you.”