And now, back to our regularly scheduled #epicvapple coverage. Apple's Phil Schiller will be back up on the stand this morning. Expect him to have a tougher reception today as Epic's Katherine Forrest gets her chance at questioning.
Today and tomorrow, we have @joshua_sisco and @BobbyAllyn as the in-court reporters.
If Schiller finishes today (he might or might not depending on the cross examination), Apple's Michael Schmid, head of game business development for the App Store, is up next.
We need a punchy name for you all. (Dynamic Duo of antitrust is already taken). Suggestions? @joshua_sisco and @BobbyAllyn
I'm getting a crazy, high-pitched noise on the media line (anyone else?). Switching to the public one and fingers crossed no screaming Fortnite fanboys today.
Some fighting this morning about whether Epic's Katherine Forrest can question Phil Schiller about an e-mail that was forwarded to in-house counsel. Apple's lawyers say the e-mail is covered by attorney-client privilege.
It relates to the small business program that reduced commissions for developers earning less than $1 million in revenue a year.
Epic is also objecting to Apple's plan to use Schmid, who works in Apple with gaming developers, to discuss what can and can't be done with browsers. YGR says a person doesn't have to be an expert to know how to use a browser.
There seems to be some discrepancy about what and can't be done with browsers. I'd like some clarity, YGR says.
Schiller is back up on the stand. Apple's Richard Doren will resume questioning after they reset the media phone line.
And the media line is back! Doren is now asking about ARKit.
"It does many technical, cool things," Schiller says (tbh this is how I'd describe pretty much all the technologies he's described so far.)
Now talking about CoreML (ML = machine learning). Schiller says these tools help software predict what might happen. For example, it could create a model that would help a person look through pictures to find photos of dogs, he says.
Schiller predicts more games will use machine learning. He's now demonstrating a program that helps people get better at making baskets in basketball.
This is the program:
Have we covered everything that Apple has done to benefit developers? Doren asks. Definitely not, Schiller says. "We make hardware with features designed to help developers and users. We have core software features. We put on events. We have people assigned to assist developers
We have tours where our people go around the world. Accelerator labs. High school and other programs to build new developers, Schiller says.
There are patents and copyrights to protect Apple's technology. Schiller says he was involved in a patent for the iPod, the wheel that was that the user interface.
At Apple, product marketing is involved from the very beginning of developing a product along with engineering, Schiller says.
And Doren is done. Epic's Katherine Forrest is now up for cross.
Forrest asks about APIs and whether they work with web apps. Schiller says they do not. They primarily only work with native apps.
Forrest is going through the list of APIs that Schiller just went over and is asking him one by one whether they work for web apps or only native apps. For most of them, he says he doesn't know.
Out of the 8 tech updates he discussed, seven of them web app developers can't use. Schiller says that's correct.
Schiller confirms Apple hasn't studied the functionality of native apps versus web apps.
Forrest is asking about Apple's IP. "You're aware that Apple relies upon the innovations of developers, many of whom are not Apple developers?" she asks. Apple relies on some open-source software.
Schiller says he knows they use some generally, but doesn't know which in particular might use open-source developments.
Forrest is reading from provisions in the Apple developer license agreement.
Forrest is having Schiller look at this website:
Forrest walks Schiller through how to read the legal and regulatory notices on your iPhone (Go to General, Legal & Regulatory, Legal Notices)
She is now reading from various of these where people have granted free rights to their use their software.
Apple utilizes a lot of "terrific innovation" in products it distributes to the public, Forrest says. Schiller says he doesn't know what those refer to so he can't characterize them.
YGR: Is Epic arguing that software isn't copyrightable? Forrest: No. We are suggesting Apple hasn't demonstrated in the record what is subject to its IP and what is from third-party development.
We are now going back to the Goldman Sachs switching report.…
Forrest asks Schiller whether he remembers at his deposition that he didn't recall ever having seen this report. He agrees. He also doesn't remember having sent it around to other executives.
When did you devise the testimony you gave yesterday? Forrest asks. It was after our deposition, Schiller says. Did you do it in consultation with counsel? she asks. No, he says, I was on my own.
Forrest is reading from this paragraph:
Forrest asks about switching over movies. Schiller says you can stream today. If you buy a movie on AppleTV, Forrest asks, you cannot move those to Android? Schiller says he doesn't know.
Forrest shows a video from Eddy Cue, a top Apple executive, that it doesn't work to move movies from Apple to Android.
