Thread by @thedextriarchy

Day 9 of Epic v. Apple starts a little after 11. Apple's expert witness Lorin Hitt is returning, then the ball's back in Epic's court with antitrust expert Michael Cragg and a return of economist David Evans. Here's what happened yesterday: theverge.com/2021/5/13/2243…

https://twitter.com/thedextriarchy/status/1392496161353781252

We’re getting started with the day. Judge just welcomed everyone to the courtroom.

Judge asks if there are any issues to address. Nothing from Apple or Epic, but Judge is addressing complaints that witnesses were talking to lawyers during the break. Judge says there’s no law against this, and she is specifically picking when to give that instruction.

My colleague @mslopatto is in court today, she’s got some updates today as well:

https://twitter.com/mslopatto/status/1392860715602436096

Lorin Hitt is back on the stand — we’re recapping his testimony yesterday, which covered his analysis of the growth in game transactions on the App Store.

Loosely speaking, Hitt made a case yesterday that Apple’s policies and pricing showed no evidence of Apple engaging in anti-competitive conduct on the App Store, and he analyzed the output and quality of transactions on the store.

Hitt is going over the average commission rate for in-game purchases. (He’s talking really, really fast and the judge is telling. him to slow down.) So now we’re looking at a chart looking at the money developers are making on transactions.

Hitt says that commissions on the App Store have been steadily rising, but not because Apple is taking a greater cut. Instead, “what is driving this is that developers have been able to charge higher prices for in-game purchases over time."

“This is a good thing. Developers are creating more value for consumers and they’re able to charge more” as a result — so developers make more, and Apple makes more without raising its commission *percentage*, says Hitt.

Hitt says that Fortnite is no exception to this pattern, and overall, "this does not suggest Apple has raised prices, and it does suggest that game developers and consumers have been getting [higher value] on these transactions."

Hitt highlights a change Apple made in 2016 that lowered its subscription commissions for long-term paying subscribers — suggests Epic could have saved money by using this model. theverge.com/2016/9/2/12774…

Lawyer asks: Did Apple raise its prices after it allegedly gained a monopoly (a date Epic’s witnesses have put around 2010)?

Hitt: No. “Apple’s commissions have been steadily declining throughout.”

Judge gets him to confirm this applies to both initial and in-app purchases.

Hitt moves on to whether we’ve seen a *quality* decrease in the App Store. One argument against it, Hitt says, is the increased money devs make: “They’ve been able to raise their prices because consumers perceive the value in what they’re offering."

Hitt also says Apple’s technical improvements to the iPhone hardware have increased the quality/performance of apps developers can offer.

Hitt is jumping a little between things that apply to *all* transactions and things that only apply to *game-related* transactions, but he basically says there’s no difference in conclusions either way.

Hitt highlights game streaming services (including Microsoft’s xCloud and Nvidia GeForce Now, which we heard about last week) as examples of innovation that iOS has made possible. It’s a little odd given that both Microsoft and Nvidia testified about Apple rejecting their apps.

Hitt says as many as 26 percent of people switch platforms (implicitly between iOS and Android) when they reach the end of their phone’s lifespan.

Judge could definitely believe this! But Apple brought Hitt in specifically to analyze the App Store.

https://twitter.com/Ramrod316/status/1392866549883576320

Hitt says there are 78 million phone purchases every year, and Apple/Samsung/LG/Google all create products designed to make it possible to easily switch between platforms.

Epic witnesses have talked about the cost of having to enter a new app ecosystem, but “developers control by their own choices a lot of these costs,” says Hitt. “Developers do have a lot of control over how difficult that switching process is."

The vast majority of games are free to download, Hitt says, and things like subscriptions can transfer easily between devices. You might have to switch subscription providers, but you’re not paying for a new download.

Judge Rogers asks: “Even if it’s free to download, unless there’s cross-platform or cross-wallet play in games, then if you haven't used all the money in your wallet on an app in an iOS device then you'd better use it before you switch to an Android device,” right?

Hitt agrees, but he says “that’s the call of the developer” — i.e. they could let you transfer your wallet to a different platform.

Earlier in the trial Apple pointed out that some game consoles actually do control these choices — Sony stops Epic from letting you transfer V-Bucks across platform, for instance. Apple doesn’t do this.

Looking now at the other side of the market — why game developers pick the platforms they do.

Apple’s lawyer asks if developers just effectively need to build for the widest possible audience.

No, Hitt says — Niantic’s games (like Pokémon Go) are “pretty much mobile exclusive."

Judge: “It’d be hard to play Pokémon go on a console.”

