Thread by @doratki

I'm back in court for day 6 of Epic v Apple, sitting alongside @Siliconlaw who's the pool reporter today. I'll be live tweeting. Judge Gonzalez Rogers is back on the stand. Let's goooo

Epic's marketing guy Matthew Weissinger will be back on the stand to wrap his examination before Epic calls its first antitrust expert economist David Evans. The attys are discussing housekeeping issues at the moment - mostly docs/evidence stuff.

Before getting Weissinger back on the stand, the judge reminded attorneys to introduce themselves before they speak for folks listening via the audio live stream. (Yes plz. Reporters haven't memorized the sounds of your voices.)

Weissinger is back on the stand explaining Epic's promotional events. His voice is much more clear in the courtroom compared to live stream. You can actually hear/understand what he's saying, and he doesn't sound like a muffled fog horn.

Weissinger says Apple's partnerships w/ Epic "always felt in some sense fly-by-night," and Apple made last-minute exclusivity requests that seemed "opportunistic" and burdened Epic's marketing team.

The judge presses him, asking if Epic's promotions w/ Sony and Nintendo were "one-sided" deals that only benefit Epic. He replies no they benefited both, but Apple "just seemed opportunistic" in supporting Epic content & not its business. (I assume he means 'new Epic content.')

Weissinger says in 2018 Apple leaked Epic's "battle key content" and then in 2019 leaked Marshmello's playlist for an Epic virtual concert, and in October 2019 leaked Epic's 'Chapter 2 launch,' which was a sequel launch of Fortnite that was Epic's 'biggest event we had.'

Weissinger lists off Epic's iOS user stats and connections. The judge stopped him surprised "Are you tracking people’s connections?" He replies yes, b/c that's how Fortnite players have connections in the game. Judge: "And people know you’re tracking them." Yes, he replies.

Apple's atty is up on cross now, pointing out that Fortnite iOS users made up 4% of game revenue. Weissinger says that sounds about right. Atty asks him why Epic hasn't shown the judge Fortnite yet on the 6th day of trial. Weissinger says they showed her a video of it Friday.

Apple atty is walking through Fortnite's 'game modes' and how people play. He shows a game screen w/ a large yellow banana man wearing a suit.

Witness: That's Peely.

Atty: We decided to go with the suit instead of a naked banana since we are in federal court this morning.

Apple's counsel is showing a ~30 second clip of Battle Royale Fortnite game mode. There are a lot of beefy looking characters running around in various scenic locations shooting at other characters and blowing them up with what looks like grenade launchers.

Apple asks the witness a series of q's that basically seems to just get him to acknowledge that Battle Royale is a first-person shooter game.

Now we're moving on to Fortnite's Party Royale mode. The suited banana man - Peely - is back on the screen, running around and then skydiving while suited. When he lands he does a special dance. Apple's atty points out that it costs over 1k "v-bucks" to make Peely do the dance.

Next up, is "create mode" in which Fortnite users make their own 'islands.' The suited banana man is back, 'building' a virtual tree. (Gosh, I hope the game itself is more entertaining than listening to this attorney's descriptions of it.)

Apple's attorney is having the banana man check out different 'doors' he can enter to play other games in Fortnite. The atty points out the one of the most popular games is a game in which users can either 'escape prison and cause mayhem in the city' or be a guard.

Apple attorney shows another video, this one of real people hooting and hollering as they're playing Fortnite "Creative Mayhem" mode, which seems to be mostly a bunch of avatars running around and shooting/blowing up things.

Apple counsel's line of questioning seems to be focusing on the shooting/violent aspects of playing Fortnite, perhaps to counter arguments that Epic has made against Apple's app review process, which has overlooked at least one potentially offensive school shooting game.

Apple's attorney shows Fortnite's v-bucks, which range $7.99 to $79.99, and says his co-counsel's 11-year-old son is happy his account has been "racking up his v-bucks" as they've used it to prepare for trial. Epic objects to the comment. The judge replies 'it's not a question.'

