Regardless of what you think about Apple, you should pay attention to the Supreme Court's ruling yesterday that a lawsuit claiming the company exerts a monopoly over its app ecosystem. If you missed it, a group of consumers has filed suit, claiming that because Apple restricts the way you can download apps on your device to its own store, it is a monopoly and is driving up the price. 

Apple claims that developers set the prices for apps and that consumers shouldn't be able to sue the company since it is simply providing a marketplace that connects app makers with app customers. 

The US Supreme Court, in a 5-4 decision, ruled that consumers could sue Apple. To be clear, the Court did not say that Apple is a monopolist, just that the plaintiff's suit could continue. The suit will likely take a year or two, and it's not clear how the narrowly-divided Court would likely rule on the merits, especially considering the possibility that the makeup of the Justices could change by then. 

A flawed argument.

There are a few things that are particularly interesting to me, but one of the main ones is the argument being made by the plaintiffs that somehow app prices would be lower if you could download them from other sources. 

Oh wait, you can. 

The app ecosystem is a competitive marketplace. Almost every app developer makes its apps available on multiple platforms, especially iOS and Android. 

I went through a random sampling of the top paid apps on the App Store and compared them to the Google Play store. In every case, they are either the same price, or they were cheaper in the App Store. I don't hear the argument that Apple is conspiring to fix prices with Google. 

The mobile app marketplace.

Apple invented the mobile app marketplace. In fact, when the iPhone came out, it didn't exist. Sure, there were a few apps made for other types of devices that were mostly available from your wireless carrier, but Apple has created a marketplace that has resulted in enormous economic impact for all types of developers and benefits to consumers. 

For example, as a consumer, you can trust that you're not downloading something that will eat your phone from the inside out. You also have somewhere to go when something goes wrong. Apple is invested in making the experience go well for consumers exactly because they do make money off apps. 

Additionally, if you are an app developer, you benefit from access to a billion consumers with iOS devices. Not only did Apple create a marketplace, but it also created an industry. Apple says there are 20 million developers for iOS, who have collectively made over $100 billion. That's an enormous economic impact created as a result of the App Store.

It's not a case about consumers.

It seems clear that this suit isn't actually about making anything better for consumers. The fact that Apple exerts a level of control over the app marketplace is a feature, not a bug. Removing that doesn't help consumers. That's why this suit isn't about competition, which already exists in the app marketplace, but rather it is simply about money. 

Apple has made a lot of money off app sales. Actually, Apple makes a lot of money off everything, but app sales are one of their most profitable businesses. 

If Apple eventually loses this case, let's be clear: it won't be consumers who ultimately benefit. It won't be app developers either. The only people who actually stand to benefit are the attorneys waiting for a huge payday. 

Published on: May 14, 2019
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