Hitt: That’s true, but “it’s always a choice.” So Niantic could have chosen to build a different kind of Pokémon game that worked on both consoles and mobile.

“Technology may be an important part of that choice for some developers.” Less so for others. Niantic is “pretty high” on the caring-about-technology side.

Lawyer asking about evidence that consumers have multiple devices they can make purchases from. Hitt says there’s survey data demonstrating this.

Epic and Apple’s witnesses have extremely divergent takes on whether people play Fortnite across different platforms in meaningful numbers.

Hitt shows a chart of how iOS Fortnite players spend money. “Many people don’t play anything, and a lot of people purchase on other platforms."

Hitt: “Most of the activity, both gameplay and time, is on non-iOS platforms, even for iOS users.” And there’s also an important distinction between playing on a device and paying on it.

Hitt brings up, for approximately the billionth time in this trial, the fact that you can buy V-Bucks on a web browser. (Side note, upon clicking around Epic’s website for V-Bucks buying info, the process honestly seems either difficult to find or somewhat convoluted.)

He doesn’t lay out examples, but my understanding is more the other way around — things like Apple’s “move from Android to iOS” tool support.apple.com/en-us/HT201196

https://twitter.com/jessaay99/status/1392875949058928645

Another example of whether Fortnite players switch between platforms — Hitt ran an analysis concluding that Fortnite launching on the Switch drew people away from iOS.

https://twitter.com/leah_nylen/status/1392876087093366785

“We heard a lot about friction this week,” lawyer says. Notes Sweeney’s testimony saying in-app purchases can’t be sufficiently replaced by out-of-app ones like a web browser purchase. “Was that testimony consistent with what you’ve heard from other app developers?”

Hitt gently disagrees — other developers say they can get consumers to participate on multiple platforms, he says.

Hitt is skeptical of the entire argument that Apple is forcing developers to add friction. “Maybe we’ve just gotten habituated to the fact that things are easy to do,” he says. But compared to the physical world, he says, we’re talking about tiny delays.

Hitt compares “leaving an app and spending a minute or two in a web browser” to having to check a convenience store price, then walk across the street to find a cheaper option.

“I’d say the types of frictions we’re talking about here that are supposedly insurmountable seem very small compared ot the ones you’d see in the real world."

Apple’s lawyer takes a dig at Epic witness testimony from a couple days ago, asks Hitt to confirm that the standard for friction is “not whether you can do this with a baby on your shoulder, correct?”

"I wouldn’t even go there.”

“Let’s talk about an exceedingly popular app that no one in the court has ever used, Tinder.” Apple’s lawyers are definitely reading our tweets.

Hitt says you can use a version of Tinder on a mobile browser.

“Whenever I talk about Tinder in my class, every one of my students, especially Ph.D. students, uses it.”

“May I approach and provide some binders?”

📒📒📒📒📒📒📒📒📒

(not a representation of the actual number of binders in court)

in MY day we used okcupid and we filled out ten pages of personality tests before we got started and we LIKED it

Cross-examination of Hitt now. Epic’s lawyers are talking about game streaming services (xCloud, GeForce Now, etc.) “You agreed that those streaming services are not able to be native apps on iOS, correct?”

“That’s correct,” Hitt says.

Lawyer trying to draw a comparison with what the effects would be if Netflix was kicked off the App Store. Hitt isn’t biting, and we’re moving on.

Epic’s lawyer compares App Store to patent monopolies — where inventors can extract rents but only for a limited time until the patent runs out.

But “Apple’s position is that it’s entitled to this 30% forever,” Epic lawyer asks.

“Apple’s commission scheme is that if you sell something on the App Store, it gets 30%. I don’t think there’s a temporal element,” says Hitt. “It’s not a comparison I’d draw."

Epic lawyer going back to the pie chart we saw earlier. He characterizes the iOS-using group that only buys on non-iOS as "essentially somebody who once in their life, or maybe more, opened Fortnite on an iOS device” but spends money elsewhere.

Lawyer is running down digital stores lowering their commission rates before Apple dropped its rates in late 2020 — Hitt says Valve did, but doesn’t name anybody else.

Asks if there’s a direct link between those two — Hitt says he’s not aware of any indication that Valve’s decision impacted Apple’s.

Apple certainly didn’t announce it was lowering its commission to compete with anyone, did it?

“I don’t recall anything of that form."

“Apple’s price was not set by … supply and demand,” right? Just a desire, Apple said at the time, to support innovation.

Not necessarily true, Hitt says. “It’s a response to enhance the overall [ecosystem].”

