Thread by @nickstatt

Day Three of Epic v Apple kicks off at 11:15AM ET & we’re hearing from more third party witnesses and our first Apple exec.

- Nvidia’s Aashish Patel
- Xbox VP Lori Wright
Andrew Grant, Epic engineering fellow
- Thomas Ko, Epic senior director
- Matthew Fischer, App Store VP

Here’s a recap on Sweeney’s day-two testimony yesterday, in which we heard his thoughts on the definition of a video game and why he sees App Store fees as an existential issue for Fortnite’s future. protocol.com/apple-epic-tri…

And @thedextriarchy at The Verge has an excellent dive into yday's debate around “cross-wallet” in Fortnite and how the ease of web purchasing on iOS is proving super tricky for Epic’s case. theverge.com/2021/5/4/22419…

Today begins with Judge Gonzalez Rogers questioning the validity of both sides’ expert testimony.

"Im concerned about admitting any written testimony until I in fact know the factual basis on which the expert opinions are relying…”

YGR concerned she’s just hearing opinion.

Okay after some courtroom logistics and debate on expert testimony, Nvidia’s Aashish Patel is back on the stand being questioned about GeForce Now, cloud gaming web apps, and Fortnite on iOS.

Epic’s lawyer, Wes Earnhardt, is having Nvidia’s Patel establish how complex cloud gaming is and how problems with game streaming are “exasperated” when done through a web browser.

The point being: web apps suck compared to native, especially for straeming apps.

Nvidia’s Patel says the company would have much preffered a native app for GeForce Now, as it has on other devices because it “offers more control and a better experience for the end user.”

Patel asked if they built an iOS app. They did, but he reiterates that Apple pulled it.

That’s it for Nvidia. Epic is now calling Xbox VP Lori Wright to the stand.

Epic’s lawyer asks Wright abotu xCloud / Xbox Game Pass on iOS.

"Much of the policies that are in place in the App Store prevented game streaming from being possible to deliver.”

Wright says they were aable to work through some issues, but not the biggest one.

The biggest one was having to submit games for invidiual review, which defeats the purpose of xCloud / Xbox Game Pass. Microsoft complained about that last fall. theverge.com/2020/9/11/2143…

"Do you view the Xbox console as a replacement or substitute of the iPhone?"

No, Wright says. Is Xbox a replacement for iPad? No. Do Xbox users also have smartphones? Yes.

Epic further trying to differentaite phones from game consoles.

Wright says “we certainly don’t view the iPhone as a competing device. We do not see the iPad as a competing device.”

Wright now talking about the requirements of console games. “You can’t just bring that over to an iPhone,” she says. But you can stream them, she adds.

“Roughly, Halo is 50 times too large to run on iOS?” Epic lawyer asks.

Yes, Wright responds. This is all to set up game streaming as a way to bring meaningfully different gaming “experiences” to the iPhone.

"Does the xbox store compete for transactions with the apple App Store?'

No, Wright says. When asked if she’s agnostic about a user buying a game on iOS, she says yes.

But if a user buys a game on PlayStation, and that game is on both platforms, that’s taking a sale away from Xbox, Wright says.

Effectively establsihing Xbox as a competitor with PlayStation, but not the App Store.

Wright confirms the Xbox hardware business loses money on purpose.

"How much margin does Microsoft earn on the sale on the Xbox consoles?”

"We don’t,” she says. “We sell the consoles at a loss.” Asked if MSFT has ever earned a profit from Xbox sales, Wright says no.

Wright explains the new Microsoft Store commission reduction as a result of competition on PC.

Says Microsoft does not plan to reduce commission on Xbox, and doesn’t allow other app stores or direct distrubition on Xbox.

Judge YGR asking Wright to define and explain the difference between special purpose devices and general devices. Touching on whether phones are comparable to game consoles.

She says Xbox is special purpose, a phone is general.

“Just because it’s in the press doesn’t make it true,” Judge YGR says, of whehter Apple’s publicly known iOS device count is an accurate figure.

Got our ass.

Wright now talking about discussions with Apple to bring xCloud to iOS.

"At the first meeting we received directions to go and follow the Netflix model or Audible model.” Neither of which were going to work for xCloud.

Wright says issue with xCloud wasn’t Microsoft wanting to bypass 30% App Store cut, but a logistical issue.

