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When Epic Games, the creator of Fortnite, opened his case against Apple earlier this month, accusing the iPhone maker of operating an illegal monopoly, legal analyst Nick Rodelli gave the software developer a one-in-one chance of prevailing. Others reduce the odds.
When the judge withdrew Monday to consider his verdict, it could have far-reaching consequences for a billion iPhone users and thousands of app developers, not to mention AppleBenefits: The case seemed harder to call.
Rodelli, who works for investment research firm CFRA, placed the odds at 55 percent in favor of Epic. Apple, he said, had lost credibility alleging ignorance of key issues, while Judge Yvonne Gonzalez Rogers appeared to be more interested in current business facts than in previous legal precedents, an advantage for Epic, which has admitted its case, lies within the “frontiers” of antitrust theory.
Here are five take-away meals from the test:
App Store margins
Apple launched Fortnite outside the App Store last year, when Epic tried to get the 30% commission charged by the iPhone maker for app sales and purchases made within smartphone games.
Epic claimed that the App Store operates with a 78% profit margin and that this reflects a monopolistic control of developers, who are forced to go through the App Store to reach iPhone users. e-mail among Apple executives dating back to 2010, indicated that the App Store was already more profitable than initially expected.
Apple disagreed, but did not refute it with a figure of its own. He argued that a margin figure could not be calculated for the App Store because it does not break down costs and revenue in this way.
This allowed Epic to argue that Apple’s reluctance to discuss the details was proof that the iPhone maker was aware of the anti-competitive optics at stake.
The testimony of Tim Cook
Trial observers saw a turning point during the witness Tim Cook on Friday last week. He also tried to dodge questions about the issue of profit margins, and more, too.
Epic’s attorney, Gary Bornstein, insisted on Apple’s chief executive on the terms and conditions for app developers, and Cook frequently replied that he didn’t know specific details. Cook also couldn’t say why Google pays Apple about $ 10 billion a year to be the iPhone’s default search engine.
“Bornstein conducted the best adverse witness test since Daniel Kaffee scolded Colonel Jessup Few good men“Is it really credible that they don’t have a good idea of the benefits? That may have affected Apple’s credibility in court.”
Cook also received a grid from Gonzalez Rogers, mostly for the reason that Apple reduced its commission from 30% to 15% last year for some types of purchases of some types of apps, after Epic launch the lawsuit.
When he tried to ask Cook for evidence that Apple has ever reduced the fees it charges developers as a result of competition, rather than because it was facing litigation, he noted how Google reduced its rate by up to 15%. after Apple did.
“I may understand that when Google changed its price, but your action was not the result of competition,” he said.
Market definition
“Market definitions will likely be the deciding factor in this case,” said Amit Daryanani, an analyst at Evercore ISI, who believed Apple was likely to prevail.
“If Epic can convince the court that Apple devices are a unique market for them, it will probably last a day. We think that’s relatively unlikely.”
Cook noted that while Apple controlled access to the iPhone through its App Store, consumers had the option to switch to an alternative ecosystem by choosing another smartphone and app developers had access. to these customers.
Apple could also argue that in the case of Fortnite, the market was even wider, unlike, say, if the case had been brought to you by a dating app or another company that would only cater to smartphone users. When
Fortnite started from the App Store, gamers could still find the game on Xbox, PlayStation and PC.
When court documents revealed that the App Store accounted for only 7% FortniteRevenue, Apple’s attorney said, “Makes you wonder why we’re even here.”
The precedent for the MacBook
Apple said last year that Epic’s vision of how the iPhone should work “would threaten the entire App Store ecosystem,” and Cook said relinquishing control over apps would turn the iPhone into a “toxic mess.”
Epic said his request was not as revolutionary, he just wanted the iPhone to act more like MacBooks and iMacs. Macs allow users to download a world of apps beyond what’s in the Mac store, said, why can’t the iPhone be the same way?
Apple’s defense was unexpected: the Mac is not safe.
Craig Federighi, Apple’s chief software officer, said: “We have a level of malware on the Mac that we don’t find acceptable and that is much worse” than on the iPhone.
“The Mac is a car you can get off the road if you want, you can drive wherever you want,” he said. But with the iPhone, “we were able to create something where, you know, kids (devils, even babies) can operate. . . device and be sure to do so ”.
Analyze the judge
González Rogers investigated both sides on Monday in an attempt to find a midpoint, but neither side wants it.
The judge seemed reluctant to do what he said would be a radical change to Apple’s business model.
“Can you find me a single antitrust case in which a court granted the kind of relief you are requesting?” he asked Epic’s advice at one point. “It’s a pretty important step that the courts haven’t taken.”
However, last Friday and Monday again, González Rogers has indicated that she was concerned about the 30% commission that Apple charged as standard. “30% have been there since its inception,” he said. “And if there was real competition, that number would move. And he hasn’t done it. “
His opinion is not expected for several weeks.
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