This is the price change they’re talking about, for background: theverge.com/2020/11/18/215…

Implication here is that Apple isn’t being constrained by market forces, so there’s nothing stopping it from arbitrarily raising and lowering prices.

Lawyer asks if Hitt controlled for general advances in technology (he names Moore’s Law or broadband speeds as an example) that could have helped the growth of the App Market outside any innovation by Apple.

(Cellular broadband speeds, to be clear — so you can stream more easily than you could when the iPhone was introduced, etc.)

Hitt: “There’s no controls in there, because I don’t believe it’s appropriate to remove the innovations Apple has contributed."

We’re going to take a 20-minute recess; Apple’s witness is not allowed to talk to anybody, sorry. Back at 1:35.

A question for people who know trials more than me, but in general I imagine a combination of “serious penalties” and “everyone can see each other around the courthouse”

https://twitter.com/DaNnShinji/status/1392892354034638853

We’re back with Hitt, who is now trying to divide up markets in the App Store by definition. So, for instances, games versus game development tools.

Epic’s lawyer is bringing up Houseparty again, implicitly demonstrating Epic has non-gaming services. Also asks if Hitt has analyzed the position of the Epic Games Store in the App Store market. He has not.

Oh no Epic’s lawyer asks if Hitt has defined games...

“I rely on self-identification [in the App Store].”

Crisis averted.

“You assume Roblox is a game, correct?”

“I don’t assume, I rely on classifications provided by developers.”

To recap an Apple exec previously described Roblox as not a game and the experiences inside it as definitely not games, but Roblox uses the “games” category on iOS and Hitt appears to describe it as a game. Trial is a real rollercoaster ride for Roblox.

To be clear Roblox is totally uninvolved in this trial, but I increasingly wish it would come testify.

Weirdly enough they said it classified itself as an app, which as far as I can tell is not the case

https://twitter.com/jessaay99/status/1392899070382026757

Lawyer pushing on Hitt having only studied a small subset of iOS Fortnite players in his analysis that Switch cannibalized iOS usage. “Even if we were to accept your analysis as showing some kind of switching, all you could show at most was that 0.3 or 0.4% at most” had done it.

I luckily/unluckily cannot see this spreadsheet and I am kind of lost

https://twitter.com/doratki/status/1392904150120157184

The lawyer is discussing an app/game called “Words Story,” which is either the best or worst permutation of the “___ Story” title convention I’ve ever heard.

introducing my new game Narrative Story

Good summary here on why the Words Story example matters

https://twitter.com/mslopatto/status/1392906379824828418

These examples are drawn from a data set Hitts compiled on games available on various platforms.

Side note to the whole Roblox trial drama, @patrickklepek has a cool profile of a full-fledged game studio that operates inside it vice.com/en/article/z3x…

oh no @patrickklepek what have you done

Back to Hitt — lawyer says that the point of his analysis was to show developers were cross-building for different platforms, but some of the games he’s citing aren’t actually on PC. “Developers develop the same game on mobile and PC — that’s [what you testified, right]?"

“There are a number of these games that are available through emulators,” Hitt says of some other games on the list. I don’t know where this is as testimony, so I’m not clear whether he’s specifying explicitly legal/authorized emulation here.

A lot of emulation involves games where there’s not an easy way to get the file *explicitly* legally, though — it’s a big enough part of the market that I’m curious how he’s parsing it.

https://twitter.com/jessaay99/status/1392908882847088644

Hitt said “many game developers” let developers purchase content on a different platform and then use it on iOS. Lawyer says it’s only a small fraction of the sample, though.

We’re looking up Candy Crush Saga, as an example of a thing that supposedly is on web — “my understanding of it is you can transact through a web browser,” says Hitt. Lawyer tries to click through King’s website, but it inevitably directs people to apps on mobile or desktop.

“Is there not candycrush.com?” judge asks.

(Technically there is, but it redirects you to the developer King’s website.)

We’re trying the same thing with Clash Royale — going to the website and looking for ways to pay without going through an App Store. But Clash Royale says it processes through either Apple or Google on the website.

“And yet you believe that your team managed to go into a website and buy legitimate Clash Royale money and go back to the app? That’s your testimony?"

“Do you believe you’d get any different results if we tried Big Fish Casino?” Lawyer says his own team tried and wasn’t able to do it. He also says that the average user isn’t going to have a research team that deliberately hunts down alternate payment methods.

I’m not in court so I cannot see what they’re doing with this — there’s a web app version of the game, as far as I can tell

https://twitter.com/notHarryHarland/status/1392911821007466503

(I’m not positive you can buy funds through it, especially if you want to transfer to other accounts, which is what they’re talking about.)

