Fresh trouble for Apple after adverse court ruling in App Store case

Apple (Nasdaq: AAPL) suffered a fresh setback Monday after the Supreme Court issued an order allowing a group of petitioners to move ahead with their antitrust case against App Store, the tech giant’s digital market place. The company’s stock was down 5% in early trading Monday following the news.

The plaintiffs, iPhone users irked by the company’s commission policy, in their lawsuit had alleged that the commission on sales done through App Store was passed on to customers in an unfair manner. They also accused the company of using its monopoly power.

Issuing the order, the court quashed the petition filed by the company seeking a favorable ruling in the case, arguing that such a lawsuit could only be filed by app developers, not by customers.

The court quashed a petition filed by the company seeking a favorable ruling in the case

The pessimistic market sentiment due to the faltering demand for iPhone continues to take a toll on Apple’s market cap. Last week, investors reacted negatively to media reports that Apple failed to prove the claims it had made in advertisements, regarding the battery life of iPhone XR.

To make matters worse, investors have become more cautious even as the recent escalation of the trade dispute between Washington and Beijing raises fresh questions about iPhone’s recovery.

In an earlier hearing in the App Store lawsuit, the court had expressed the view that Apple did not have sufficient grounds to counter the allegations against it, giving a clear signal that the final order would not be in the company’s favor.

Apple Store had courted controversy since its early years, and the legal fight over its allegedly unfair practices has been going on for around ten years now. The writing on the wall is pretty clear now – a hefty penalty might be slapped on Apple if the charges are proven and the business practices of its peers in the tech industry who operate online marketplaces, like Amazon (AMZM) and Google (GOOG), will come under strict scrutiny.

The steady recovery of Apple shares, after last year’s tech selloff, lost momentum early May. The stock, which is currently trading at the levels seen twelve months ago, has gained 19% since the beginning of 2019.

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