Mehran KhanApple seems to be prevalent in an antitrust test, investigating whether its mobile app store illegally reduces profits from smaller companies. But while buying digital services on iPhones, iPads, and iPods, the tech giant’s clear edge has been etched amid questions that have troubled people about their financial status. If nothing else, the skirmish has focused on the particular payment system that Apple has built into transactions occurring within apps installed on its family of mobile devices.
Apple has collected a 15 percent to 30 percent commission on in-app purchases for the past 13 years, boosting a money-making machine that allowed the company to increase its market value from about $ 150 billion in 2008 to $ 2 trillion today. Has helped to do more than.
They avoid app commissions when their customers pay for their services through other options such as web browsers. But Apple forbids apps from posting any links or making any other suggestions that lead people to those other options.
The anti-steering provision inspired Epic Games, the creator of the popular video game Fortnite, To sue Apple last year and now in Oakland, California, court room to set the stage for its second weekend trial.
To prevail, Epic would have to convince U.S. District Judge Yvonne Gonzalez Rogers that Apple’s App Store had become a monopoly that enabled the Cupertino, California, company to engage in pricing. That argument would require Gonzalez Rogers to accept Epic’s argument that the iPhone’s software and app store itself is large enough to represent a market.
This has been a difficult case to make, largely because similar commission rates were pushed to major video game consoles - Microsoft’s Xbox, Sony’s PlayStation and Nintendo’s Switch - as well as similar stores powered by smartphones and other devices running on Google. Has been charged by Android system.
What’s more, Apple has never increased its commission, and last year reduced them to companies that generate less than $ 1 million in annual sales on their products - a concession that is now about 1.8 in their stores Million applies to the overwhelming majority of apps.
Antitrust expert Herbert Hovenkamp, professor of law at the Wharton School of the University of Pennsylvania, said he suspected that Gonzalez Rogers would agree with Epic’s narrow market definition. And, he said, gives Apple a clear upper hand in the matter so far.
“This is the case about market strength, so even if bad behavior is going on, it doesn’t matter if Apple is not a monopolist (judicial),” Hovenkamp told the Associated Press.
Epic on Thursday intensified its efforts to turn the tide and proved that Apple had a monopoly on app distribution. Grilling Apple’s economic expert Lauren Hitt, Epic provided evidence that many of the highest revenue-generating games are not available to play on consoles.
It remains to be seen whether any of that data will affect Gonzalez Rogers. But based on his comments and questions during the last few days of the trial, judges are clearly upset by Apple’s anti-steering requirements.
One of Apple’s expert witnesses, Richard Schmalency, was on the stand while his concerns crystalized.
(Also read: Apple vs Epic Trial: Tim Sweeney) Acknowledges that Epic shamelessly breached a contract with Apple to make a point)
Schmalense, former dean of the Massachusetts Institute of Technology’s Sloan School of Management, also defended American Express in an antitrust case, challenging a ban on merchants recommending merchants use other credit cards with lower transaction fees Had gone - a policy which was upheld by the US Supreme Court in its 2018 decision. .
After Schmalensee compared Apple’s in-app commission to a credit card terminal that charges for being part of its store, Gonzalez Rogers questioned why an app can’t display different payment options , By the way stores can show a sign at the checkout stand. Displaying various credit cards and other forms of payment they accept. She suggested that some type of button or link may be inserted into apps allowing consumers to choose other payment methods.
This is something Epic would like, given the main objectives of its lawsuit. Epic has two goals: to avoid giving Apple its sales cut to Fortnite players making impulsive purchases for digital goods while playing games; And it wants Apple to allow competition on the iPhone, including Epic’s own unprofitable App Store that charges a 12 percent commission.
(Also read: Apple vs. Epic Games Trial: Slide Presentation Review Reveals App Store Has Earned $ 2.1 Billion In Billing)
But Apple says that its payment system should be the only option for in-app transactions on the iPhone and its other devices. It argues that it helps pay $ 100 billion, saying it has invested in mobile software, as well as to protect its customers from potential security threats.
Hovenkamp interpreted Gonzalez Rogers’ questions about Apple’s anti-steering requirements as “an invitation to settle” before releasing its decision at some point after the trial ended later this month.
(Also read: In Apple v. Epic Games Court: A Trial That Can Change the Future of the App Store and Change Forever How Apps Work)
Even if Gonzalez Rogers is with Apple and retains the status quo, Epic could still win if the issues aired in the trial raise consumers’ awareness of the various options available to them, case after case. Boston College law professor Daniel Lyon said.
“Even if they lose the case, they are playing a court-of-public-opinion game,” Leone said. “You spend a few million dollars on lawyers and you’re a company that makes headlines for sticking up for a little boy. Maybe it’s a win in itself.”
(Also read: Apple recently severed ties with employees following staff reaction to sexist comments)
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