The Supreme Court is going to start hearing arguments today in a case where consumers are challenging Apple's distribution monopoly on iPhone apps. These consumers are represented by the attorney generals of 30 states including California, Texas, Florida and New York.
I just heard about this case today and it is too late to file an amicus brief, so I am simply going to share my thoughts on this case here.
- Apple argues that consumers cannot bring suit against them as it is the app developers who are the harmed party, if there is one at all. I don't agree with that for two reasons. First, developers pass the increased costs on to the consumer. Second, the developers are not going to attack Apple because they are their only way to get to market.
- Apple argues that a decision against them will harm the broader e-commerce market. I don't agree with that either. If anything, opening up the distribution system for mobile applications would massively increase the e-commerce market which is artificially constrained by Apple and Google's mobile app store monopolies. I wrote a bit about that earlier this year.
- The U.S. Chamber of Commerce did write a brief in support of Apple, in which they argued that "The increased risk and cost of litigation will chill innovation, discourage commerce, and hurt developers, retailers and consumers alike." I cannot disagree with that statement more. Innovation flourishes when there is an open market where no one party can control what can be sold. Apple routinely prevents innovative new apps from being sold in their app stores. A good example of that right now are crypto-based games and other applications that threaten Apple's 30 percent take rate on digital goods business model.
Apple and Google have constrained the distribution system for mobile apps in many parts of the world and the result is higher costs for consumers, less choice, and ultimately less innovation. None of this is good for the economy. It is high time for the courts to weigh in here and open up the opportunity for third-party app stores to exist on Apple and Google phones. I encourage the Supreme Court to rule in favor of the consumers in this case in hopes that it will lead to that.