On Monday, the Supreme Court stymied an effort by Apple to protect its monopoly over sales of iPhone apps. Justice Brett Kavanaugh’s decision in Apple v. Pepper turned on an arcane bit of antitrust law, and it provided the first small hope that the antitrust establishment may finally turn against Big Tech. But the odds remain formidable.
The story begins during an almost unimaginably remote time in the American past—when the internet had not yet been invented, and antitrust law was still taken seriously. It was 1968, and the Supreme Court faced a dispute between Hanover Shoe, a manufacturer, and the United Shoe Machinery Corporation, from which it had leased equipment. Hanover Shoe sought damages on the grounds that United Shoe had used its monopolistic power to overcharge for the machinery.
United Shoe argued that Hanover Shoe had not been injured, because it had been able to pass on the overcharge to its own customers in the form of higher shoe prices. Those customers—that is, ordinary people who buy shoes—possessed the claim against the monopolist, not the intermediary who merely passed on the monopoly price. The Court would have none of it. The ultimate buyers—who might have spent a few extra dollars for their shoes—would not be able to afford a lawsuit. The “direct purchaser” from the manufacturer can bring an antitrust claim even if it does not suffer any damages, the Court ruled. Otherwise, monopolists would be protected from lawsuits.
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