“We weren’t seeking to negotiate rev share percent. We were seeking way to not have to rewrite all of these links and seek an aggregate way to pay the store commission."

Wow. Lori Wright reveals that Microsoft inadvertantly got the Shadow cloud gaming service pulled from the App Store when it was trying to iron out xCloud dispute. “That was not our intention,” she says.

Court is on recess and then a closed session. So here’s a lil write up on Xbox exec Lori Wright finally saying the quiet part out loud: console hardware loses money and Xbox has never turned a profit from a device sale. protocol.com/microsoft-conf…

Apple’s lawyer is taking a quite adversarial stance against Xbox VP Lori Wright, trying to discredit her testimony by casting Microsoft as an Epic ally and financially intertwined with it.

Apple’s lawyer seems to be trying to characterize Microsoft’s negotiations with Apple as in bad faith, saying Wright should know the App Store rules and that even Xbox is a closed ecosystem that doesn’t allow competitors.

Wright says App Store restrictions on cloud gaming “fundamentally break the type of service we’re trying to deliver.”

Apple’s lawyer counters, "Wouldn’t you agree Apple tried to meet you halfway?”

Apple did compromise, sort of. But not enough as xCloud isn’t in the App Store.

Apple’s lawyer now reading from gaming press reviews on xCloud, including Gizmodo headline calling it “super solid.” Trying to imply here that the web browser was a good enough delivery mechanism for xCloud. gizmodo.com/xbox-cloud-gam…

"If the xCloud app, the native app, was available on the App Store... Apple would have made money off that service?” Apple lawyer asks.

Yes, Wright says. But she clarifies that xCloud is only for Game Pass subscribers who typically process that transaction elsewhere.

"You don’t believe it's an antirust violation” for Microsoft to bar developers from distributing games directly to consumers?

I’m not an antitrust expert, Wright says.

Apple’s lawyer honing in on 30% cut. "It’s okay for Microsoft to charge a 30% commission on Xbox because you don’t make money on the consoles?"

"My justification is it’s required for us to even build the console,” Wright says. She clarifies Xbox business is profitable as a whole

Apple’s lawyer seems confused as to how a video game could be on multiple platforms, have the same name, and be a different game.

Probably being purposefully obtuse, but Minecraft is not that hard to understand.

Maybe someone with more trial experience can explain this to me, but are lawyers generally rewarded for being assholes during cross-examination? Like does it work durign a bench trial?
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Seems like Apple’s lawyer is just overly antagonist regardless of the topic at hand.

Wright, now on redirect with Epic’s lawyer, asked what would happen if the rules applying to cloud gaming applied to video streaming services.

"Netflix wouldn’t exist today,” Wright says. Because every single tv show and movie on Netflix would have to be an individual app.

"What’s the difference between Microsoft’s windows business and its xbox business?”

"Depends on how they’re used and how many people use them,” Wright says. Epic again trying to hit home the point that phones are different than consoles and consoles are different from PCs.

That’s it for Lori Wright, who faced some tough questioning from Apple counsel. Now up to Eric Grant, Epic Games engineering fellow to testify about Fortnite’s mobile ports.

Now we’re onto the really heady stuff, like defining what a “platform” is.

We’re back to basics, as Epic lawyer Katherine Forrest asks Grant very basic, foundational stuff about the game industry and technology in general.

But it’s okay. Think we could all use a breather here.

Court is now in recess until 1:15PM PT / 4:15PM ET, with Eric Grant of Epic still in the early phase of relatively benign direct testimony. Will be interesting to see cross from Apple, but not expecting a lot of fireworks until then.

Grant’s testimony, which resumed a short while ago, is finally transitioning to more relevant matter. Grant asked to explain the difference between consoles and phones/computers and says consoles are "single-purpose” devices deisgned "for entertainment.”

Technically you can plug a mouse and keyboard into an Xbox these days, but don’t think anyone is going to go to bat for calling an Xbox a computer (unlike the iPad…)

“Compare the experience of playing Fortniet on a console verses playing it on an iOS as a native application.”

Grant says Fortnite on mobile is much more portable. But console performance is better.

Grant now being asked about progressive web apps, and whehter they’re good substitives for a native app on iOS or a game built for console. They are not, he says, because of subpar performance through web apps / streaming apps.