Apple’s year of public relations woes seems to be getting worse. Last week, the U.S. Supreme Court gave antitrust laws in the digital era a major boost as it opened the door for Apple to be sued for allegedly monopolizing the sale of iPhone apps.
Joined by the court’s four liberal justices, Justice Brett M. Kavanaugh rejected Apple’s defense that it couldn’t be sued over the price of phone apps because the firm simply provided a platform for other app creators to sell their products. The ruling, then, may open the way for similar lawsuits against giant technology platforms that have a business model similar to Apple’s.
“Today’s decision unquestionably opens the door to consumer claims against a wide range of digital platforms that use their market power to their advantage,” said Deepak Gupta, a Washington lawyer representing the Open Markets Institute in the case. “Going forward, this is going to be a significant ruling for the big platforms — from Apple to Amazon.”
Still, Apple said it expects to win in the end. “We’re confident we will prevail when the facts are presented and that the App Store is a not a monopoly by any metric,” the tech giant said in a statement. “We’re proud to have created the safest, most secure and trusted platform for customers and a great business opportunity for all developers around the world. Developers set the price they want to charge for their app, and Apple has no role in that.”
The App Store is playing an increasingly important role in Apple’s overall business model; last year, services revenue for the firm grew 24 percent year-on-year, to $37.2 billion. Reports of revenue growth were followed swiftly by the first ever Apple event dedicated entirely to its services businesses, rather than one involving a product launch. At the event, Apple announced a host of new subscription gaming, entertainment, and news programs.
Nonetheless, the ruling is sure to open a Pandora’s box of headaches for the technology behemoth, with the firm still well and truly entangled in an ugly public relations brawl with Spotify over Apple’s alleged antitrust infringements.
In March, Spotify filed a complaint with the European Commission about Apple and its App Store policies, charging the firm with being a “monopolist” that hurt consumers and competition. The music streaming platform even launched an entire website dedicated to the campaign, the aptly named TimeToPlayFair.com.
In response, Apple has charged Spotify with “misleading rhetoric,” defending its revenue structure as one where companies — Spotify included — are shielded from paying dividends on revenue from advertising and carrier deals.
Nonetheless, the ongoing legal strife on both sides of the Atlantic is bad business for Apple. The sooner it's able to wrap it up, the better.