Apple's Fortnite 'tutorial' wrapped. Now atty asks Epic's Weissinger if he knows the age and gender of most Fortnite users. Weissinger replies he doesn't, b/c Epic doesn't collect user age stats, but he eventually acknowledges Fortnite's 'core demographic' is male, 13-25 yr olds.

Apple's counsel points to survey data (unclear where this data is from) that says 13-17 year olds don't regret "splurging" on video games and 63% follow "online celebrities/creators."

Wow. It seems like this trial has devolved into a fight over children playing video games and whether first-person shooter games are bad.

Apple's attorney points to an internal 2019 email in which Epic exec wrote Epic "secured the opportunity to take over the App Store on the release of Chapter 2." Evidence seems to counter testimony that Apple leaked Epic's Chapter 2 Fortnite release.

Apple's counsel points out Fortnite users could shoot each other leading up to the Marshmello and Fortnite virtual concerts and The Verge wrote at some point that the events were "bloodbaths." The witness says it wasn't, b/c "there's no blood in Fortnite."

Apple's counsel is depicting Fortnite as a killing game, where users shoot and club each other to death. The Epic exec replies 'there’s no killing, there’s eliminations.' The judge asks if there's a difference. The witness explains eliminated users don't die, they "teleport out"

Apple's attorneys point to a 2020 email in which Weissinger wrote "I know Apple can keep secrets." He also gets Weissinger to concede some of Epic's other promotional partners leaked Fortnite info.

Apple's attorney points to the marketing VP's notes that he saved in draft emails. One note recommends Epic goes "the nuclear option" w/ launching on Google Play Store and another that says "create narrative that we are benevolent." He replies 'I have no idea the context.'

We're taking a 20 minute break. (And I am going to spend it looking through my draft emails to see what brilliant notes of mine would apparently be discoverable in litigation.)

We're back. Only a few more q's for Epic's marketing exec before moving on to antitrust experts. Apple's counsel points to email chains showing Epic had a "war room" slack channel prepping for the hot fix that circumvented Apple's in-app payment system.

Epic's back on redirect, and the judge asked Weissinger if he can quantify the percentage of users who play Fortnite's games versus their user experience mode. He says he can't quantify it.

Judge: Do you have documents that quantify it?

Witness: I believe we do.

Epic's counsel follows up on Apple attorney's banana-man suit comment. She asks the witness if there's anything inappropriate about the Fortnite character "Peely" if he doesn't wear a suit. (She shows an image of him on the screen.)

Witness: No, it’s just a banana man.

And the parties wrapped with Weissinger. (Could've really used more banana-man apparel testimony tbh.) Epic's called @ucl economics professor David Evans, who specializes in industrial organization and antitrust economics, to the stand.

Evans is on the stand, explaining Epic's proposed antitrust market, which consists of iOS app distribution, but no other non-Apple products. Testimony is going to get pretty theoretical going forward. Think Econ 101.

Evans says in his proposed market, developers are the customers, apps are the product and Apple's App Store is the distributor. Apps don't compete for distribution and he compares Apple's App Store to steel makers and Amex credit card network, which distribute products/services.

Evans says game consoles aren't substitutable for Apple devices and the iOS App Store, because they aren’t mobile, can't fit in your pocket, and they don't have cellular connectivity (ie. they need wifi).

Evans is going through data: In 2019, 83% of US adults have a smartphone, 77% spend their online time on their phone - not PCs/laptops - 89% are using apps when they're using their phones. The avg time is 3 hrs a day.

Evans is explaining that Mac/Windows/iOS/Android have general purpose operating systems, which are generally open to various apps, and it's distinct from Xbox/Sony/Nintendo's gaming systems, which are special purpose for games.

He says gaming consoles aren't profitable (which echoes testimony a Microsoft exec gave earlier in trial) but the judge stops him and wants the cos' specific stats:

"I’ve heard this now a number of times, but we’re in court of law and in court of law. We need facts," she says.

