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Apple Wins Dismissal of Antitrust Suit Over IPhone Apps

Dec. 2 (Bloomberg) -- Apple Inc. passed along to customers fees on iPhone applications imposed by developers, a judge said, dismissing a lawsuit claiming the company’s apps monopoly cost consumers hundreds of millions of dollars in overcharges.

The suit attacked Apple’s practice of keeping 30 percent of the price consumers pay for applications created by independent software developers. Buyers would pay less if it weren’t for the “fixed” fee, consumers claimed in the complaint.

U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California, said the cost is passed on to consumers by developers, rather than charged directly to buyers by Apple. Consumers don’t have a right to sue for antitrust violations over such passed-on charges, she ruled today.

“Any injury to plaintiffs is an indirect effect resulting from the software developers’ own costs,” Rogers said.

Alexander Schmidt, an attorney for the apps buyers who sued, said he plans to appeal the decision to a federal appeals court in San Francisco, which ruled in a separate case that consumers like the apps buyers may bring antitrust lawsuits.

“It’s clear to us that a consumer that buys a monopoly priced product directly from a monopolist is a direct purchaser,” said Schmidt by phone. “She is essentially adopting Apple’s argument that because Apple told the apps developers in advance that Apple would charge 30 percent, that somehow makes the developers the first purchasers” and consumers indirect purchasers.

In a separate case Apple won dismissal last month of a privacy lawsuit alleging it improperly collected and shared customers’ personal information. U.S. District Judge Lucy H. Koh in San Jose, California, found that the consumers who sued didn’t adequately show how they were injured by relying on Apple’s privacy policies for applications on smartphones and tablets.

The case is In re Apple iPhone Antitrust Litigation 11-cv-06714, U.S. District Court, Northern District of California (Oakland).

To contact the reporter on this story: Karen Gullo in federal court in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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