YGR offers that she thinks "My Cousin Vinny" is a "great movie."
On AppleTV, My Cousin Vinny costs $14.99 to buy.
She is reading off a bunch of movies and how much they cost (generally $7.99 to $19.99). Schiller points out that you can rent. Forrest points out that's only for some of them. It wouldn't take much to spend $100 on movies? she asks. If that's how you choose to use them, he says.
iCloud service is Apple's service. Can Android users get it? Forrest asks. Schiller says he doesn't think so. A person who has an Android but their family has Apple products cannot share that service, Forrest says. Schiller agrees.
Moving on to this e-mail:…
Schiller agrees that he said he didn't remember this email at his deposition.
Schiller says after his deposition he went back and tried to remember what they were about. Forrest asks whether it was because she used it in her opening. He says no.
Schiller acknowledges he also said he didn't remember this email when asked at his deposition. He says he wanted to know what it was about so looked after. "You wanted to know how to explain it," Forrest says. "No," Schiller says.
What you were saying in this email was Apple only wanted to support its own APIs, Forrest says. In addition to the web, yes, Schiller says. You wanted to drive competitors out of business, she says. Absolutely not, Schiller says.
Now looking at an email Schiller sent to Steve Jobs about a contacts app. You wanted them to use the Apple contacts app, she says. No, he says.
This was all about not using a competitor's product, Forest says. No, he says.
Moving on to an email Schiller sent to Scott Forstall. Schiller says he doesn't remember it off the top of his head.
Schiller says he hasn't looked at it since August 2008. Forrest says it is "essentially a debate" about app distribution. Schiller says in the email: "This feels to me just like the argument earlier this year around app distribution."
Schiller says it wasn't about opening up to third-parties for app distribution.
Now an e-mail from Steve Jobs to Schiller. Subject line: Is Google working to target iPhone ad market?
Oct 2008: "You weren't basking in the ability to destroy another company's business," Forrest asks. "No," Schiller says.
New email from Nov 2009 from Schiller to Jobs. Just over a year since the App Store launched.
The plan was to keep app distribution through the App Store? she asks. It was one of the many decisions we made, he says. You keep saying plan as though there was one special plan you are referring to.
There is a complaint from an app user about how app review is keeping him from playing his favorite games. Schiller says in email "It all comes down to whether we will ever open up the iPhone for app developers to distribute" on their own.
Schiller says they rejected the idea of publishing guidelines the previous year, but he think they will need to sometime.
They are now looking at the first version of the App Store guidelines from 2010.
This version includes: "If you run to the press and trash us, it never helps."
It was apps that were a key to selling iPhones, Forrest says. Schiller says they were "certainly important."
October 2016 email from Schiller sends a Verge article "iMessage is the glue that keeps you stuck to the iPhone"
Schiller confirms he sent this to other top Apple executives.
In the e-books case, the court suggested that highest level execs involved in that conspiracy, Forrest asks. Yes, Schiller says. But he says he didn't have anything to do with e-books case.
The monitor that the court imposed wanted to interview you, Forrest says. Schiller says he knows. Forrest says the monitor wanted to interview him for more than a year and a half and couldn't. He says he didn't know that.
Eddy Cue was specifically called out in the case as a participant in the price-fixing, Forrest says. Schiller says he doesn't know exactly.
Mr Cue said he would do what he did in the ebooks case all over again but would take better notes, Forrest says. Schiller says he didn’t know that.
You also learned to be more careful in your notes, Forrest says. Schiller says he doesn't know what she is referring to.
December 2019 email from Craig Federighi to Schiller related to phishing. Forwarded an email from Cook that says “what could we do that would give us a longterm competitive advantage for enterprise and consumers”
“Our primary strategy is to eliminate the use of user entered passwords.” It discusses how it might be hard because Chrome users will use that password manager
One of the difficulties with switching devices is remembering your password, Forrest says. Schiller says he disagrees. Most people have dozens of passwords. Autofilled ones are jumbles of numbers/letters, she says.
If I switch to an iPhone they are remembered, she says. Schiller agrees. If I switch to Android they won't be remembered, she says. He agrees, but says you can just reset your password.
You'd have to do that 50 times, she says. Or you could use a third-party password manager that works across devices, he says.
Schiller says he has a Mac and gets his software through the Mac App Store. Some third-parties force people to go to their website, he says. That's a choice you can make, Forrest says, as a human being. "People are smart, but you may not know all the tradeoffs," Schiller says.