Evans explains that he's seen Microsoft's profitability data on game consoles and its estimates of Nintendo and Sony's $$, and says he doesn't think it's a contested issue.

An article Evans wrote titled "Vertical restraints in a digital world" mentioning iPhones just came up. The judge asked if he ever addressed the "overlay" of IP law or the 20 yr IP investment return. He says he has, but not in this article. Unclear where the judge's q came from.

Evans says game consoles aren't substitutable for smartphones, and notes that data shows users with game consoles have smartphones as well. He says PCs are a "closer call," but portability and cellular data access makes them also not substitutable.

Evans says Apple has 'substantial market power' over smartphone OS market. He shows a graph w/ data 2008 to 2019 showing that in 2019 Apple's iOS had ~40% and Android had ~60% of the market excluding China.

The judge asks Evans what year Android and iOS became a "duopoly" over the OS smartphone market. He says in 2010 there as a 'dramatic movement' of consumers to iOS/Android as more folks dropped Blackberry and cellular connectivity improved.

Taking a 40 minute lunch break. Brb

We're back. Evans is on the stand, explaining that in-app purchases aren't included in his proposed market definition and going into lengthy explanations on potential OS 'foremarket' constraints. Testimony is dense.

Evans says in the absence of Apple's restrictions there would be multiple alternative app stores on Apple devices, and it's currently a "single-brand market."

Evans says data he studied showed that most Fortnite users who only played Fortnite on their phone didn't switch to other platforms to play after the game was removed from Apple's App Store: "It’s not like there’s no substitution, it’s just that there wasn’t much substitution."

Wonder if Apple knew Epic's economic expert was keeping track of this data when Apple kicked Fortnite outta the App Store after it learned of the hot fix last summer.

Judge Gonzalez Rogers asks Evans if his analysis considered her decision on Epic's TRO bid requesting to get back in the store, b/c some users "may have been waiting." He says his data doesn't consider her ruling.

Epic's counsel points to Steve Jobs' comment to press in 2008 saying "‘We don’t intend to make money off the App Store," and "we are basically giving all the money to the developers here and if that 30% of it pays for running the store, well that will be great."

Evans says Jobs' comment doesn't mean Apple was planning to run a "charitable enterprise," and in fact Apple's profit margins on the App Store are "obviously high" compared to other bizs and it's grown between 2013 and 2020. He won't specify numbers.

Really hoping Evans will slip up and throw out a $$ amount on those App Store profit margins.

He says Apple's App Store profit margins "provide evidence of market power bc in a competitive environment I would have expected the margins would have declined either as a result of prices falling or as a result of substantial investments in the App Store."

Evans says if Apple capped its App Store profit margins in 2019 at $1 billion and reduced its commissions rate accordingly, the app commission would be 6.8% and not its current 30%.

(Doing the reverse math on that, I think it's safe to say that Apple made more than $4 billion in App Store profit margins that year.)

Getting closer to wrapping trial for the day and a bit of levity. Starbucks and Tinder icons are on the screen. Evans said he "has no personal experience" w/ Tinder, and his kid explained the app to him, but it uses a different payment solution than Starbucks.

Judge asks if people use Tinder on PCs. Evans says they can subscribe on PCs, but people mostly use their phones and Apple's anti-steering restrictions make it 'v difficult' for users to know that they can use other devices.

Epic's atty clarifies that also has never used Tinder, but he's explaining that Tinder works by using location. The judge says she has also not used Tinder, but asks if users can buy 'likes' from their PCs. He says he doesn't know. (OMG move over, lemme give you a tutorial.)

And with that they've wrapped trial for the day. (Just in time too - that Tinder line of q was real special.) They didn't make it to Evans' cross yet. I'll be back in court tmr as the designated pool reporter, sitting alongside @mslopatto✌️