A major Supreme Court case could present grave consequences for third party ecommerce platforms and open up major online vendors to more litigation. The Supreme Court recently agreed to hear the case of Apple vs. Pepper, which challenges Apple’s supposed monopoly over iphone software applications.
The antitrust lawsuit is lead by Robert Pepper, among other iphone consumers, who claim that Apple has monopolized the sale of software applications over its App Store, leading to artificially inflated prices. While Apple doesn’t set prices on its apps, it does add a 30% markup that is charged directly to all vendors on its app platform.
The lawsuit was originally thrown out by a lower court several years ago, but was later allowed to proceed by an Oakland judge in the U.S. Circuit Court of Appeals for the 9th Circuit. This led Apple to file a writ of certiorari, which SCOTUS agreed to take up.
While the case is considered an antitrust lawsuit, SCOTUS is more concerned with whether or not the plaintiffs have legal standing to sue in the first place. A win from the plaintiffs would not result in immediate damages from Apple, but rather allow the lawsuit to proceed to a trial court.
The foundation for the plaintiff’s case rests on a 1977 Supreme Court ruling that allowed direct purchasers of products to sue for antitrust practices that lead to artificially inflated prices. The case does not allow intermediaries or indirect injured parties to sue, in order to avoid ‘duplicate recoveries.’
In order to bring a class action lawsuit, the plaintiff must establish that they are in fact 1st party purchasers in the supply chain.
Apple has argued that since they merely act as intermediaries to facilitate exchanges on its platform, they cannot be sued for antitrust practices. Trump’s Department of Justice agreed with Apple’s standing, arguing in favor of the tech giant and stating that the Lower Circuit Court was wrong in using the precedent established in Illinois Brick Co. v. Illinois.
What Happens if Apple Loses?
So what does this all mean to consumers, the manufacturers of prank apps, and even the platforms that facilitate this exchange. If Apple loses the case and a lower court judge rules in favor of the plaintiffs, this could open up major companies, such as eBay and Amazon to lawsuits over antitrust practices.
Apple could end up owing consumers hundreds of millions of dollars, as well as open them up to more lawsuits in the future. E-commerce sales accounted for $452 billion of U.S. retail sales in 2017. A win by the plaintiffs could have irrevocable consequences or it could be rather in relation to the Supreme Court’s decision to widen local sales tax laws to ecommerce businesses.