Apple's Mounting App Store Woes

Abstract

By making the App Store the only official channel for iPhone owners to buy apps, Apple has created the only market in which iPhone owners and app developers may transact their business. Apple exploits the bottleneck that it creates by imposing a 15 percent or 30 percent commission on transactions between iPhone owners and app developers. The array of Apple litigation elicited by this conduct may pose a case of first impression, since there does not appear to be a pigeonhole for Apple’s conduct. Apple neither buys nor sells third-party apps and therefore it does not exercise monopsony or monopoly power.

If plaintiffs frame their antitrust challenges correctly, a court will have to determine whether Apple’s conduct—use of its proprietary technology and threats aimed at both app developers and iPhone owners—offends Section 2 of the Sherman Act. If the court finds that Apple has violated Section 2 of the Sherman Act, then it must also decide who has suffered antitrust injury and who has standing to sue under Section 4 of the Clayton Act. We offer an economic analysis of these issues.