The Supreme Court voted 5-4 on Monday to allow a class-action suit against Apple (AAPL) - Get Apple Inc. Report claiming that its App Store represents an unlawful monopoly to proceed, adding to the tech giant's woes on Monday.
The ruling, authored by Justice Brett Kavanagh, said that the suit brought against Apple by four iPhone users claiming that the tech giant uses its monopoly power to charge users more than it should for apps, could not be dismissed, as Apple had argued, simply because Apple does not directly set the retail price for apps sold in the App Store. But the court did not rule on the specific merits of the antitrust claims against Apple.
"The plaintiffs purchased apps directly from Apple and therefore are direct purchasers under Illinois Brick," Kavanagh wrote, referring to a precedent case cited by Apple. "At this early pleadings stage of the litigation, we do not assess the merits of the plaintiffs' antitrust claims against Apple, nor do we consider any other defenses Apple might have. We merely hold that the Illinois Brick direct-purchaser rule does not bar these plaintiffs from suing Apple under the antitrust laws."
The case was appealed several times before making its way before the Supreme Court. Antitrust cases entitle plaintiffs to triple damages, so Apple's liability could be large if it winds up losing the case.
Apple shares were already down on Monday on concerns about increased tariffs on Chinese-made goods and the Supreme Court ruling furthered those declines. Apple shares were down 4.6% to $188.10 on Monday morning, putting them in correction territory.