Can you imagine a world without the App Store? Neither can most people, and apparently even the Supreme Court has its doubts, as demonstrated by its Monday decision to hear Apple Inc. v. Pepper, an antitrust case questioning whether Apple has monopolized the market for iPhone apps.
This case not only harbors the possibility of clipping the Cupertino, California giant, but posits a potentially significant impact on both its consumers and other huge companies, like Amazon, that follow a similar business model.
The crux of the case revolves around the argument made by plaintiffs Robert Pepper--an App Store customer--and fellow customers, that the 30 percent commission Apple charges its app developers coupled with the fact that the App Store is the only platform on which developers can sell iOS apps, has led to inflated prices for consumers. Essentially, developers must pay high fees--and consequently charge high prices for apps--because app makers have no other option if they want to reach Apple customers.
If the court rules against Apple, it could lead to a huge shift in how the companies behind apps distribute their content. Apple's app distribution model could end up closer mimicking the way the Android app market functions. With Android, developers have more than one option for where to sell their apps: the Google Play Store, the Amazon Appstore, or F-Droid for open-source apps. As a result, apps could conceivably fetch lower prices, while maintaining margins for developers.
Price flexibility is something app developers have advocated for during the decade since the App Store's launch. Two years ago, Apple responded to calls from developers and revamped the app store, but it didn't solve any of their fundamental issues. In May of this year, a group of app developers formed a union, asking for "sustainability in the App Store" through free trials of apps to entice consumers, and later on, a "more reasonable revenue cut and other community-driven, developer friendly changes."
A ruling that Apple is in fact a distribution monopoly could help app developers finally get what they want. Consumers, too, may benefit from more competitive prices, but that's just the beginning. The case is expected to go before the Supreme Court in October.