Epic vs Apple: what we know from testing that could change the iPhone


If Epic Games, the maker of Fortnite, opened it case against Apple earlier this month, accusing the iPhone maker of running an illegal monopoly, legal analyst Nick Rodelli gave the software maker a three -time win. Others also put the possibilities shorter.

By the time the judge retired Monday to consider his verdict, that could have far -reaching consequences for a billion iPhone users and thousands of app developers – not to mention Apple ‘s we – the case as hard to call.

Rodelli, who works for investment research firm CFRA, puts the odds at 55 percent in favor of Epic. Apple, he said, has lost credibility by asking ignorance of the key questions, while Judge Yvonne Gonzalez Rogers has shown more interest in current business realities than the old legal ones followed – an additional on summary, which agreed its case was within the “limits” of antitrust theory.

Here are five excerpts from the test:

App Store margins

Apple threw away Fortnite except in the App Store last year when Epic tried to get the 30 percent commission the iPhone maker ordered on app sales and purchases made within smartphone games.

Epic says the App Store operates with 78 percent of revenue and it reflects a monopolistic digging of developers, who are forced to go through the App Store to reach iPhone users. Emails among Apple executives back in 2010 it was shown that the App Store was more profitable than expected earlier.

Apple disagrees but it hasn’t shifted its own image. It argues that it cannot calculate a margin figure for the App Store because it does not break down costs and revenue as such.

Epic is allowed to argue that Apple’s refusal to discuss the details is exactly the evidence that the iPhone maker was aware of the anti-competitive optics at play.

Testimony of Tim Cook

Those who saw the test found a significant change over time testimony of Tim Cook on Friday last week. He also tries to ignore questions about the issue of profit margins, and more, too.

Epic’s attorney Gary Bornstein insisted on Apple’s chief executive about the terms and conditions for app developers and Cook repeatedly responded that he didn’t know the specific details. Cook also would not say why Google paid Apple an estimated $ 10bn a year to become the iPhone’s default search engine.

“Bornstein made the most unsatisfactory examination of the testimony from Daniel Kaffee’s assassination of Colonel Jessup in Some Good Men, ”Rodelli said. “Can you really believe they don’t have a good understanding of what the revenues are? It could have affected Apple’s credibility in court.”

Cook also got the slaughter from Gonzalez Rogers, especially how Apple cut 30 percent commission to 15 percent last year for certain types of purchases for certain varieties of apps, after launching in Epic its suit.

When he tried to ask Cook for evidence that Apple had reduced the fees it charged developers as a result of competition – rather than because it was facing litigation – he pointed to how it was reduced by Google rates it at 15 percent after what Apple did.

“I understand that Google used to change its price, but your move is not the result of competition,” he said.

Market definition

“Market definitions may be the main reason for this case,” said Amit Daryanani, analyst at Evercore ISI, who thinks Apple might move forward.

“If Epic can convince the court that Apple devices are a solitary market in themselves, it will probably take the day. We don’t think it’s possible.”

Cook points out that while Apple controls access to the iPhone through the App Store, consumers have the option to switch to an alternative ecosystem by selecting another smartphone and app developers have access to those customer.

Apple also argues that, in the case of Fortnite, the market is even wider – not like, let’s say, if the case was brought by a dating app or another company that only caters to smartphone users. When
Fortnite booted from the App Store, players can still find the game on Xbox, PlayStation and PC.

When court documents show that the App Store counts for only 7 percent of FortniteEarnings, Apple’s lawyer said: “You wonder why we’re even here.”

The MacBook example

Apple said last year that Epic’s vision of how the iPhone works could threaten the entire App Store ecosystem ”and Cook said giving it control to apps would be a“ toxic difference ”the iPhone.

Epic says its request isn’t all that revolutionary, it just wants the iPhone to work more like MacBooks and iMacs. Macs allow users to download global apps beyond what is available in the Mac Store, as it were, so why is the iPhone not the same as that?

Apple’s defense was unexpected: the Mac is unsafe.

Craig Federighi, Apple’s chief software officer, said: “We have a level of malware on the Mac that we can’t find acceptable and much worse” than the iPhone.

“The Mac is a car that you can walk on the road if you want, you can drive wherever you want,” he said. But on the iPhone, “we’ve created something where, you know, kids – heck, even babies – can operate a… Device and be safe to do so”.

Paraphrasing the judge

Gonzalez Rogers questioned both parties on Monday in an attempt to find the middle – but either side didn’t want to.

The judge intends to do what he says will improve changes to Apple’s business model.

“Can you find me an antitrust case where the difference you asked for was granted in a court?” He asked Epic’s advice at one point. “This is an important step that the courts have not taken.”

Even on Friday and also on Monday, Gonzalez Rogers showed that he struggles with the 30 percent commission charged by Apple’s standard. “The 30 percent figure has been there since the beginning,” he said. “And if there’s real competition, that number will move. And it doesn’t.”

His verdict was not expected for several weeks.

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