Apples and Peppers: Allowing End Users as well as Developers to Sue Apple for App Prices Violates Valid Precedent

Apple v Pepper's outcome should favor Apple because there's no basis to overturn the Supreme Court's holding in Illinois Brick that protects against duplicative lawsuits, here for example lawsuits by developers as well as by app purchasers against Apple. None of the case law exceptions to Illinois Brick’s protections apply.

There's no evidence of any explicit or even any implied conspiracy between app developers and Apple to price fix. It stretches reason to think that every app developer has somehow entered into an implied conspiracy with Apple to raise the price of the app by Apple’s 30% commission! App prices are based on competitive principles. Consider the plethora of $1.99 apps. Without Apples’s 30% commission, those would be priced at $1.39, you think? Nope.

Further, Apple's reasons for restricting the sale of Apple apps outside of the Apple Store are based on its paramount security concerns regarding viruses. This is not an unfair business practice focused on limiting competition, but rather the reason is security-based and rightly so. Downloading apps from 3rd party websites is a well known source of smartphone hacks and network viruses: a route reserved only for the foolhardy. Apple cares enough about its product and its users to embed such protections into its app store. However even if such restrictions on the sale of apps outside of the Apple Store were to be considered illegally monopolistic, the app developers themselves would be the parties able to bring antitrust action against Apple. Notably, no developer-led antitrust class action lawsuits have been brought to date against Apple, underscoring the developers’ presumed satisfaction with the deal. It is the intended purpose of Illinois Brick to prevent redundant lawsuits, lest varying types of plaintiffs (e.g., retailers, distributors, and purchasers) line up to sue manufacturers out of existence suit after suit for the same underlying problematic product or practice, clogging our courts in the process.

Importantly, Apple is not even the manufacturer of these apps. It is merely the agent, brokering sales between app purchasers and developers and charging the developers 30% for the deal. Typically, the relevant case law is focused on direct deals between sellers and buyers, not agents. This too is why end-users should not be able to bring antitrust actions against Apple in addition to the app developers themselves. There’s simply too indirect a relationship between the end users and Apple regarding these app purchases, despite appearances.

Antitrust law is focused on promoting competition. There's plenty of that in the app market between Android, Apple, and Microsoft, among other lesser entities. If app developers believe Apple is exercising illegal monopolistic behavior, they can sue Apple. But they have not done so. Moreover, they can vote with their feet, as it were, taking their app business elsewhere. They freely choose to work with Apple and Android, oftentimes floating apps on both platforms. There are no restrictions to that, and everyone prospers as a result: Android makers, Apple, the developers, and us. The market has boomed as a result. So what’s the problem? Why the class action lawsuit?

The case of Apple v Pepper currently before the Supreme Court should be decided therefore in Apple's favor. The reason is that the holding in Illinois Brick is precedent, and no exceptions apply here. I believe the Supreme Court will not overturn the solid precedent of Illinois Brick, will apply its general bar against the Plaintiffs’ suit, and will remand to the lower district court to determine if any exceptions apply based on the facts. In turn, I believe the lower court will not find any applicable exceptions for the reasons stated above. I believe the Plaintiffs might then appeal to the 9th Circuit hoping to encourage a finding of an implied conspiracy between the developers and Apple. I believe the 9th Circuit, even though it is a proponent of Shamrock Foods’ conspiracy exception to Illinois Brick, will not find the facts suitable. I don’t think Apple will settle this case given the importance of the legal protections at stake, and thus we may see it linger in the courts for years to come.