Supreme Court: iPhone users can sue Apple over App Store prices

The Supreme Court on Monday said that iPhone users can proceed with a class-action lawsuit against Apple over its control of app sales in a ruling that could threaten the company's exclusive marketplace third-party software.

A group of consumers had sued Apple, claiming that the company's monopoly over its App Store led to inflated app prices. Apple disputed the legality of the suit, arguing the consumers could only sue the app developers.

Justice Brett Kavanaugh wrote the opinion for the 5-4 decision, surprising many by breaking with his conservative colleagues and siding with the court's liberal justices.

The Supreme Court had ruled in 1977 that only "direct purchasers" of products have standing to bring antitrust lawsuits. In his decision, Kavanaugh rejected Apple's argument that it was the app developers, and not the company operating the App Store, that sold the programs directly to users.

"Apple’s theory would provide a roadmap for monopolistic retailers to structure transactions with manufacturers or suppliers so as to evade antitrust claims by consumers and thereby thwart effective antitrust enforcement," Kavanaugh wrote.

The justices did not address the merits of the plaintiffs' case against Apple, but the ruling allows the case to advance through a district court.

The Justice Department filed a brief in support of Apple last year, arguing that an appellate decision siding with consumers "creates uncertainty" for the entire e-commerce industry.

Apple did not immediately respond when asked for comment. Apple shares were down around 5 percent Monday morning.

The company charges developers a 30 percent fee for sales through the App Store, but allows the developers to set the prices. The plaintiffs argued that the arrangement makes apps on Apple's marketplace more expensive than they would be in a more competitive environment.