Apple had argued that a Supreme Court ruling allowing the case to proceed could pose a threat to e-commerce, a rapidly expanding segment of the US economy worth hundreds of billions of dollars in annual sales.
The US Supreme Court on Monday ruled against Apple in a case that could have broad implications for the e-commerce industry and which also means the door is now open for consumers to sue the iPhone maker over its App Store rules and practices. The ruling "exalts form over substance", Gorsuch said in an opinion joined by Chief Justice John Roberts and Justices Samuel Alito and Clarence Thomas.
The case stems from a 2011 class-action suit by iPhone owners alleging that by taking a 30% cut of app sales, Apple has encouraged app developers to raise their prices in response. "The only instance where Apple shares in revenue is if the developer chooses to sell digital services through the App Store", they added.
But dissenting Justice Neil Gorsuch suggested companies can easily insulate themselves from lawsuits going forward.
"The plaintiffs seek to hold retailers to account if the retailers engage in unlawful anticompetitive conduct that harms consumers who purchase from those retailers", Kavanaugh wrote.
A group of iPhone owners accusing Apple of violating United States antitrust rules because of its App Store monopoly can sue the company, the Supreme Court ruled Monday.
The court did not rule on the plaintiff's merits, but the matter can now be litigated in District Court.
When I initially wrote up the case, I described Apple's argument as "confusing and counterintuitive". This story will be updated if or when Apple responds. "But that makes little sense, and it would directly contradict the longstanding goal of effective private enforcement and consumer protection in antitrust cases".
It's fair to say that the real problem isn't so much that Apple charges a commission but that it charges a massive 30 per cent. Apple will happily spend some of the billions of dollars it makes through the current system on lawyers in an effort to stretch the case out for another eight years, especially since the legal action as now structured seeks antitrust-grade triple damages.
Kavanaugh described this as a "straightforward" application of antitrust law and prior Supreme Court precedents. "In other words, Apple as retailer pockets a 30% commission on every app sale", said Kavanaugh, one of President Donald Trump's two high court appointees.
Justice Brett Kavanaugh, joining the court's liberal wing in the majority, said App Store customers meet that test because they buy directly from Apple.