Kavanaugh Takes a Shot at Apple, and Big Tech Should Take Note

(Bloomberg Opinion) -- In a 5-4 decision Monday, the U.S. Supreme Court allowed iPhone users to sue Apple Inc. for being a monopolist when it comes to apps. The fascinating fact about the holding isn’t its legal logic, which was sensible enough, although by no means obvious. Rather, it’s worth noticing that the opinion was written by Justice Brett Kavanaugh — and joined by the court’s four liberals. Four other conservative justices dissented, joining an opinion by Justice Neil Gorsuch.

Before you get excited, this isn’t some magical sign that the conservative Kavanaugh is a closet liberal. But it nevertheless reveals something important about the possible future of antitrust litigation against big technology companies at the Supreme Court.

In general, liberals like antitrust enforcement more than conservatives do. What’s more, it has been mostly liberals who in recent years have been arguing that we need stronger antitrust enforcement to limit the power of the tech companies.

So until now, it would have been reasonable to expect that in any case where the Supreme Court split 5-4 over whether it should be open to antitrust litigation against tech giants like Apple, the split would have followed conservative-liberal lines, and ended up with the conservatives handing victory to the tech companies.

Monday’s decision in Apple v. Pepper shows that isn’t necessarily so. Rather, Kavanaugh is open to breaking ranks with the conservatives when it comes to antitrust.

To grasp the significance, you have to realize that under Supreme Court precedent, the suit against Apple could reasonably have come out either way.

The basic issue was whether iPhone users are the right people to sue the company over the allegation that it’s using its monopoly over its App Store to overcharge consumers. Apple is restrictive about what apps can be sold in the store, and doesn’t allow users to download apps sold elsewhere.

At the level of basic logic, it would make sense to let the iPhone users sue. The Sherman Antitrust Act says that “any person” injured by a monopoly should be able to sue. And if Apple is overcharging for apps, iPhone users are being injured. That’s more or less what Kavanaugh’s opinion says.

Yet there is a Supreme Court precedent, Illinois Brick Company v. Illinois, that interprets antitrust laws to create a limit on who can sue for violations. Specifically, the Illinois Brick case held that you can’t sue someone who overcharged you as a result of monopoly behavior by a third party. (In that case, the state of Illinois was the end purchaser of bricks that had been sold to it by contractors who brought the bricks from the alleged monopolist; the court said the state couldn’t sue the monopolist directly.)

As Gorsuch argued in his dissent, the situation of the iPhone users is practically speaking much like that of the state that couldn’t sue the brick monopolist in the Illinois Brick case. The iPhone users, Gorsuch reasoned, bought their apps from the app makers, not from Apple. The app makers, not Apple, set the price of apps — Apple just collects the money and takes a 30% commission. (It also requires all app prices to end in $.99. Who noticed? Not me.) Thus, ran Gorsuch’s reasoning, the iPhone users could sue the app makers, but not Apple.

If none of this sounds very ideological to you, that’s because on the surface, it isn’t. The underlying ideological issue is how difficult or easy the court should make it to sue Apple.

And that’s why Kavanaugh’s surprise vote matters going forward. His vote signals that in potential future cases, he won’t reflexively go with the conservative impulse to make it harder to sue big companies over antitrust issues.

In other words, if you are trying to calculate the overall risk of major successful antitrust suits against big tech companies, Kavanaugh’s vote should change your priors. It’s new information of potential value.

What’s Kavanaugh’s motive? One possibility is that he is becoming a mild skeptic of big tech. Lots of conservatives who aren’t crazy about antitrust laws are nevertheless getting worried about big tech companies, whom they perceive as politically liberal.

Another possibility is that Kavanaugh saw a good opportunity to join the liberals and begin the long slow process of rehabilitating himself in the eyes of mainstream Supreme Court watchers, all without alienating the conservative base.

In any case, there was nothing necessary about Kavanaugh’s decision here — and that’s what makes it meaningful.

To contact the editor responsible for this story: Stacey Shick at sshick@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Noah Feldman is a Bloomberg Opinion columnist. He is a professor of law at Harvard University and was a clerk to U.S. Supreme Court Justice David Souter. His books include “The Three Lives of James Madison: Genius, Partisan, President.”

©2019 Bloomberg L.P.