Schiller testified yesterday as if Epic wins the app review process would go away, and that's not true, Forrest says. Schiller says he doesn't agree.
You understand we are seeking to allow other competitive stores and channels, Forrest says. Sure, Schiller says. Not the elimination of IAP and app review, Forrest. App review for apps in the App Store would continue to exist. Yes, in the App Store, Schiller says.
Back to the gas station example from Epic's opening. "You understand that what we are seeking is when the user leaves the App Store, when they go to the gas pump, what we are seeking is the ability to have other payment opportunities but IAP would" be there, Forrest says.
Looking now at a 2010 email from Phillip Shoemaker to Schiller. There is a PDF attached that provides guidance for app reviewers. Schiller says he doesn't remember this email but agrees he received it.
One page includes YES or NO for whether reviewers could submit for additional guidance to ERB. KF reads aloud:
Do not submit to ERB

Porn or adult stars
Sole purpose of app is sex
Sex shop locators
Sex toy catalog
Escort services locator or catalogs
KF says she wants to clarify what kind of content is on the app store and what apps Apple allow to be on the app store. Do you know anything factually about Schiller says he's never looked at it.
This is not a case about keeping sexually explicit content off the app store, Forrest says. I would not agree with that, Schiller says.
Forrest says she searched a number of terms on the app store. She first searched BDSM. It returned results. The first is KinkD, for kinky dating.
Several of these have in-app purchases, she notes. Schiller agrees. Apple is getting a 30 percent commission if it's digital content in the app, she asks. Yes, he says.
Next she searched "escorts." It returns results. The first result is an ad. That means Apple was selling the term on its ad site, she asks. Yes, Schiller says.
Then Forrest says she searched "fetish." There's an ad at the top and various in-app purchasing opportunities here, she says. Schiller agrees.
She searched "pornography." There are in-app purchasing opportunities for sex positions, she says. Schiller agrees.
There are apps for "adult bedtime stories," Forrest says. Schiller agrees.
Lastly, she searched "sex." First results are again Sex Positions 3D, with in-app purchase opportunities. Schiller agrees.
(I'll bet when Schiller woke up this morning, he didn't expect to be asked to talk about sex apps in the App Store).
Forrest asks Schiller if he is familiar with TikTok. She shows him an exhibit that it is among the top apps on the App Store. Schiller agrees.
Forrest now shows him how to search TikTok and that there are results for the term "BDSM." Schiller says he doesn't know, because he has never searched TikTok.
Apple objects, but YGR says she doesn't have any reason to believe it's not accurate as a public record. She admits these TikTok results. Forrest shows him that she has searched "sex."
Now turning to Instagram. Schiller says he knows that Instagram is available on the App Store and that you can search it for terms.
Forrest shows him that if you search Instagram for "sex" and "porn" there are results. Do you know that PornHub is a porn site? Forrest says. Schiller says he doesn't know that.
Now we are going to do this with Reddit. It is an app available on the App Store, Schiller agrees.
There are coins that can be purchased and avatar gear on Reddit, Forrest says and Schiller agrees. We are now talking about R/NSFW and R/Porn, R/GoneWild, which have millions of members.
The way people protect themselves from content like this is parental controls? Forrest asks. Schiller says it is one way.
We are now taking our 20 minute morning break.
Back. Forrest asks about whether Apple's small business program was to help the iPhone-maker out with its competition problems. Schiller says "those aren't mutually exclusive."
The pandemic is never mentioned in any documents about the small business program, Forrest says. Schiller says he believes he had communications that it was one of the reasons.
We're returning to the e-mail about the 70/30 split. Today the question is no longer if, but when, Forrest says. You know it's not going to last forever. No, Schiller says, I don't know that.
Forrest is reading from the second paragraph.
Forrest says the App Store has been profitable since 2009. Schiller says he doesn't know that. How is it as the executive responsible for this major business in the country, you don't know if its profitable? Forrest asks. It's not what we focus on, he says. It doesn't come up.
Forrest pulls up a 2017 press release from Apple. It says that Apple has paid out more than $70B to developers since it was created. That would be in the range of $20B+ Apple received, she says. Schiller agrees.
You don't know if that $20B+ Apple received put the App Store into the realm of profitably, she asks. Schiller says he doesn't know. So Apple can make accelerometers and machine learning and it can't figure out if the App Store is profitable, she asks.
Schiller says they haven't done it. We don't deny that it probably is, but we don't manage the business in a way that would make it possible to calculate its profitability, he says.
