Even asks about emulators. Hitt says it allows a user to play something available on a different platform. Hitt says he is aware they exist but doesn't know who makes them.
Even says it would seem to undermine Apple's safety and security to have a user download an emulator to play a particular game. Hitt said there appeared to be some games available in the Microsoft Store through emulators.
Even asks about the Switch. "While a lot of people have iPhones, not many people have Switch?" he asks. Hitt says he wouldn’t characterize it as "not many" but fewer than iPhone users.
And Hitt is now done.
Epic expert Michael Cragg is up next. He will be questioned by Yonatan Even.
Cragg says his job was to review the testimony of Apple's economic witnesses (Schmalensee, LaFontaine, Hitt) particularly on market definition and market power.
On market definition, the Apple expert are both too broad and too narrow in some ways. Cragg says he also determined that Apple has market power.
Cragg says Apple's experts could have used the hypothetical monopolist test. This is an econ test that seeks to figure out whether a monopolist could profitably raise prices on the game transactions market.
There is no separate store on iOS for game transactions, Cragg says.
Cragg is looking at some charts. Image
Cragg says this led him to draw two conclusions. 1) For mobile games, all are published on Android and iOS. The developer has to go through two channels. 2) Static games are more complex, bigger screens, different ways of interacting. Platform games do not substitute for mobile
Cragg likens console games to Hollywood movies. They tend to have bigger budget. YGR asks him where he got this data from. Cragg says press reports and game consultants. This is the chart from his written testimony. Image
Fortnite is played in different ways depending on the platform, Cragg says (he is walking through this chart) Image
He notes that mobile Fortnite players tend to play it only for a short period of time each week in comparison to those who use consoles. Console players are more engaged and spend more, Cragg says.
The fourth and fifth column are "multi-platform" players -- those who might play Fortnite on mobile and console. Cragg says multi-platform players are not playing on iOS in the same way, they can go weeks without using it.
Lunch break. Back at 1:15/4:15.
Back. Cragg is now talking about this chart Image
What it shows is if someone plays Fortnite and gets an additional way to play (like a new console or Nintendo Switch), their play time tends to increase.
So if someone was originally playing on a PC and then got a console, their play time increased (+ sign). The -- indicates the play time stayed the same.
Then he did another test to determine whether various platforms are complements or substitutes. Image
In some cases, he found that if someone had one platform and then added another, that would increase a user's game play. They were complements (C). The -- indicates that adding a second platform had no change.
In some other cases, he found that if someone has one device (for example a PC) and then got a second one, they would substitute the second device. (S) You see that primarily with consoles.
Cragg says this chart shows that iOS is not a substitute for other types of play (including the Switch)
Cragg is now criticizing Hitt's analysis of how spending changed. This is redacted in the written, but his point is that Hitt used percentages but that doesn't give a good indication of the actual dollar amounts
It's a math thing. Image
Hitt suggested that the introduction of the Nintendo Switch led iOS users to spend less money on Apple. That is a misrepresentation of the numbers, Cragg says (Below is Hitt's graph) Image
This is Cragg's analysis using the same data. Image
iOS users who got a Switch (blue line) tend to spend more money than other iOS users (green line), Cragg says.
These two graphs use the same data, Cragg says. (It's all about how you analyze it)
Now onto this graph Image
So this is people who play on both iOS and Switch. The teal shows how much they paid on Fortnite on iOS. Pink is the Switch.
Craig notes that both increased from June into July.
They are talking about Hitt's calculation of the average commission rate, where he included the free apps as 0%. (These charts are sealed in the written testimony). Cragg says this is bad math. $0 is $0 not 0%
Daniel Swanson is objecting to something Cragg has in his testimony that relates to a document Spotify submitted. Even says that was his last topic, so he is done. Swanson will start cross now.
Swanson is asking Cragg about his CV. He says on there he has been qualified as an antitrust expert in federal court. Cragg acknowledges it was an administrative proceeding and involved drug importation, not a strict antitrust matter.
Cragg also had on there he had worked for the Justice Department on IP and antitrust. Cragg acknowledges that he has not worked for DOJ on antitrust. YGR suggests he update his CV on Brattle Group today.
Swanson is now talking a Tax Court decision involving Coca-Cola that rejected Cragg's economic analysis. The court said Cragg's analysis led to "absurd results." Cragg says that was only with respect to one area in the report.
Swanson has asked Cragg is familiar with the Reader rule, which allow apps to have content used within an iOS app even though bought elsewhere.
They're now talking about these two rules in Apple's developer guidelines Image
Back to hypothetical monopolists. Cragg says it depends on the facts and circumstances of each particular case.
Now they are discussing this paragraph of Cragg's testimony.
Cragg says he is trying to determine whether it is possible to break out game transactions from all transactions.
Cragg gives an analogy involving gas. "I have no idea what you are talking about," judge says.
Swanson is now asking Cragg about this graph and his views about game genres by platforms. Image
"Here I am identifying that mobile devices for gaming purposes are used for a different experience than a console," Cragg says. It shows that the mobile and the console aren't in the same market.
Puzzles are the most popular type of game on mobile devices, Swanson and Cragg agree.
Returning to those charts about multi-platform users, Swanson asks if Cragg had any data about when a user acquired its device. Cragg says he couldn't observe that and doesn't know the reason why a user adds a second device.
Ah, today's best analogy. Swanson is asking Cragg about complements. Swanson: When the price of hotdogs goes up, the sales of hotdog buns goes down.
Swanson asks if the price of Fortnite goes up on mobile (causing transactions to go down), would Cragg except transactions on a complementary device to also go down? Cragg says generally yes, that's what a complement means, but he didn't analyze that.
I believe we're back to this graph. Image
Swanson says Switch is taking up some of the transactions from other platforms once it is introduced.
Cragg acknowledges that he doesn't know how Apple, Google, Sony and Nintendo view each other.
Cragg says he is a consultant to Microsoft. Swanson asks if he is working on xBox. Cragg says his agreement with the company doesn't allow him to say which parts of the business he's analyzing for them.
Cragg says he doesn't know whether Microsoft considers itself a competitor to the App Store.
Cragg says he didn't identify a date at which Apple became a monopoly.
Swanson ends. Even is back up for re-direct.
After asking two questions, Even says he is done. YGR is now moving it into a closed session so they can discuss that sealed document offered by Spotify. After that, they're done for the day. So use audio folx are free!

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