iPhone App Prices Spark Supreme Court Battle

A seven-year-old case into Apple app pricing is heading to the Supreme Court. It's a technical case that centers on the percentage Apple takes from every iPhone or iPad app sale.

The case isn't about the royalty itself, which is 30 percent of every sale through the iTunes store. Various legal and technical measures mean that's the only way developers can distribute iOS apps, so there's no way around paying the royalty.

Instead, the legal question is whether or not consumers have the right to take legal action against Apple over the system. Such lawsuits, of which several have been proposed, are based on the idea that the mandatory commission leads to higher pricing passed on to consumers. Critics suggest that it's a case Apple's monopoly status over iOS apps, which in turn harms consumers. (Source: bbc.co.uk)

Apple Says It's Just An Agent

Regardless of the merits of such an argument, Apple maintains that the consumers don't have the right to bring such cases. It says that the iTunes store simply acts as an agent to facilitate a sale from the developer to the device owner. In turn, even if Apple was exploiting a monopoly position, it would only directly affect the developers (who pay the royalty) rather than the customer.

Apple has cited a ruling in a 1977 case that says laws on anti-competitive behavior only apply to the people who directly pay higher costs, rather than anyone who winds up paying more because those costs are passed on. That ruling was based partly on the problem of objectively deciding how to split the responsibility for the higher prices.

eBay, Uber Could Be Affected

Both sides in the current case say the outcome could have much wider implications. Apple says a decision against it would threaten online companies that act as go-betweens such as eBay or ticket resellers.

Contrastingly, the groups wanting to bring lawsuits against Apple say it could allow other companies to avoid legal action. One gave the example of Uber potentially being able to say passengers can't sue it because it's simply acting as an agent for drivers. (Source: reuters.com)

What's Your Opinion?

Do you think the mandatory 30 percent royalty is anti-competitive behavior? Should the 'market' in question being iOS apps alone or all mobile apps? Even if it is anti-competitive behavior, should end users be allowed to sue Apple for the effect on the prices that developers charge?