So I read the case. And these were some nuggets that I pulled out of the arguments for the case to proceed. I'm not a lawyer, but these seemed to stand out the most to me in all 28 pages of the document:
In the Affirmative:
In this case, however, several consumers contend that Apple charges too much for apps. The consumers argue,in particular, that Apple has monopolized the retail market for the sale of apps and has unlawfully used its monopolistic power to charge consumers higher-than-competitive prices.
And they allege that they have “paid more for their iPhone apps than they would have paid in a competitive market.”
Apple exercises monopoly power in the retail market for the sale of apps and has unlawfully used its monopoly power to force iPhone owners to pay Apple higher-than-competitive prices for apps.
It is undisputed that the iPhone owners bought the apps directly from Apple. Therefore, under
Illinois Brick, the iPhone owners were direct purchasers who may sue Apple for alleged monopolization.
There is no intermediary in the distribution chain between Apple and the consumer.
If a retailer has engaged in unlawful monopolistic conduct that has caused consumers to pay higher-than-competitive prices, it does not matter how the retailer structured its relationship with an upstream manufacturer or supplier—whether, for example, the retailer employed a markup or kept a commission.To be sure, if the monopolistic retailer’s conduct has not caused the consumer to pay a higher-than-competitive price, then the plaintiff ’s damages will be zero. Here, for example, if the competitive commission rate were 10 per-cent rather than 30 percent but Apple could prove that app developers in a 10 percent commission system would always set a higher price such that consumers would pay the same retail price regardless of whether Apple’s com-mission was 10 percent or 30 percent, then the consumers’damages would presumably be zero.
The consumers seek damages based on the difference between the price they paid and the competitive price. The app developers would seek lost profits that they could have earned in a competitive retail market.
The Dissenting opinion:
The problem is that the 30% com-mission falls initially on the developers. So if the commission is in fact a monopolistic overcharge, the developers are the parties who are directly injured by it. Plaintiffs can be injured
only if the developers are able and choose to pass on the overcharge to them in the form of higher app prices that the developers alone control. Plaintiffs admit-ted as much in the district court, where they described their theory of injury this way: “f Apple tells the developer . . . we’re going to take this 30 percent commission . . .what’s the developer going to do? The developer is going to increase its price to cover Apple’s . . . demanded profit.”
Consider first the question of causation. To determine if Apple’s conduct damaged plaintiffs at all (and if so, the magnitude of their damages), a court will first have to explore whether and to what extent each individual app developer was able—and then opted—to pass on the 30%commission to its consumers in the form of higher app prices. Sorting this out, if it can be done at all, will entail wrestling with “‘complicated theories’” about “how the relevant market variables would have behaved had there been no overcharge.”
So courts will have to divvy up the com-missions Apple collected between the developers and the consumers. To do that, they’ll have to figure out which party bore what portion of the overcharge in every purchase. And if the developers bring suit separately from the consumers, Apple might be at risk of duplicative dam-ages awards totaling more than the full amount it collected in commissions. To avoid that possibility, it may turn out that the developers are necessary parties who will have to be joined in the plaintiffs’ lawsuit.
To evade the Court’s test, all Apple must do is amend its contracts. Instead of collecting payments for apps sold in the App Store and remitting the balance (less its commission) to developers, Apple can simply specify that consumers’ payments will flow the other way: directly to the developers, who will then remit commissions to Apple. No antitrust reason exists to treat these contractual arrangements differently, and doing so will only induce firms to abandon their preferred—and presumably more efficient—distribution arrangements in favor of less efficient ones, all so they might avoid an arbitrary legal rule.
The plaintiffs have not asked us to overrule our precedent—in fact, they’ve disavowed any such re-quest. Tr. of Oral Arg. 40. So we lack the benefit of the adversarial process in a complex area involving a 40-year-old precedent and many hard questions. For example, if we are really inclined to overrule
Illinois Brick, doesn’t that mean we must do the same to
Hanover Shoe? If the proximate cause line is no longer to be drawn at the first injured party, how far down the causal chain can a plain-tiff be and still recoup damages? Must all potential claim-ants to the single monopoly rent be gathered in a single lawsuit as necessary parties (and if not, why not)?
Personal Opinion:
I think that the case probably shouldn't be proceeding. It's definitely an uphill battle for the plaintiffs to prove a monopoly, or that any anti-trust laws were broken. Such a case isn't going to change the App Store, or allow other app stores to be created, if anything, Apple will likely just have to re-frame the EULAs that users agree to within the App Store, as well as the Developers EULA as well.
It's an interesting case, and I'm kinda excited to see where it will lead, but I don't think it's the case that we all may have thought it was.
