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Home / Business

Juha Saarinen: Have a happy birthday, App Store... see you in court

Juha Saarinen
By Juha Saarinen
Tech blogger for nzherald.co.nz.·NZ Herald·
19 Jun, 2018 05:00 PM3 mins to read

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The US Supreme Court will decide if the legal action by a group of App Store customers can go ahead. Photo / Getty Images

The US Supreme Court will decide if the legal action by a group of App Store customers can go ahead. Photo / Getty Images

Juha Saarinen
Opinion by Juha Saarinen
Tech writer for NZ Herald.
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Apple's App Store will be a decade old next month and so will Google's Play, which started life as the Android Market, in October this year.

Both have been hugely successful digital software distribution mechanisms, earning developers billions of dollars while making it easy for you and I to discover new, cool apps that we might otherwise never have found.

They've also been huge successes for Apple and Google, although Microsoft was actually first cab out of the rank of the three with its now-gone Windows Marketplace in 2004.

Popular with most users and developers, app stores aren't without their controversies.

Chief among these is the "walled garden" concept, which means Apple, Google and Microsoft decide who gets to play in the app store and who doesn't.

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They set the rules, and developers follow them and in return get access to hundreds of millions of people around the world, around the clock, every day of the week.

For that privilege, developers pay the IT giants a good chunk of their revenues in commission, usually 30 per cent of the sales price.

Some people are unhappy with the app store concept, and say Apple is a monopolist that controls access to the iPhone software market because of the restrictive App Store policies.

Thanks to that, consumers pay higher prices for apps, and there's reduced competition between developers.

The lawyers have been circling for some years now, with courts mulling whether or not Apple sells directly to customers or is simply a middleman.

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Does the App Store model mean Apple's being anti-competitive and able to charge inflated prices?

There's a court case around that issue waiting to be heard, and in October the United States Supreme Court will decide if the legal action by a group of App Store customers can go ahead.

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Apple wants the lawsuit to be thrown out as App Store customers aren't direct purchasers from the company, and the commission is charged on developers and not buyers.

This a technicality from the 1970s that would mean the Cupertino IT giant doesn't have an antitrust case to answer.

But, courts are unpredictable beasts and there's more than just hundreds of millions of dollars in damages at play here, if the case goes ahead.

Apple, Google and just about any company operating a "walled garden" app store would be affected if the court decided that this is indeed a case of monopolistic business practices. Losing the court case is unthinkable for Apple, which has broken out the big expensive lawyers and sought support from the US Department of Justice.

A loss could have dramatic effects such as allowing alternative app stores on iPhones and iPads, something that's only possible today if you're brave enough to bypass Apple's software restrictions via jailbreaking so as to install whatever programs you like.

It'll be a nervous few months for Apple and other companies in other words, because there's such a lot for them at stake, and it's a difficult case (which is why the Supreme Court is weighing in on it).

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I wouldn't be surprised if Apple voluntarily changes its App Store model to prevent future monopolist allegations leading to interminable court cases that hinge on defining legal concepts hammered out well before internet e-commerce, so watch this space come October.

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