Schiller confirms he is aware that Spotify filed an antitrust complaint against Apple in March 2019.
Now looking at an June 2019 email from Josh Rosenstock, an Apple PR person, about the House Judiciary committee launching an investigation and reporting some remarks by EU Margrethe Vestager
Next email August 2019 email to Schiller, Cook and others about FAS (Russian antitrust authority) investigation into Apple.
Forrest shows him where it says the FAS is launching an investigation focused on the iOS app distribution market. Schiller says he sees that.
Schiller confirms he is aware that in June 2020 the EU opened a probe into Apple.…
Looking at a June 17, 2020 email from Schiller to others in the company. Around that time there was a lot of press around the rejection of Basecamp's Hey e-mail app, Forrest says. Schiller agrees.
You knew there was press around the Basecamp Hey rejection, Forrest asks. Schiller says yes.
June 21, 2020 email from Schiller. "Are there some developers we could turn to quickly?" he asks in the email.
Matt Fischer responds "We definitely have developers who would be willing to go on the record to support us if we want" and provides a list of developers, Forrest says.
Another Apple employee says they have other developers who will speak positively about Apple. "This was Apple's attempt to combat the press you were getting from developer Basecamp and pressure building with foreign investigations" Forrest says.
Schiller says he wouldn't connect directly. But one of the reasons was Basecamp, correct, Forrest says. Schiller says he doesn't know that its related to Basecamp at all. "We wanted to show that people were happy with it."
it in that sentence being the App Store.
Oh. Forrest is mentioning my story on the DOJ/state AG were looking at app store.
"I know that the DOJ had a hearing," he said. "I know there had been a number of states as raised by Coalition for App Fairness"
Schiller said he didn't see the story. He gets press clips everyday but doesn't know if this story was in there.
Looking at an internal email in which Schiller was talking with Fischer and others about adding more people to the PR team to focus on competition issues.
Tim Cook testified before Congress on July 29, 2020, Forrest says. Schiller says he doesn't remember exactly when it was.
Now looking at an article referencing a Korean investigation of app stores in-app payment systems. Schiller says he doesn't remember when he learned about that.
Another article referencing Japan investigating Apple's App Store from September 3, 2020. Schiller says he doesn't recall.
(Also Schiller says he doesn't use PowerPoint)
Did you become aware in September 2020 about Australia investigating Google/Apple app stores. Schiller says he does recall that one.
Email from Phil Schiller to others at Apple. You said in a declaration that this email was privileged and Judge Hixon called it mischaracterizing, Forrest says. Schiller says he wasn't aware of that.
The email refers to the small business program. Apple wanted to find a way to have the least financial impact possible while announcing the small business program, Forrest says. Schiller says he doesn't agree with that characterization.
The email is discussing various scenarios that might reduce the number of developers impacted by the small business program, Forrest says. (The email is partly sealed so she's being a bit vague)
Actually Doren says its completely sealed and Forrest confirms that one won't go into the Box. (Boo)
Schiller says he doesn't recall that the House Judiciary antitrust subcommittee did an investigation into competition in digital markets
YGR asks: has the committee done anything since? Forrest says they are working on various things but she is not aware of anything public they have done since.
Forrest is having Schiller look at an internal presentation Apple put together on the small business program and its financial impact on the company.
Schiller says the document was accurate at the time it was created but he doesn't think it's accurate today.
Schiller says he doesn't recall if he learned the UK's Competition and Markets Authority is investigating the App Store.
Did you know Russia passed a law? Schiller says Forrest is mischaracterizing the law. As part of default set up, users have to be offered a set of Russian applications. It's a prompt to encourage users to get certain apps. "It's nothing like a store within a store," he says.
Forrest asks if Schiller was aware of the Senate Judiciary app store hearing last month. He says yes.
Schiller says he was aware of a fine imposed by the Russian authority recently on Apple.
Forrest is asking Schiller if he was aware of the ACCC's interim report on Apple's App Store. He says yes. YGR has admitted the report.
The small business program introduced in Dec 2020 was not because of Epic but wide-ranging scrutiny on the App Store, Forrest says. Schiller says Epic was a factor along with other things like the pandemic
Apple’s own apps track a lot of user information don’t they, Forrests says. Schiller says he’s not sure that’s accurate. Apple tells users what info it collects
There isn’t a way to opt out, Forrest says. Schiller says there are ways to opt out of things, but he doesn’t know all the settings of how to do it
Apple makes money from advertising in its news app, Forrest says. Schiller says he doesn’t know how it works since he’s not involved in that but he thinks they do use ads
Forrest is walking Schiller through a privacy policy document that Apple created.
