Earlier this week the US Supreme Court allowed an antitrust lawsuit against Apple to proceed. If you’re like me this decision sounded super important... but also super confusing.
To try to clear things up, in this article, we’ll break down what this ruling means for your average developer, the ruling’s effect on the iOS ecosystem, and the ruling’s implications on the future of mobile development.
Let’s start with a little background. If you develop an app for the iOS platform, the only way to get that app to users is through the iOS App Store, and Apple takes a 30% cut of all transactions that occur there. That cut ends up being incredibly lucrative for Apple, as App Store revenues were a staggering 46.6 billion dollars in 2018.
This court case calls Apple’s app-distribution model into question. Specifically, the case’s plaintiff alleged that, by requiring iOS users to buy apps exclusively from the App Store, and taking a 30% commission on all transactions that occur there, Apple is adding a fee that developers pass on to customers. Simply put, the plaintiffs claimed that Apple is using their monopoly over app distribution to raise prices for iOS customers.
Apple’s counterargument was that iOS users buy apps from developers and not Apple, and therefore Apple is not subject to some complicated provisions of US antitrust laws. (The specifics involve a 1970s legal doctrine called Illinois Brick and a kind-of confusing “indirect purchaser” discussion. Being a lawyer must be so fun.)
The court ruled against Apple, and in a 5–4 decision, allowed iOS customers to sue Apple for allegedly driving up prices of iOS apps.
Let’s start with one important point: this ruling only allows iOS customers to sue Apple for their app-distribution business model; it did not rule that the App Store violates anti-trust law. However, this ruling clears the way for legal proceedings that attack the App Store’s business model directly, which could force Apple to fundamentally change the way app distribution on iOS works.
That being said, it’s possible (likely even) that the subsequent cases that challenge this model will take years to play out. After all, the initial court procedures that started the just-resolved case were made in December of 2013. Therefore, don’t expect this ruling to have any short-term effect on way you build and distribute iOS applications.
One reason the proceedings may take longer than expecting is dealing with the finer points of the law. For example, suppose the court rules that Apple’s model indeed violated anti-trust policies, and consequently raised prices for consumers. How do you determine the amount prices were raised? And who does the extra money go to? Customers? Developers? The current suit was done on behalf of customers, but it’s very possible that a class-action lawsuit on the behalf of developers could complicate the issue.
Long term, if legal restrictions do come down on Apple they’re likely positive effect on iOS developers. We might see a future where Apple is forced to permit third-party app stores, or to provide ways for users to side load apps—each of which would give developers more control in how they get their apps to their users.
Interestingly, these changes would make iOS work a lot more like Android, which already allows for alternative app stores and side loading, and is therefore not subject to these legal actions.
Although these court proceedings have centered around Apple, this ruling has consequences that could extend to software distribution on other platforms, because there are a lot of platforms that have monopolistic control over app distribution that you might not think about.
Consider Rokus, Fire TVs, and basically all smart TVs platforms. In each of these, the only way to get apps is through a single vendor-controlled store.
Here’s another interesting one: Microsoft recently announced an Xbox that doesn’t come with a disc drive. Presumably the only way to purchase games for this new Xbox will be through a Microsoft-provided store; therefore, does that new Xbox violate US anti-trust law?
These cases will depend on how each platform makes money. For example, if Microsoft doesn’t make any additional money from digital purchases, there’s not much reason for developers or customers to file a lawsuit. But the court’s recent decision does open the door for class-action lawsuits against platforms with a business model similar to Apple’s.
If you’re still confused by all of this here’s a quick wrap up: the US Supreme Court ruled that customers have the ability to sue Apple for its monopolistic control over iOS app distribution, alleging that this monopoly unfairly raises prices for consumers.
This ruling doesn’t have any immediate effect on iOS users or developers, but it allows for further lawsuits to proceed—lawsuits that could fundamentally change how iOS app distribution works, and could have a broader effect on how all platforms control app distribution.
