Below is my column in The Hill newspaper on the 5-4 ruling of the Supreme Court against Apple Corporation.
Here is the column:
It was 35 years ago when an electrifying commercial showed prisoners in drab gray uniforms watching a televised Big Brother extol the “glorious anniversary” of the “garden of pure ideology, where each worker may bloom, secure from the pests of purveying contradictory truths.” Then a young woman ran up and heaved a sledgehammer into the giant screen, shattering the myth of the single truth and the “unification of thoughts.”
It was late 1984, and the launch of the Apple Macintosh. Over the years, many came to wonder if Apple had not simply created its own “garden of pure ideology” by coercing people to buy Apple products and slavishly following their “geniuses” in those antiseptically white showrooms. Now a figure has emerged and shattered the unchallenged domination of Apple.
What was surprising is this time, the runner throwing the sledgehammer was Supreme Court Associate Justice Brett Kavanaugh, who sided with the four liberal justices to rule that customers could sue Apple over its allegedly monopolizing conduct. Thecase, Apple versus Pepper, could have far reaching consequences for colossal technology companies.
The decision hits the company where it is dominant and seemingly impenetrable with the App Store. Entrance to it promises access to a largely captive audience of users. Apple claims to feature more than two million apps and to generate billions of dollars for developers. The plaintiffs showed that developers have to pay Apple a 30 percent commission that is then passed on as a 30 percent markup for users.
Apple argued that the arrangement meant its customers are not direct purchasers from Apple and instead buy from the app developers. It is a legal sleight of hand in that by grabbing the 30 percent commission from app developers, Apple could argue that it was not subject to antitrust laws under a 1977 case, Illinois Brick Company versus Illinois, in which the Supreme Court blocked antitrust damages for “indirect purchasers.”
That was until the figurative sledgehammer hit the screen this week. Not only did Kavanaugh deliver a majority with the left wing of the Supreme Court, but he upheld the liberal Ninth Circuit. Apple will now be viewed as a distributor which sells apps to its customers directly. That is closer to reality for Apple users, who purchase what Apple allows in its App Store.
Indeed, Kavanaugh portrayed Apple as that imposing and manipulative Big Brother, writing that its theory “would disregard statutory text and precedent, create an unprincipled and economically senseless distinction among monopolistic retailers and furnish monopolistic retailers with a how to guide for evasion of the antitrust laws.” Equally fascinating is that the dissent to the decision was written by Associate Justice Neil Gorsuch, who of course is the other Supreme Court nominee of President Trump.
Gorsuch suggested that Kavanaugh was revising or ignoring Illinois Brick Company, which is a reasonable view given the similarity of the “pass on” techniques in the two cases. Gorsuch also warned that Apple could easily evade the ruling by restructuring to have Apple users pay app developers directly, and then have those app developers pay a commission to Apple.
While that could be true, the decision clearly shows that antitrust rules are flexible enough to apply to new practices by technology companies to control prices and access to products. The most chilling line of the ruling may be that “if a retailer has engaged in unlawful monopolistic conduct that has caused consumers to pay higher than competitive prices, it does not matter how the retailer structured its relationship with an upstream manufacturer or supplier.” For consumer advocates, it shatters a myth that will encourage people to sue these companies for predatory practices.
Apple itself was previously found to have engaged in antitrust violations by manipulating the price of eBooks and later settled for $450 million. It has been accused of heavy handed efforts on music streaming services, and it is being targeted by European regulators. It has also been accused of removing or restrictingapps for screen time monitoring and parental controls favor its own products. Apple thus far has largely been able to engage in monopolizing conduct and, to quote its 1984 commercial, allow its enemies to “talk themselves to death” and get buried “with their own confusion.” They are much less confused and more empowered this week.
Some liberals hope the other shattering effect of this decision may be felt by the new conservative majority. That may be a bit premature, however, it is notable that Gorsuch and Kavanaugh have divided on a number of key cases this term. Kavanaugh voted with the left wing of the Supreme Court to protect the appellate rights of criminal defendants. Conservatives were not happy when litigants could not get the necessary four justices to hear a case on blocking Medicaid money for abortion clinics. The conservative holdouts were obvious when only Justices Gorsuch, Clarence Thomas, and Samuel Alito objected to denial of review. That was a telling moment.
When Kavanaugh was nominated, I wrote a column expressing the irony that Trump had criticized Chief Justice John Roberts but decided on a nominee with a resume and demeanor that was a virtual clone of Roberts. Neither Roberts nor Kavanaugh would agree to be the fourth vote to allow the abortion case to be heard. Conversely, Gorsuch has broken with the conservatives on Native American rights and immigration cases. Gorsuch and Kavanaugh were never the robotic jurists portrayed by their foes in their confirmation hearings. Indeed, some of the liberal justices show equal, if not greater, bloc voting records. However, both men remain committed conservatives with well established jurisprudential views.
When it comes to the Apple decision, those views took them to opposite sides of the Supreme Court division. Yet, these are not sledgehammers hitting the figurative big screen of the judiciary. For its part, Apple remains a behemoth firm that pulled in more than $265 billion in sales and close to $60 billion in profits last year. It is not that small anti-Orwellian operating system from 1984. I was one of those watching in 1984. I bought the first Macintosh and have owned Apple products ever since. I still remember the promise Apple made in its commercial that 1984 will not be like the book “1984.” That was true back then but, 35 years later, I am not so sure.
Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University. You can follow him on Twitter @JonathanTurley.