Apple defeats consumers’ antitrust case, but ruling is ‘hardly the end’ of its antitrust woes, University at Buffalo legal scholar says

BUFFALO, N.Y. – Apple Inc. has appeared to dodge the control of the federal government’s regulation over abuses by a monopoly – for now.

A federal judge in San Francisco has dismissed a consumer lawsuit accusing Apple of driving up fees at platforms such as Venmo and Cash App by prohibiting payment apps from implementing cryptocurrency transactions.

It’s hardly over, according to Christine P. Bartholomew, University at Buffalo law professor of law, vice dean for academic affairs in the School of Law and antitrust scholar. First, U.S. District Judge Vince Chhabria gave the consumer plaintiffs 21 days to amend their complaint, which he wrote “suffers from several fatal problems.” Second, it’s just the start of the company’s legal problems, Bartholomew says.

“This ruling is hardly the end of Apple’s antitrust woes,” says Bartholomew, who has published one of the few comprehensive studies on antitrust studies which examined more than 1,300 settlements in such cases. The article explores the role of antitrust class actions, its efficacy and challenges this arm of enforcement faces.

“Apple is facing even more serious antitrust challenges from the Department of Justice, 16 state attorneys general and at least three class actions for alleged anticompetitive conduct in the smartphone market,” says Bartholomew, who answered the following questions regarding Apple’s pending court conflicts.

Q: Why this is so important? What implications it has for everyday consumers who have to bear the brunt of what Apple decides to do. What’s at stake here?

CB: More than 1.3 billion people globally use Apple products. In the United States, Apple controls 61% of the smartphone market. Being a monopolist is not illegal. But when a company has that level of market share, there is a danger that it could use that power to hinder competition. Less competition risks higher prices, less innovation and less quality products for consumers.

Q; Can you give us a bit of historical perspective?

CB: Antitrust is having a bit of a heyday right now. For the last several decades, market concentration has grown, while government enforcement of these corporate giants was limited. Antitrust class actions faced stiff challenges, as tort reform aimed at other types of class action hindered consumers’ ability to use class action mechanisms to provide the quantum and level of antitrust oversight needed to combat the risks of greater market concentration. At the same time, global enforcement of antitrust grew, with the European Union taking a particularly aggressive stance with tech giants. 

Now, the political zeitgeist in the U.S. differs. Consumers are paying more for products. Everyone from politicians to consumer advocates to regulators are looking more closely at the role of antitrust as a consumer protection tool. That helps explain why we are talking more about antitrust now than two decades ago, when I started studying this field.

Q: The group’s challenge has undergone a setback. Are there any chances of a successful outcome from these groups challenging Apple’s authority?

CB: It is too early to say. In recent antitrust challenges against the tech giant, Apple has fought back — hard. I don’t anticipate quick answers here. Some cases are dismissed quickly, like the cryptocurrency case. But others, like Epic Games v. Apple went all the way through appeal. The newest claims against Apple involve fairly sweeping claims and seek to be certified as class actions. That combination suggests it could be many months — if not years — before we know the outcome. 

Q: Will this encourage other consumer groups to file lawsuits against these huge international, embedded corporations?

CB: Since the DOJ’s filing on Friday, at least three more firms have filed suits alleged. I anticipate more cases in the coming days and weeks. Private antitrust suits, meaning consumer class actions, are the dominant form of antitrust enforcement in the United States. Antitrust enforcement in our legal system relies on a boots and suspenders approach, whereby companies can face antitrust challenges from consumers (generally through class actions), the federal government, state attorneys general and competitors. If one regulator loses, another enforcer may still pursue its case.

In 2014, Apple had to pay out over $400 million dollars to consumers in an antitrust alleged misconduct by the tech giant in the e-book industry. It currently is facing another consumer antitrust suit for its handling of iOS cloud-based storage policies.