The US Supreme Court refused to consider Apple’s appeal in an antitrust suit challenging its lucrative App Store, a decision that will likely affect billions of dollars in revenue for the iPhone maker.
The decision lets stand a 2023 appeals court ruling that found Apple’s business model didn’t violate antitrust laws, but that it did violate California’s Unfair Competition Law by limiting the developers ability to communicate about alternate payment systems that may cost less. The decision applies nationally and the iPhone maker must start letting developers tell users about cheaper payment options.
Both Apple and Fortnite maker Epic Games had asked the court to hear an appeal related to the case. The justices turned down both appeals without explanation.
Apple shares slid as much as 2.7 per cent after the court’s announcement before paring their decline.
The high court’s decision ends a temporary stay in the case and lets developers start directing iPhone users to cheaper purchasing options outside of Apple App Store via buttons or links to outside websites. Apple charges developers a commission of as much as 30 per cent for digital goods and services sold through its App Store. The change will allow developers to bypass Apple’s system and offer links to cheaper alternatives.
“As of today, developers can begin exercising their court-established right to tell US customers about better prices on the web,” Epic CEO Tim Sweeney said in a thread on the social media site X, formerly known as Twitter.
Apple didn’t immediately respond to a request for comment.
Billions of dollars are at stake. In app spending is forecast to reach $182 billion (€167 billion) this year and $207 billion in 2025, according to research firm Sensor Tower. And competitors are ready to steal a piece of it: Microsoft has said that it’s already in talks to launch a mobile app store focused on gaming.
The 9th US Circuit Court of Appeals last year largely affirmed a lower-court judge’s 2021 decision largely rejecting claims by Epic that Apple’s online marketplace policies violated federal antitrust law because they ban third-party app marketplaces on its operating system. But the appeals court also upheld a federal judge’s ruling that the iPhone maker’s practices don’t violate federal antitrust law, rejecting the bulk of Epic’s case against Apple’s App Store.
That decision had been on hold while the Supreme Court appeals were pending.
The Epic case was the first to challenge Apple’s lucrative App Store system, which rakes in billions of dollars each year. In the interim, the company has come under serious pressure around the world, including in Europe where competition enforcers have two antitrust cases pending against the tech giant. EU authorities are expected to fine the company later this year for allegedly using its App Store rules to thwart music-streaming rivals like Spotify.
In a separate Epic suit in December, a jury found that Alphabet Inc.’s Google unfairly wields monopoly power in its Android app store. Google has said it plans to appeal, but key legislation in Europe, investigations in the US and UK and an expected wave of follow-on lawsuits will keep pressure on the tech giants’ app store duopoly. – Bloomberg
