What Apple's Supreme Court Case Means for Developers

Legal cases against tech giants can seem like a dime a dozen – after all, litigious activity is inherent in being some of the largest companies in the world. Supreme Court cases, however, are certainly not standard. Apple finds itself embroiled in one whose outcome will have a real effect on developers and their business models.

The highest court in the United States agreed to hear Apple Inc. v. Pepper in June; oral arguments were held on November 26. The class-action lawsuit alleges that Apple has, according to Business Insider, “[broken] federal antitrust laws by monopolizing the market for iPhone apps and causing consumers to pay more than they should.” Judges will determine if Apple is responsible for damages, but their ruling will also set precedent on whether consumers can sue for damages in the future under similar circumstances.

Apple’s argument hinges on a precedent set by Illinois Brick Co. v. Illinois in 1977. In that case, which involved allegations of price-fixing against concrete block manufacturers that increased building costs, the Supreme Court ruled that “only a company’s direct customer can sue for antitrust violations,” – in this case, only the contractors who purchased directly from manufacturers could sue said manufacturers.

Apple is arguing that their App Store is effectively a middleman between consumers and developers, analogous to the concrete manufacturers – developers are thus the masonry workers, and the only ones who can file a suit for better terms. They insist developers can charge any price – not just the standard $0.99 – to improve their margins if they sell their apps in the store.

Developers are frustrated by Apple’s 30 percent fee (described as a “commission”) on each sale and handcuffed by economic principles (lower priced items tend to sell better than more expensive ones) when it comes to charging for their products. Should the Supreme Court agree with Apple, developers will need to band together if they want to bring a suit; regardless of outcome, it is likely developers will need to work together to create a better system benefiting large and small creators alike.

How a new model would work is up for interpretation. Some smaller developers are already moving towards subscription-based purchases – a far friendlier approach to their bottom line than one-off, $0.99 sales. Nathan Swanner, Dice’s insights editor, writes in a blog post that “Apple may be forced to allow outside app downloads, or at least allow developers to link to outside sales portals within their own apps (or create apps that are solely for sales of other apps).” Developers may also decide to charge more to expand their margin when faced with service fees.

App developers will live with the uncertainty until the Supreme Court rules. While the outcome is undecided, it is evident that the app-purchasing landscape is shifting. Developers will adjust accordingly, and consumers’ wallets are likely to bear the brunt of the changes.

Looking for Fresh Investment Ideas? See How Algorithms and A.I. Can Help

Want to invest and/or diversify your portfolio but unsure where to start? Artificial Intelligence can help! Tickeron has developed user-friendly Artificial Intelligence tools to help new and experienced investors generate investment ideas. Tickeron’s A.I. is capable of evaluating a portfolio and providing a “Diversification Score,” to tell the user how well-diversified their portfolio is. It can also generate investment ideas for a user’s 401(k) plan – even if you’re just getting started! The A.I. will give you ideas based on your risk tolerance, investment objectives, and the investment options available.

Tickeron’s new financial website is available to beginners, intermediate investors, and even experts and advisors. Explore tickeron.com today.