• The Supreme Court ruled Monday that iPhone user can sue Apple on the grounds that the company is monopolizing the market.
• The decision stems from a 2011 class-action lawsuit that argues Apple essentially forces users to only use its App store and forces developers to raise their prices because of the company’s membership and commission fees.
• Apple and other tech companies like Google and Amazon are concerned this judgment will bring more lawsuits and antitrust complaints against them.

The Supreme Court’s Ruling

The Supreme Court ruled on Monday that iPhone users can sue Apple on the grounds that the company is monopolizing the marketplace with their App store, as well as increasing prices of the apps with additional charges.

This judgment overturns a previous court decision involving four iPhone users who filed a class action suit against Apple in 2011. In their complaint, the users claim Apple essentially forces them to use only the Apple App store. The complaint also says Apple requires an annual $99 membership fee for app developers and says Apple takes 30 percent commission on every app sale.

“Through these actions,” the complaint states, “Apple has unlawfully stifled competition, reduced output and consumer choice, and artificially increased prices in the aftermarkets for iPhone.”

Apple turned to a previous Supreme Court decision for their defense, citing the 1977 case Illinois Brick Company versus Illinois. In that case, the court ruled that only those directly purchasing bricks from Illinois Brick Company had the right to sue. The tech company argued that because the app store was technically a middleman between the app developers and the consumers, the iPhone users had no right to pursue legal action. In 2013, the court ruled in favor of Apple and dismissed the complaint.

“Given that none of the exceptions to the Illinois Brick doctrine apply,” the judge ruled, “Plaintiffs are barred from bringing claims because they are indirect purchasers.”

The iPhone users immediately filed an appeal to attempt to overturn the judgment, ultimately bringing the case to the Supreme Court of Appeals in 2017. The appeal case finally ended with a five to four vote on Monday in favor of the consumers. Justice Brett Kavanaugh was the deciding vote, going against Apple and surprising many by forgoing his usual conservative stance.

“The plaintiffs purchased apps directly from Apple and therefore are direct purchasers under Illinois Brick,” Kavanaugh stated as the reason for his vote.  

What Does the Ruling Mean?

The Supreme Court, however, did not directly rule on the 2011 case on Monday, they only determined that the original plaintiffs had the right to continue pursuing their lawsuit. Many big-name tech companies like Google and Amazon have voiced concerns over the new judgment.

They fear that allowing class action suits like the one from 2011 to proceed, will open the floodgates to many more antitrust complaints, resulting in costly and lengthy lawsuits.  

Edward Black, the CEO of the nonprofit organization Computer and Communications Industry Association, echoed the tech companies’ worries.

“We are concerned that the outcome of this ruling expands a previous ruling (Illinois Brick’s), and increases liability risks for multi-sided business models,” Black stated. “The decision may unintentionally expose businesses offering digital platform services to unintended liability.”

Apple’s response to the judgment, however, does not appear to show any concern about future litigation.

“We’re confident we will prevail when the facts are presented and that the App Store is not a monopoly by any metric,” they said in a statement. “We’re proud to have created the safest, most secure and trusted platform for customers and a great business opportunity for all developers around the world. Developers set the price they want to charge for their app and Apple has no role in that.”

If the plaintiffs decide to continue with their original class action suit, it will be the district courts decision to determine if Apple did, in fact, violate any antitrust laws. For now, they have the support of the Supreme Court to fight on.

See what others are saying: (Market Watch) (The Hill) (Bloomberg)

• The New York Times published an op-ed by Facebook co-founder Chris Hughes on Thursday in which he calls for Facebook to be broken up.
• Hughes hasn’t been connected to the platform since 2012, but says that CEO Mark Zucerkberg has too much power over speech and the digital marketplace.
• Hughes is calling for more government regulation on tech companies overall and says that Facebook should be forced to split Instagram and WhatsApp into separate companies.

The Call

In an op-ed published Thursday by the New York Times, Facebook co-founder Chris Hughes says that the company has too much power and should be broken up by the government.

Hughes hasn’t worked for Facebook since 2008 and sold his final shares in 2012. However, the co-founder argues that because of the company’s position in the marketplace, Facebook CEO Mark Zuckerberg has an amount of power that is “unprecedented and un-American.”

In the op-ed, Hughes said that it is “time to break up Facebook.” Hughes is calling for more government regulation of the company and argues that Facebook should be forced to split Instagram and WhatsApp into separate companies.

“I’m angry that his focus on growth led him to sacrifice security and civility for clicks. I’m disappointed in myself and the early Facebook team for not thinking more about how the News Feed algorithm could change our culture, influence elections and empower nationalist leaders,” Hughes wrote in the piece.

