U.S Supreme Court Seems Likely To Allow Apple App Store Monopoly Lawsuit To Move Forward
Justices sitting on the United States Supreme Court, the States highest Federal court, today seemed likely to allow a hearing against Apple to move forward. A class-action lawsuit against Apple for engaging in monopolistic practices to be exact.
The monopolistic practice in question is the ‘walled garden’ App Store that every iOS and iDevice user is forced into using in order to obtain applications for their phone or tablet (or watch). Users are forced to jailbreak their devices to circumvent this requirement, which by virtue of Apple’s terms of service automatically relegates the device warranty worthless.
Apple enjoys a 30 percent cut for all sales down via the App Store and the general idea is that consumers are getting gouged since they cannot purchase apps directly from developers at basically 30 percent cheaper.
Supreme Court will probably allow the most important case ever regarding Apple to move forward
The case in question, Apple Inc. v. Pepper, won’t actually address the heart of the issue, rather it is merely for the Supreme Court to decide IF the case should be allowed to make its way up through lower level courts first. It’s likely it will reach the Supreme Court again but due process is.. due process this author supposes. The case was originally brought up way back in 2011, so when you hear that “the wheels of justice turn slowly” you can start to understand what that means.
Today the Justices sat through an hour of hearings from both sides and offered some comments on the matter afterward. Generally speaking, liberal justices were more eager to move forward with the protection of consumers in mind, while the more conservative Justices, especially Trump-appointees, were afraid that this precedent would hinder future e-commerce growth.
Legal and business implications are huge for Apple and others
We’ve long had an eye towards Apple and its exploding App Store revenue. Head over here for a dive into the numbers. The skinny is some analysts are expecting upwards of $50 billion in USD by 2020 from services alone for Apple. The App Store makes up a majority slice of this pie, which is expected to close around $36 billion in sales in total for 2018.
All of this comes at a particularly interesting time for Apple. In the last few years, their numbers have been outstanding as the average selling price for their devices has steadily been increased all while volume shipments have been strong as well. While its good to be the King, others have taken notice and today the world is more competitive than it ever has been before. Smartphones, in particular, have become a challenging market as new entrants, especially Chinese contenders like OnePlus and Huawei, have stormed the market with value-market prices with top-shelf components.
Just two weeks ago we reported the news that Apple suppliers in Asia were slashing forecasts for the fourth quarter of 2018, which directly correlates to fewer iPhone sales worldwide. Most analysts took this as a signal that iPhone shipments were looking flat and Apple took a hit on the stock market accordingly.