Epic vs. Apple: Quick thoughts from Monday’s closing arguments

Dashed off without benefit of notes, recordings or a law degree…

On market definition:

Epic wants to define the relevant market as Apple’s app distribution system. Apple wants to define it as the smartphone market. At one point the judge suggested she might define it as the market for mobile games, which tends to favor Apple because it doesn’t have dominant share of that market.

The fairness prong: 

Apple could be on the hook even without a monopoly, according to Epic, by the third prong of the Sherman Act (I think that’s what they said). Apple maintained the court must pass the first prongs (including finding that Apple has monopoly control of the relevant market) before it considers fairness.

Balancing act:

Balancing comes up when the defense (Apple in this case) offers what it maintains are sound competitive reasons for the alleged anticompetitive behavior. In that case the judge must weigh those benefits against the harm to consumers that would be caused if the behavior was curtailed. The judge seemed to feel that was an exercise she would have to perform.

In-app purchases:

As she did when questioning Tim Cook, the judge noted that impulse in-app purchases are enormously profitable for Apple and that the company seems to face no competitive pressure in that space. One idea she floated with Tim Cook is that Apple get paid only once — when it brings the gamer to the game — and that the rest of the revenue from in-app purchases should go to the game publisher.

The walled garden:

The judge seemed receptive to Apple’s argument that letting Epic’s app store — and apps Apple hasn’t approved — into the walled garden would destroy the relatively malware/porn/crime-free ecosystem Apple has worked so hard to create and sustain. Not good for Epic.

I was riding my bike during the debate and missed some of the colloquy. Feel free in the comment stream to correct my memory or fill in the blanks.

13 Comments

  1. Aaron Belich said:
    If epic wins any of this, the console market will implode.

    3
    May 24, 2021
  2. Kirk DeBernardi said:
    On Market Definition:

    Hang any name you care to on it. It’s the core of what this is really all about. Epic wants “a store” to be redefined in its favor. Their strategy is to force the courts to redefine the predefined.

    On the Fairness Prong:

    Monopoly? When developers can submit their apps to all platforms? Of course they PREFER to go where the money gets spent.

    On the Balancing Act:

    “…harm to consumers that would be caused…” — The supreme danger (see Market Definition above).

    On In-App Purchases:

    “One idea she floated with Tim Cook is that Apple get paid only once — when it brings the gamer to the game.” Most apps are free — and increasingly so. Establishing an “outside” payment system just for in-app purchases could potentially negate the buy-in purchase.

    On the Walled Garden:

    Customers fully appreciate (and will INTENTIONALLY pay for) a walled garden if the walls keep the bad stuff out. Proven. (Sorry it’s made Apple so successful to the masses.)

    3
    May 24, 2021
    • David Emery said:
      On in-app: What’s to keep Epic from placing a free ‘game shell’ in their store, then using Apple’s IP to sell games to run on iOS through the ‘game shell.’ Apple would get $0. Is that in any way “fair?”

      2
      May 24, 2021
    • Gregg Thurman said:
      Should Wal-Mart (or any retailer) be limited to first sale profits, and not on subsequent sales?

      The AppStore is a store and ALL stores have a
      “Monopoly” on what is sold in their respective stores. You can’t get a Big Mac at Burger King. There is zero precedent forcing a retailer to carry items it doesn’t want to, and to me that “theory” is so full of holes it gives Swiss cheese a bad name.

      I’m not aware of ANY store allowing a competitor to set up shop, using their own cash registers without being compensated for the privilege. Best Buy got compensated when Apple’s “Store within a Store” program was initiated.

      Every anti-trust argument Epic has made is unsupported nonsense. Frankly I don’t expected Rogers to take an inordinate amount of time deciding guilt. The time she takes will be governed by precedent research. As there isn’t any precedent supporting the facts as presented the research part of the decision won’t take long. Her opinion will, she doesn’t want to be reversed on appeal.

      3
      May 24, 2021
  3. Fred Stein said:
    Even with bad hearing, walking the dog, driving to Whole Foods while getting the sound piped to Tesla from my iPhone (I know….). The hearing aid blue-tooth’ed to the iPhone gave better quality. Even so, it was thrilling. YGR was tough on everyone, tested every argument, played devils’s advocate.

    I’m optimistic.

    One time, she stopped Epic’s lawyer cold, when he introduced a prior case that was over-turned. Strong positive, IMO.

    5
    May 24, 2021
    • David Emery said:
      “One time, she stopped Epic’s lawyer cold, when he introduced a prior case that was over-turned.” That implies a judge who has done her homework, and a lawyer who got caught with his/her pants down.

      7
      May 24, 2021
  4. Kirk DeBernardi said:
    While it’s probably a long-recognized observation to most Apple 3.0 subscribers, it bears repeating; the side that can best educate the judge on the law stands the best chance of prevailing.

    5
    May 24, 2021
  5. Michael Goldfeder said:
    These are very high priced law firms involved on this case representing both sides. That being said, citing case law that was overturned is inexcusable in a courtroom anywhere. It also shows either complete ignorance and utter lack of preparation, or worse yet, playing the judge for a fool.

    That type of egregious error isn’t tolerated in Federal Court and further exposes the ineptness of Epic’s extremely flawed case from front to back.

    7
    May 24, 2021
    • David Emery said:
      Judge: “Counsel, should I conclude that you are incompetent and didn’t know about the decision being overturned, or that you think I am incompetent and wouldn’t notice?” 🙂

      5
      May 24, 2021
  6. Dave Ryder said:
    I think that Apple’s overall “take” on the App Store is reasonable. Doesn’t Apple deserve, say, 10% of the value of all Apps? If yes, then how does Apple collect that?

    2
    May 24, 2021

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