24/7 Wall St.

On Monday the Supreme Court will consider in Apple v. Pepper whether to overturn Illinois Brick.

From The Antitrust Bar vs. Apple ($) in Saturday’s Wall Street Journal:

A decade ago Apple revolutionized software development and the smartphone with its one-stop application shop where consumers could download games, social media and other applications. Apple assumed overhead functions for developers including protecting intellectual property and intermediating financial transactions. In return, it collects a 30% commission on app purchases.

Apple’s App Store freed developers to innovate and expanded distribution of their products—epitomizing Steve Jobs’s famous axiom that people don’t know what they want until you show it to them. The App Store launched with 500 apps but now has more than two million. Google, Microsoft and others have imitated Apple’s model to the benefit of consumers world-wide.

Yet plaintiff lawyers now want a share of the bounty. A class action on behalf of all App Store purchasers alleges that Apple monopolizes the app market and overcharges consumers by collecting the 30% commission. Plaintiffs are seeking treble damages under the Clayton Act.

The relevant precedent here is the Supreme Court’s landmark 1977 Illinois Brick Co. v. Illinois decision that bars indirect purchasers from bringing antitrust suits for “pass-through costs.”

Yet a Ninth Circuit Court of Appeals panel said app purchasers could sue and “whether app developers are direct purchasers of distribution services from Apple in the sense of Illinois Brick makes no difference.” …

Online marketplaces of all sorts including e-Bay, Amazon Marketplace, and Etsy that charge sellers fees or commissions could be affected. Ditto sharing-economy services such as Airbnb and TaskRabbit.

My take: The Trump Administration has sided with Apple and against the Ninth Circuit of Court of Appeals. Getting out the popcorn.