Apple iPhone users can sue for being overcharged in App Store

Apple has been in and out of court since 2011 to argue whether it forces users to overpay for apps by effectively killing off competitors on the multi-billion-dollar App Store. Photo / 123RF

Apple iPhone owners can now sue for monopoly abuse if they feel they have been overcharged when buying an app for their phone, after the US Supreme Court sided with consumers in a landmark ruling.

Apple has been in and out of court since 2011 to argue whether it forces them to overpay for apps by effectively killing off competitors on the multi-billion-dollar App Store.

The decision will have consequences for the App Store's entire business model. The software library has become one of the company's fastest-growing and most profitable divisions as demand for its devices plateaus.

Apple shares fell more than 5 per cent in early New York trade after the justices upheld a lower court's ruling from 2018.

Conservative justice Brett Kavanaugh joined the court's four liberal justices to rule against Apple. He said: "Leaving consumers at the mercy of monopolistic retailers simply because upstream suppliers could also sue the retailers would directly contradict the long-standing goal of effective private enforcement in antitrust cases."

Customers argued that the cut Apple takes is evidence of the company exploiting its monopoly position. They insisted: "iPhone consumers nationwide have paid [Apple] hundreds of millions of dollars more for iPhone apps than they would have paid in a competitive market".

Apple argued that because the app developers themselves set the price of apps in the App Store, iPhone users are purchasing the apps from the developers directly.

Developers earned more than US$26 billion ($39.4b) in 2017, a 30 per cent increase over 2016, according to Apple.

Opponents claim that because Apple sets rules about the App Store, such as the minimum price, it is distributing the apps on to users.

Apple had previously claimed that a Supreme Court ruling allowing the case to proceed could pose a threat to US's booming e-commerce industry.