Benedict Evans’ takeaways from the first week of Epic vs. Apple

From “Apple versus Epic in court” posted Sunday to Benedict’s Newsletter subscribers:

The Apple/Epic App Store court case started this week. It mostly turns on legal arguments and court precedents around how to define the market, the platform and the payment system, not the facts or any ‘smoking gun’ emails, and a lot of US antitrust lawyers seem to think Epic’s case is pretty weak (🤷🏻‍♂️). As I’ve written before, the EU has already effectively decided in favour of Spotify, so regardless of this case there are big changes coming. But either way, cases like this generally produce a lot of interesting disclosure:

    • Epic produced lots of internal Apple emails showing how many scams and problems there are in store management, aiming to undermine Apple’s ‘we curate the store’ argument. But these are mostly from 5-10 years ago (when it was having huge problems scaling) and could equally well show how necessary curation is
    • Apple produced Epic emails showing it planned the whole fight a year in advance and is investing massively in its own store
    • From outside, the most interesting thing is the app store operating data: how Apple scans for malware and API abuse (no, the security is not all in the sandbox), how many apps are submitted and which ones are rejected. Also, there are only 17k Watch apps: like Amazon’s Alexa, the Apple Watch is a huge success but has largely failed as an app platform.

My take: Gotta love discovery.

24 Comments

  1. Gregg Thurman said:
    Is this pretty much how everyone felt about the Apple Book Store case, only to get a bonehead decision from the presiding judge, and the real violator (Amazon) was never charged?

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    May 9, 2021
    • John Konopka said:
      I’m still mad about that.

      2
      May 10, 2021
  2. Michael Goldfeder said:
    This case is substantially below even a mediocre antitrust dispute. It’s a simple breach of contract that is being conflated into a make believe antitrust, anti-competition issue that never existed. At its core, Epic is saying that by Apple charging a fee to access any iOS customers in their App Store is somehow “anticompetitive.” An absurdity on its face.

    To accept the specious contentions being made in this case, Epic is proffering that Apple’s walled garden is essentially a prison keeping a billion users hostage. Therefore, consumers are being irreparably harmed by Epic having to charge the fees they do all because of Apple charging 30%.

    The same premise is being made by the EU on behalf of Spotify.

    5
    May 9, 2021
    • David Emery said:
      There’s a big difference between Epic and Spotify: Apple does not produce an app to compete with Epic’s games. Apple DOES produce an app to compete with Spotify. From a legal perspective, this is significant. It opens up the charge of ‘using a legal monopoly in ways that are illegal.’

      Additionally, Vestager’s track record -in court- against Apple isn’t that good, so I wouldn’t say anything in the EU has been “decided”

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      May 10, 2021
      • Ken Cheng said:
        Who’s competing with whom? The iPhone has always had a music app. Does it matter if the music it plays are on your iPhone or streaming to your iPhone? Same music right? Spotify created an app that would ultimately compete with Apple’s core music offering. It was an obvious feature as streaming data costs dropped and network coverage improved that streaming music would be the future.

        Why is it Apple’s fault that they compete now? How was Apple supposed to play music on the original iPhone without a music app? When others compete with Apple, that Apple allows by allowing 3rd-party apps, Apple is supposed to just stop offering their core apps? Could Apple just have avoided all this nonsense by not opening the iPhone to 3rd-party apps, and keeping to Steve’s original idea of only allowing web apps? Seems strange that Apple has created an app ecosystem that makes billions for developers is now the bad guy.

        1
        May 10, 2021
        • David Emery said:
          Part of what changed is that Apple introduced music -streaming-. Before you could play stuff that you ripped and stored on your phone. That changed with the Apple Music streaming service, which is basically the same core technology (music streamed to a device, versus music stored on a device) as Spotify.

          So given Apple has a streaming music service that a jury could find is a reasonable competitor for Spotify, the second problem then is whether Apple used its ‘monopoly’ in ways that are illegal. That goes back to “what’s the market?” for the definition of ‘monopoly’. If the market is “devices”, you get a different solution than if the market is “streaming music apps on the iPhone.” A judgement for Spotify would have to resolve both questions in Spotify’s favor (and #2 depends on #1.)

          IANAL, but I think Spotify has a reasonable case, much more than Epic does, because Apple has a directly competing app.

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          May 10, 2021
  3. “So you don’t have any idea how what you are asking for would impact any of the developers who engage in those other categories of apps, is that right?” Judge Gonzalez Rogers asked.
    “I personally do not,” Sweeney said.

    This exchange at the Epic Apple Trial trial is key.

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    May 9, 2021
  4. Fred Stein said:
    Sweeney is playing another game. This suit is a head fake.

    He and his allies / co-conspirators / co-investors / gaming competitors Microsoft, Sony, Nvidia, and Tencent, see Apple as the powerhouse is due their silicon advantage, and of course Apple’s most loyal customer base with the most discretionary income.

    While I have no clue to their game plan, it’s just getting started.

    1
    May 9, 2021
  5. Daniel Epstein said:
    Hmm I thought the plaintiffs case was being presented this week and at the end of it everybody should think Apple is losing until their defense is presented. Seems like a lot of people are disappointed that the Epic case against Apple is as weak as it sounded when they brought it. Has anyone said that Epic actually proved anything bad about Apple’s conduct that applies to the case? Apple tries to make a profit on everything it sells hardware and software is not an argument that they should change their fees.