“And I’m worried that Mark has surrounded himself with a team that reinforces his beliefs instead of challenging them.”

Hughes went on to say that the most problematic aspect of Facebook’s dominance is the amount of power Zuckerberg has over speech. “There is no precedent for his ability to monitor, organize and even censor the conversations of two billion people,” Hughes said.

Hughes argues that the root of the issue is that Facebook has effectively become a monopoly with no government oversight. He points out that when Facebook hasn’t been able to buy out a competitor, the company just copies the competitor’s idea. For instance, when Snapchat grew in popularity, Facebook copied its stories and disappearing messages. Afterwards, Zuckerberg allegedly said, “Don’t be too proud to copy,” and it became an informal slogan at Facebook.

In the op-ed Hughes warns that without competition like MySpace, Facebook would never have innovated the way they did in the early days.

“Imagine a competitive market in which they could choose among one network that offered higher privacy standards, another that cost a fee to join but had little advertising and another that would allow users to customize and tweak their feeds as they saw fit,” Hughes wrote.

Regulations

Over the past few years, there have been increased calls for regulation on tech companies including Facebook, especially after the Cambridge Analytica scandal and the spread of misinformation leading up to the 2016 election.

Aside from calling on the FTC and the Justice Department to break up Facebook, Hughes also wants to see more regulation on the industry including a government agency dedicated to regulating tech companies with its first mandate being to protect privacy.

He also wants a privacy bill that specifies what control Americans have over their digital information and guidelines for “acceptable speech on social media,” because he says, “there is no constitutional right to harass others or live-stream violence.”

Hughes closes the op-ed by saying, “Mark Zuckerberg cannot fix Facebook, but our government can.”

See what others are saying: (New York Times) (Variety) (Vox)

• Today ridesharing drivers in cities around the world are striking to demand a livable income among other things.
• The strike comes just days before Uber’s public trading debut on the stock market at the end of the week.
• The company is expected to be valued as high as $91 billion.

Taking Action

In cities around the world, rideshare drivers are choosing not to work for apps like Uber and Lyft to protest the companies low wages.

In cities like Los Angeles, San Francisco, New York, Melbourne, and London, drivers are striking from anywhere between 2 and 24-hours in an effort to send a message to companies like Uber and Lyft. While these companies bill themselves as a good opportunity for people to earn a little extra cash, drivers are saying that it has been taking more and more hours of work to make a livable income.

Awesome work to the drivers & riders logging off to strike today for fair work + pay.

We're chanting "Uber uber you must listen we will break your algorithm!" #uberstrike #Melbourne pic.twitter.com/Bms7CglCTE

— 💧Pat Simons (@prrsimons) May 8, 2019

Right now ridesharing drivers are considered independent contractors, which means more flexibility, but also no sick days or minimum wage requirements. Some drivers are looking to change this especially after drivers have seen a dip in earnings in recent months, like in Los Angeles where drivers saw a 25 percent rate cut in March.

“Most of drivers living in San Francisco are forced to work at least 70-80 hours a week in order to survive in the city. Living expenses increase, gas prices increase, food expenses increase, everything is getting more expensive in order to live in San Francisco,” Mostafa Maklad, an Uber driver and organizer, told Gizmodo.

“We have to drive more and more, deal with health and stress problems, but Uber doesn’t care. What uber is doing is decreasing pay to drivers.”

Their Demands

According to Rideshare Drivers United, an unofficial advocacy group that organized the strike in L.A., drivers are demanding: a 10 percent commission cap, a rideshare vehicle cap, an elected driver-representative at each rideshare company, and want the app to show the estimated fare and destination of a ride before drivers accept the job. Drivers also want an hourly minimum wage of $27.86 before expenses among other things.  

Uber said in a statement on Tuesday that they are focused on improving drivers’ experience, saying, “Whether it’s more consistent earnings, stronger insurance protections or fully-funded four-year degrees for drivers or their families, we’ll continue working to improve the experience for and with drivers.”

Meanwhile, Lyft said in a statement that their drivers have seen increased earnings and claimed that 75 percent of their drivers only use the app for 10 hours a week to supplement their existing jobs.

Going Public

This strike comes before Uber’s public trading debut on the stock market set for this Friday, where the company expects to be valued as high as $91 billion.

The estimate is expected despite last years reports that said the company lost an average of 58 cents per ride. However, showing losses before going public is not uncommon for tech companies. It took Amazon years after its first public offering to become profitable.

See what others are saying: (New York Times) (Fox News) (CNN)