Apple lawyer and Hitt are disputing the idea that apps having different developers (something Epic pointed to as a sign they weren’t equivalent) means they’re different games — Hitt notes that different studios can port the same game.

Judge asks if Hitt actually went through and tried to spend money in the games Epic was describing. “It looked pretty difficult based on the examples they provided,” she says.

“Do you have any logical explanation for why you couldn’t get to it during the cross-examination?” judge asks.

“There were a number of other links in there” on the page, Hitt says — the research team would go through and they could find a way to do it.

(This doesn’t necessarily refute Epic’s argument that most people don’t have a research team to find the best payment method.)

Lawyer brings up Epic’s earlier question about why Hitt didn’t control for general technological advances like Moore’s Law.

“Moore’s Law is not magic. It happened because developers and hardware engineers and Intel and Apple and Samsung and many other manufacturers do the engineering to make that happen."

Hitt’s also revisiting Epic’s criticism that he didn’t analyze behavior of all iOS users who adopted the Switch. “I was not trying to find all Switch users … I was trying to identify the population that would be most informative.” Also, "457,000 is a pretty big number."

Epic’s lawyer is back now, criticizing the idea that “comparable games from a different developer” are good equivalents to each other.

Epic lawyer appears to be construing what Hitt is describing as knockoff games, while Apple lawyer interprets it as licensed ports.

Epic’s lawyer is also grilling Hitt about emulators — Hitt says he saw entries in the Microsoft Store with “download links to games that look like they’re running emulators.” I’m not totally sure what this means.

There are nigh-identical-looking versions of “Words Story” on iOS and Microsoft — possible one is pirated/unauthorized, but I legit can’t tell which one

https://twitter.com/pixelquips/status/1392917647919099906

Lawyer asked about a “green arrow” showing the growth rate of digital games and the App Store, I briefly misheard it as “dream arrow” and now I’m sad.

With that anticlimax, Hitt is stepping down.

Michael Cragg is our next witness. He’s an antitrust expert whose clients include (among many others) Gawker and Ozzy Osbourne

I didn’t realize Ozzy Osbourne had an antitrust suit but I guess he did in 2018! rollingstone.com/music/music-ne…

Unclear whether Ozzy Osbourne is a game or an experience.

Here’s Cragg’s written testimony rebutting Apple experts (he’s with Epic) storage.courtlistener.com/recap/gov.usco…

Apple and Epic’s expert testimony is basically “your market is too narrow *and* too broad!” on top of the pointing Spider-Man gif

Cragg is applying this test by looking at a collection of popular mobile games. This is not the same list that we just went through with Hitt

https://twitter.com/mslopatto/status/1392922460274577408

Cragg uses a category called “static platforms” for platforms where you’re basically tethered to one place — it’s roughly equivalent to the “console” definition other people have used, complete with the incredibly tortured placement of the Nintendo Switch.

“You never did an analysis of Switch in the mobile context?” judge asks.

Cragg says the crossover with mobile games and Switch was “very limited."

Nintendo doesn’t “as a company” look to capitalize on mobile devices. (Maybe I’m mishearing that from Cragg? I feel like Pokémon Go would beg to differ here.)

Anyway, the nature of static games is different from a mobile device, since “static” games are “more complex, they take advantage of the fact that you have a bigger screen and different ways of interacting with the game and as a result those games provide a different experience."

Lawyer is asking about the cost of making a “static” game. Cragg says he has press reports that budgets for these games can be hundreds of millions of dollars. Mobile games cost “hundreds of thousands of dollars or less."

Static games are “absorbing entertainment experiences, and those are expensive to produce.”

Mobile games are simpler because the device is simpler (?), the screen is smaller, and you’re playing at times you aren’t looking to be “absorbed” into a game.

Epic witness just busting into games discourse with a shotgun full of loose change.

Cragg is really fond of the term “absorbed” as a differentiating factor between playing on static and mobile platforms.

Console players are “more engaged in their play with Fortnite, and they spend more.” So the play is being done in a way that isn’t substitutable with mobile gaming.

We’re going to get a 40-minute recess, back at 4:15 ET.

We now have Cragg back in testimony, talking about how users play Fortnite on static (i.e. console) versus mobile.

“People play on a single platform for the most part,” Cragg says — multi-platform gameplay just isn’t enough to create a “disciplining force” on Apple’s App Store policies.

Doesn’t that suggest that “a Fortnite user from a consumer perspective, the user would use the same platform for some other game if they wanted a game?” judge asks.

