AAPL Apple Inc

By Brent Kendall and Tripp Mickle 

WASHINGTON -- The Supreme Court ruled Monday that consumers can proceed with an antitrust lawsuit challenging Apple Inc.'s exclusive control over the marketplace for iPhone apps, threatening the tech giant's slice of billions of dollars in software sales.

Plaintiffs, who are suing on behalf of a class of app purchasers, allege consumers pay inflated prices because Apple requires that all phone software be sold and purchased through the company's App Store. Apps would be cheaper if software developers could sell them directly and bypass Apple as a middleman, the lawsuit alleges.

Apple typically takes a 30% cut of every app it sells, and a 15% cut of subscriptions sold through the app store after subscribers' first year. The consumer lawsuit also complains about other App Store rules that affect pricing, such as Apple's requirement that every app price point end in "99 cents," meaning developers can only set prices in one-dollar increments like $1.99, $2.99 and so forth.

The Supreme Court's decision focused on a preliminary issue in the case: whether consumers had a right to sue Apple over these practices. The court, in a 5-4 opinion by Justice Brett Kavanaugh, said they did.

The court rejected Apple's arguments that consumers can't sue because it is the app developers, not the company, that set app prices.

"If accepted, Apple's theory would provide a roadmap for monopolistic retailers to structure transactions with manufacturers or suppliers so as to evade antitrust claims by consumers and thereby thwart effective antitrust enforcement," Justice Kavanaugh wrote in a 14-page opinion.

Justice Kavanaugh, President Trump's most recent appointee to the high court, was joined by four liberal justices: Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan.

Four conservatives dissented: Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito and Neil Gorsuch.

The high court didn't address the merits of the plaintiffs' claims. If they ultimately win, the case could change the way apps are sold and make Apple liable for significant monetary damages. The case could take one to two years, if not longer, to resolve.

Write to Brent Kendall at brent.kendall@wsj.com and Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

May 13, 2019 10:57 ET (14:57 GMT)

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