Thread by @b_fung

Thanks to the incredible @leah_nylen the press is able to view the remote proceedings now underway in Epic Games v. Apple. Updates to follow.

https://twitter.com/b_fung/status/1310617879847542786

The debate right now is over how to define the market that Apple is allegedly monopolizing.

Judge Yvonne Gonzalez Rogers is pushing Epic on its claim that the relevant market is iOS app distribution, asking why it isn’t “video games” writ large.

Epic’s lawyer argues that many Fortnite players “don’t have multiple devices” to play Fortnite on.

Apple’s lawyer argues there are “many channels” for Epic to distribute Fortnite on besides iOS.

Aaaand it looks like the Twitch stream of the Zoom stream has been taken down after a warning from the court that video recordings of the proceedings are prohibited. Welp… guess that’s that (unless people feel like playing a game of cat and mouse)

Before the stream cut out, I saw a glimpse of the Twitch chat. It was filled with messages critical of Apple.

Back on the stream. Judge Gonzalez Rogers seems very skeptical of Epic’s case that this right now is about iOS app distribution.

“You want access to Apple’s customer base. That doesn’t necessarily mean you’re locked in,” she says.

Epic’s lawyer responds that 63 percent of people who play Fortnite on iOS play it “only on iOS” and that Epic has lost access to those consumers.

Apple’s lawyer: “What Epic wants to do here is open its own store within the App Store. That’s really what this litigation is about, that’s really its objective. … That is a fundamental disagreement with the way Apple has chosen to do business."

Apple’s lawyer adds that Epic’s stat about 63 percent is misleading.

“That just tells us if we look at everyone who has ever opened Fortnite on iOS, that they didn’t use others… perhaps they looked and lost interest, we don’t know.”

The more relevant stat, Apple argues, is that less than 10 percent of Fortnite’s daily average playerbase accessed the game on iOS, implying that consumers have lots of choice when it comes to getting to Fortnite (and thus Apple’s action against Epic isn’t anti-competitive).

Epic’s lawyer comes back to the 63 percent figure, saying it represents 71 million people who only access Fortnite through iOS, saying there’s now no way for those people (absent switching phones or gaming devices) for them to play.

The judge isn’t persuaded that people who’ve lost access to Fortnite on iOS can’t simply switch to another device.

Judge YGR: “Walled gardens have existed for decades.”

Cites Nintendo, Sony, Microsoft.

“It’s hard to ignore the economcis of the industry, which is what you’re asking me to do."

This is seemingly a very different take than what the judge outlined at the last hearing, when she indicated that she is very familiar with the research literature on consumer switching costs and effective barriers to competition.

This is a brutal hearing for Epic. The judge is very skeptical.

We’ve moved on to allegations of anticompetitive tying and a debate about the role of Apple Pay and in-app purchases in Apple’s alleged dominance.

The judge is not persuaded that Apple’s use of Apple Pay is a form of tying. She doesn’t think it’s a separate “product” that allegations of tying would imply.

Apple’s lawyer goes in for the kill, agreeing that in-app purchases have “never been offered as a product… it’s utterly distinct from the tying of a second product to a first."

Apple’s lawyer: “At the end of the day… this is simply an element of the App Store, which is an element of the iPhone. It is a fully integrated product.”

(Seems bold to claim the App Store is merely an “element” of the iPhone when Apple’s services shift has been well reported!)

Correction — this was about in-app purchases, not Apple Pay.

https://twitter.com/b_fung/status/1310636829591449602

Epic is currently going over what it says is the irreparable harm it’s being caused by Apple’s conduct.

Key businesses affected, Epic says, include Fortnite concerts and Unreal Engine.

Apple lawyer Ted Boutrous argues Epic CEO Tim Sweeney is "trying to be the Pied Piper of other developers” and show that they too could “cheat, breach its agreements, and sneak in software to bypass app review” — that this a direct assault on Apple’s core business.

Apple says a finding for Epic would be "a greenlight to other companies, and that would be very dangerous."

The judge tosses Epic a small bone, saying that under other circumstances, Apple would be within its contractual rights to do what it did. But:

“This is no small case. All the developers know that… this is not an ordinary case."

But then challenges Epic to describe when Apple transformed from being an “innovator” to a monopolist.

Epic’s lawyer Katherine Forrest argues Apple had been a monopolist from the very beginning but that it didn’t become unlawful until 2018 when it entered into a contract with Epic.

The judge is getting pretty heated now. She says Epic “lied” and accuses it of dishonesty for implementing the hotfix despite being told in the contract with Apple not to.

Judge YGR: “There are a lot of people in the public who consider you guys heroes for what you guys did, but it’s still not honest.”

This dovetails with what she said in the last hearing about how Epic doesn’t come to this with “clean hands."

This seems like a really big sticking point for the judge.

She says:

“You did something, you lied about it by omission, by not being forthcoming. That’s the security issue. That’s the security issue!"

Judge YGR to Epic: "There’s that old saying, ‘A rose by any other name is still a rose.’ You did it yourself. It’s self-help."

The judge says flat-out that she has never been persuaded by Epic’s claim that its hotfix reflects it refusal to comply with an anticompetitive, illegal contract.

And she isn’t persuaded by it now.

Kind of a backhanded compliment by the judge about Epic’s media strategy:

“Your marketiing campaign has been applauded, given your conduct."

Epic’s defense is that “when you are taking on the biggest company in the world, … where you know it’s going to retaliate, you don’t lie down in the street and die. You plan very carefully on how you’re going to respond, and you try very hard to keep your head above water."

Epic is unapologetic about its tactics, saying they were necessary in order to “take on the biggest company in the world."

The judge says she thinks this case should be tried before a jury.

She elaborates: “You might as well find out what people really think and want and take that… it is important enough to understand what real people think.”

She acknowledges that her court is just a “stepping stone” and that whichever side loses is likely to appeal.

They’re just talking logistics now for the trial schedule. We’re nearing a close here, people.

The judge warns that she has another case going to trial in June.

We’re unlikely to see a trial in this case before July 2021, she said.

And that’s it, we’re out.

On the whole, it seems like a tough day for Epic.

On the request for an injunction, all the judge would say was “you’ll hear from me in writing” without giving much of a timeframe.