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    May 9, 2021
  6. The 17,000 apps developed for the Apple Watch, so far, DO NOT make it a failure as an app platform.
    I’ve gotten to know various judges in the US and abroad. They tend to develop a keen sense for detecting staged BS arguments. They do not suffer fools gladly.

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    May 10, 2021
    • Gregg Thurman said:
      When Epic completes its testimony, what are the odds that Apple requests a Summary Judgement in favor of Apple, and Rogers grants it?

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      May 10, 2021
      • David Emery said:
        Pretty good, actually, especially if the judge believes that Epic has not made a case to define “the market” in its favor.

        But if the real battle is not in court, but in Congress and ‘public opinion,’ Apple has to weigh the advantages it could accrue from getting testimony from its witnesses under oath. There’s a risk that Epic’s lawyers get someone to say “something bad” under cross-examination.

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        May 10, 2021
        • David Emery said:
          Here’s something my limited knowledge of law and courts doesn’t know: If the judge grants a summary judgement, is that more or less likely to be overturned on appeal?

          0
          May 11, 2021
  7. Kirk DeBernardi said:
    (quote)

    “It mostly turns on legal arguments and court precedents around how to define the market, the platform and the payment system…”

    Aye…that’s the rub.

    Isn’t it strangely interesting in all of this that since Apple’s “dawn of creation” with the App Store that goes on to gather lots of developers, creates fantastic with tremendous customer benefit, grows in size, breadth and popular usefulness ends up reaching a pinnacle moment where — because of a crybaby-brat challenge in court — others possibly get to define what it “really” is by court/antitrust fiat.

    0
    May 10, 2021
    • John Konopka said:
      Tony Randall said something to the effect that most of the really important things in life we learned in grammar school.

      These suits against Apple remind me of the children’s book “The Little Red Hen.” Page after page no one wants to help her grow the wheat, harvest the wheat, bake the bread. But at the end everyone wants to help eat the bread.

      3
      May 10, 2021
  8. Kirk DeBernardi said:
    * creates fantastic apps…

    (got timed out before editing)

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    May 10, 2021
  9. Kirk DeBernardi said:
    Looked at another way, isn’t it really the size of Apple’s profits and not the size of its percentage-take that has others pissed off?

    Shame on Epic. No one has yet to complain about the size of their profits.

    3
    May 10, 2021
    • David Emery said:
      The outrage against “excessive profits” will grow, worldwide, I expect. Look at the continuing growth of “excessive executive compensation” judgements.

      Now I think the problem is not income inequality, but rather the inequality of opportunity. Everyone should have the equal opportunity to get (stinking) rich, and that’s just not the case right now. But instead we get proposals about trying to provide ‘equal results’, and that’s both bad policy and bad economics.

      4
      May 10, 2021
      • Kirk DeBernardi said:
        @ David Emery —

        Agreed.

        As we all know, things don’t get big and popular simply because they exist. Either things are needed, wanted or (hopefully) desired.

        Equal success is not commensurate with equal opportunity. So— to what extent this big success/profits?

        An End-User Value Proposition for one. Utility number two. Self-satisfaction third.

        Sorry, Apple fires on MOST of these pistons MOST of the time with MOST of their products with MOST people whose can discern and enjoy all three.

        So how does Apple “interfere” with this process in this case? Is it a matter of building a better mousetrap or having the only mousetrap? At what point do we arrive at “unfair” profits from such?

        Does this tree deserve trimming?

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        May 10, 2021
  10. Thomas Larkin said:
    Has Epic shown its crusade will do anything whatsoever for consumers? Epic is just attempting to insert itself into the revenue stream flowing from iOS Platform Users (i.e., consumers, who care about privacy and security), to Game App Developers (i.e., the ones actually doing the creative work), by contractually tying up and then bundling the game developer’s games. How does letting Epic insert itself into that revenue stream decrease game prices charged to gamers? Small Game developers in particular get a pretty nice deal from Apple directly, and a lot of value for their money. So the only one losing here if Epic is denied relief, is Epic.

    1
    May 10, 2021
    • David Emery said:
      If everyone is charging 30%, it’s hard for Epic to make a solid argument for how consumers are harmed by the Apple Store’s 30%. By some legal theories, if you can’t show a direct financial harm to consumers, you don’t have an illegal monopoly. (I’m not sure how widely that theory is believed in the judiciary, but as I recall it did pop up during the various filings and discussions on the Apple Ebooks case.)

      0
      May 10, 2021
  11. A recent fund-raising letter sent out by Senator Josh Hawley advises « Silicon Valley mega-corporations are…trying to run me out of office. »
    He calls for ‘the break-up of the powerful and abusive Big Tech monopolies.’ ´Big Tech has joined forces with woke mob.’ His fund-raising letter provides no specifics but his supporters appear to eschew facts anyway.
    Sen. Klobuchar is not far behind Hawley’s position. Both are throwing crap at the wall to see what sticks.
    This bitching about Big Tech is quite in vogue. No mention at all of global economic benefits, jobs, taxes paid or those very useful phones, laptops & tablets every politician now totes.

    2
    May 10, 2021
    • David Emery said:
      Where would the World Economy be without the computer/internet technology industries? If there was no easily executed work-from-home through broadband, devices, servers/cloud and especially software, we’d be in a serious world-wide depression, I suspect.

      2
      May 10, 2021

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