I think it's this page:…
Apple can follow you, Forrest says. It knows where you are. "It's not about tracking where you are. It's about giving you geographically relevant" apps, Schiller says.
Forrest is reading this paragraph
This paragraph means that Apple still collects the info but you can turn off getting the ads, Forrest says. On ad tracking, yes, Schiller says.
Ah. I'm told the page they were looking at was this one:
Forrest is walking through what information various Apple products collect about users based on the privacy labels:
"I don't think its appropriate to say any of this is tracking," Schiller says.
It's a lot of information, don't you agree, Forrest says. Schiller says he doesn't agree.
Apple gets paid for the App Store in many ways, Forrest says. IAP is not the sole source of revenue. Schiller says that is correct.
Schiller agrees that Apple gets money from developers, enterprise program, IAP, app downloads and search advertising.
Schiller agrees that IAP added in 2009, then added subscriptions and search advertising. Also Apple Arcade which has subscriptions, he agrees.
Some of the apps in the App Store went into the Apple Arcade, Forrest says. Schiller says when it launched they were all new, but acknowledges that it has since added some games that were in the App Store already.

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More from @leah_nylen

19 May
Welcome to Day 13 of #epicvapple. @joshua_sisco and @BobbyAllyn are doing double duty and are back in court again today.
Apple’s Michael Schmid, who works with game developers, will be back up on the stand this AM. After he’s done, Craig Federighi, senior vice president of software engineering at Apple, will testify followed by Dominique Hanssens, Apple’s marketing/survey expert
YGR says she works every weekend during trial because she has "hundreds of other cases" and those do not end at the end of the trial day.
Read 221 tweets
18 May
Doren returns to the sexual terms. There are categories of things we don't want on our store like pornography, Schiller says. When you have categories of apps, like dating apps, developers will try to find where the line is. "It's not an easy task," he says.
It would be inappropriate for Apple to reject dating apps because of the people who use them, Schiller said.
Nudity is allowed for medical apps, but pornography is not permitted, Schiller says. "It's been a very difficult topic," he says of porn. Apple sets rules like the display of genitalia to help the app reviewers, Schiller says.
Read 58 tweets
18 May
Now it's adding podcasts, Forrest says. Schiller says that is iTunes not App Store.
Schiller says he receives regular reports on how much Apple is earning in search ads through the App Store. They are looking at one (which is sealed).
You are aware IAP requires developers to choose a price from a price tier, Forrest says. Schiller agrees. The prices must end in .99.
Read 47 tweets
18 May
And lastly, my fave topic of all: SEPs. Last night, @JusticeATR filed a letter with the 5th Circuit.
Some background: the Trump admin DOJ AAG Makan Delrahim had strong views on the intersection of antitrust and IP, views that contradicted those held by the Obama DOJ.
Under Delrahim, DOJ weighed in on a number of private #antitrust cases with "Statements of Interest" expressing views on antitrust-IP. One such case involved Continental Automotive, which had sued Avancii a patent company that owns SEPs needed for connected car tech
Read 6 tweets
18 May
In pharma #antitrust, @oversightdems released a staff report this AM on Abbvie and Humira…
@OversightDems Among the findings, Abbvie knew Humira, a blockbuster arthritis drug, would face biosimilar competition in 2017, so it took steps to delay that until 2023. The company's internal documents estimate that cost the U.S. health care system $19B
Abbvie has sought or obtained 250 patents related to Humira, the report found. The company has invested a lot of its R&D into a Humira “enhancements” program to protect against biosimilar competition.
Read 4 tweets
17 May
Day 11 in #epicvapple starts in about an hour. Today's in-court reporters are @eringriffith and @mslopatto. Harvard's James Mickens, Epic's security expert, will resume his testimony this AM. After he's done, Apple's Phil Schiller will be up.
YGR says she'd really like to finish the case next Monday (me too, your honor, me too). Apple and Epic's lawyers promise they will be done next Monday. YGR says she doesn't want the closing proceeding to take more than 3 hours, 90 minutes for each side.
The lawyers are now arguing about whether Apple's expert Loren Hitt should be allowed to change some of his written testimony. Epic says Hitt is changing his opinion in light of their cross examination last week.
Read 171 tweets

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