Crag says when you buy a new home console, you typically play less on an old console to compensate. In mobile/console, they’re additive — you end up playing more, not swapping one for the other

https://twitter.com/leah_nylen/status/1392939102945873926

For the “static” category of Switch, home console, and PC, when you introduce a new static device, you see a decline in play on the others. Again, not true on mobile vs. static, says Crag.

This hasn’t come up in the trial (and probably won’t) but streaming video services see themselves as also very much competing with Fortnite for finite eyeball time polygon.com/2019/1/17/1818…

Now we’re looking not at playtime, but at iOS transaction data.

Hitt’s analysis suggested that people swapped from iOS to Switch when Fortnite launched on it. Cragg is looking at that next.

“This is really a fairly rudimentary review of the numbers,” Cragg says.

Cragg ran his own analysis and came up with different numbers — says there was a different starting point in terms of how iOS players and non-iOS players spent time and money, and if you account for that, there isn’t the kind of drop Hitt showed.

This testimony is all happening amid some kind of “extraordinary circumstance” that may have something to do with Apple, by the way. Mysterious!

https://twitter.com/doratki/status/1392937472883974145

We’re moving to cross-examination of Cragg.

Apple notes Cragg hasn’t held an academic position since 1998, and he’s never held a tenured position.

They’re noting Cragg also hasn’t worked only in antitrust — they’re citing a case about opium importation. His CV cites it as "Opioid litigation – Analysis of market power in global and U.S. markets for narcotic raw
material and production of active pharmaceutical ingredients."

This means he hasn’t worked with the DOJ on Sherman Act antitrust matters, and the lawyer is suggesting that there was a misleading resume suggesting this on his site. They discuss fixing the issue. Judge says “you’ll do that today,” right? Cragg says yes.

To be clear my impression is that he has *worked* with the DOJ, but it was on the opioid issue or something else non-strictly-antitrust-related

https://twitter.com/sqfreak/status/1392949854691807233

Apple lawyer is talking about substitutability being a “matter of degree,” and he’s talking about indirect nework effects — basically a feedback loop that amplifies even small changes in how people engage with platforms, brought up earlier this week.

Long discussion of, again, whether you can separate the games market from the general apps market.

“I have no idea what you mean by that,” judge says of a complicated example involving reselling gasoline subsidies.

We are discussing “core,” “midcore,” and “casual” games and asking if those are supposed to be submarkets — Cragg says no, he’s just trying to establish that mobile and console games are different and not substitutable because they favor specific styles.

Trying to decide what music and/or fashion movement “midcore” should be.

(“Core” games, of course, were “hardcore” games until everyone decided that made you sound like a 13-year-old with a superiority complex.)

Lawyer just said “puzzle games are casual games” and I’m thinking through who I should find to argue with about this.

(Obviously there was also a weird period where everybody got confused about whether “core” games were the games that killed you the hardest or the games with the most triangles.)

sorry I got distracted from the trial thinking about triangles

https://twitter.com/mslopatto/status/1392957327624441856

is a hotdog a sandwich or a game

https://twitter.com/leah_nylen/status/1392958061149626371

Cragg and lawyer are talking about the potential confounding effect of also having a Fortnite season release or other kind of seasonal pattern that happened around the comparison periods Cragg is using — new seasons draw old players back to the game.

Cragg says his comparison points aren’t perfect, but they hold up.

“You don’t know if Google regards Google Play as a competitor to the App Store, is that correct?” and vice versa, lawyer asks. Same question with, say, Nintendo regarding the eShop as an App Store competitor.

Cragg says no to all.

At least two of Epic’s expert witnesses have worked with Microsoft, including Cragg — Apple lawyer pointing out Cragg couldn’t answer certain questions because of his relationship with Microsoft.

Lawyer’s asking when Cragg thinks Apple raised prices to a monopoly level — he doesn’t really give a solid answer to this.

Does Cragg agree Apple’s “explosive growth” over the last decade has been “extraordinary?” Yes, he says.

I have to drop off in a few minutes to record a Vergecast, so I’m going to miss the last 15 minutes of testimony. I’ll be back tomorrow, and hopefully we’ll learn more about this Extraordinary Circumstance in the courtroom.

Never mind! Turns out in any case, we’re moving into a sealed session, so this is the end of the day for us.

“I frequently ask for what is the source material. Sometimes I get data, sometimes I don’t,” Judge Rogers notes. So she says she will allow testimony from Cragg that’s been objected to — “I think it is better to have it on the record."

All right, we’ll be back tomorrow morning to wrap up the second week of the trial. Everybody go spend money on Candy Crush through a browser or something. Have fun.