WEBVTT - Apple May Lose Its Epic Trial

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<v Speaker 1>This is Bloomberg Law with June Brusso from Bloomberg Radio.

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<v Speaker 1>Why don't you The latest ads for the iPhone are

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<v Speaker 1>apps and websites. But at Apple, we believe that you

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<v Speaker 1>ads end with the words privacy. That's iPhone, and that's

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<v Speaker 1>been one of Apple's arguments in its high stakes legal

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<v Speaker 1>battle with Epic Games, saying it's control of the app

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<v Speaker 1>store is the only way to ensure security and privacy

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<v Speaker 1>on iPhones, with Epic claiming that the app stores anti

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<v Speaker 1>competitor is joining me is anti drust expert Harry First,

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<v Speaker 1>a professor at m y U Law School. So, Harry,

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<v Speaker 1>there's been no jury at this three week trial and

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<v Speaker 1>it will now be up to Judge von Gonzalis Rogers

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<v Speaker 1>to make the decision in the case. What are some

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<v Speaker 1>of the issues she'll be considering. Well, there's sort of

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<v Speaker 1>a set of legal issues which involves the technical issues

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<v Speaker 1>for antitrust. What's the market, how do you define it?

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<v Speaker 1>What's the conduct, what are the competitive justifications and what's

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<v Speaker 1>the harm? So you know, those are the legal issues

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<v Speaker 1>that the parties have to deal with. And then there's

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<v Speaker 1>the you know, what's it all about part of the case,

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<v Speaker 1>sort of the texture of what the party's business complaints

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<v Speaker 1>really are and why they're doing what they're doing, and

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<v Speaker 1>that in the end informs the facts that she finds

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<v Speaker 1>and her conclusion. So that part is, you know, well,

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<v Speaker 1>how do you justify this price gouging, Mr? Cook? And

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<v Speaker 1>how did you decide to name fortnite fortnite? You know,

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<v Speaker 1>and as a banana banana? I mean, that's sort of

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<v Speaker 1>what their business is, what gaming is, and what Apple's

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<v Speaker 1>businesses and how they can continue to charge so much

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<v Speaker 1>money and justify And there you're referring to some of

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<v Speaker 1>the more bizarre moments in the trial with the discussion

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<v Speaker 1>of a banana action figure in Fortnite and the judges

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<v Speaker 1>questions about how the game was named. Now, Apple has

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<v Speaker 1>been saying that iPhone security and privacy drives what they do,

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<v Speaker 1>and Tim Cook on the stand repeatedly said that the

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<v Speaker 1>rules and restrictions on the App Store are aimed at

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<v Speaker 1>ensuring a safe and secure platform for consumers, But the

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<v Speaker 1>judge seems skeptical about that argument. I think anyone is

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<v Speaker 1>always a little skeptical when the head of a company

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<v Speaker 1>that has the highest value of any company in the

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<v Speaker 1>country says, Oh, no, we're really just in it to

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<v Speaker 1>protect our you is privacy, So you know, is it

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<v Speaker 1>a smoke screen? I think epics representatives of pushing on

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<v Speaker 1>that and is there some reality to it? Sure, there's

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<v Speaker 1>some reality to it. That's what Apple has been pushing

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<v Speaker 1>as its brand that it's safer. So is it really.

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<v Speaker 1>They've had expert witnesses who testified not really. It's no

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<v Speaker 1>more or less safe than Google Play in the Android marketplace.

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<v Speaker 1>So you can say it all you want, but still

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<v Speaker 1>stuff gets by. And I don't think anyone's going to

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<v Speaker 1>ever believe that that's all that they're doing. They may

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<v Speaker 1>be doing that, but this is about making a whole

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<v Speaker 1>lot of money, and they are making a ton of money.

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<v Speaker 1>And as far as money goes, Apple claims that it

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<v Speaker 1>doesn't break out the app stores profits separate from the

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<v Speaker 1>other units in the company, and Cook denied repeatedly that

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<v Speaker 1>he knew how much money Apple makes in profits on

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<v Speaker 1>the app store. Is that believable. You know, this strikes

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<v Speaker 1>me as amazing. This is a this is a company

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<v Speaker 1>with a market cap over two trillion dollars and they

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<v Speaker 1>don't know where they're you know, Oh, really, we get

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<v Speaker 1>paid so many billions of dollars by Google. I have

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<v Speaker 1>no idea how much? How much that is? Oh do

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<v Speaker 1>we make money off the app store? G I don't know.

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<v Speaker 1>We just keep investing hundreds of millions of dollars what

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<v Speaker 1>for the fun of it? I mean, this is whacko.

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<v Speaker 1>I'm not sure it's a great strategy to walk away

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<v Speaker 1>from the idea that this is very profitable. And I

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<v Speaker 1>think their legal strategy in the end will be to say, yes,

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<v Speaker 1>it is profitable and that's what incentivizes innovation. Now, you

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<v Speaker 1>can't say it's an incentive for innovation if you don't

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<v Speaker 1>know that it's profitable. I mean, it's just wacko. And

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<v Speaker 1>I don't think anybody's going to believe that. It's just

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<v Speaker 1>I'm not sure why his lawyers sent him in to

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<v Speaker 1>say that. Maybe they didn't. Maybe that's how what he

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<v Speaker 1>really believes. But it seems unbelievable yet, maybe it's an

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<v Speaker 1>accounting matter, Maybe they don't break it out exactly, but

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<v Speaker 1>that doesn't mean they don't know what's going on. The

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<v Speaker 1>judge also seemed a little skeptical about Apple's intellectual property argument.

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<v Speaker 1>You know, they're protecting their i P. They're spending so

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<v Speaker 1>much money on their i P. She said that they're

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<v Speaker 1>making a disproportionate amount of money relative to the i

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<v Speaker 1>P you've given them. Tech companies have often this, This

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<v Speaker 1>started with Microsoft probably went back before, said oh, you know,

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<v Speaker 1>we've got to protect our intellectual property rights, and we've

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<v Speaker 1>been given these rights and these are really important to us,

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<v Speaker 1>and they never are put to the test whether any

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<v Speaker 1>of these rights are enforceable, and you know, it's sort

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<v Speaker 1>of a smoke screen about right, but it's really about

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<v Speaker 1>protecting their business. As for the relative value of putting

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<v Speaker 1>together the i P. And there's a lot of on paper,

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<v Speaker 1>a lot of copyright and patent protection for what they do,

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<v Speaker 1>but the relative value of doing at and what value

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<v Speaker 1>is added by the gamers and the implementers. This is

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<v Speaker 1>always an issue as well, you know, because both parties

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<v Speaker 1>need each other. So one party says I'm the most

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<v Speaker 1>important one, I should get the biggest amount, and the

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<v Speaker 1>other says no, without me no one would have a phone.

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<v Speaker 1>So one of the interesting things is this issue was

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<v Speaker 1>raised in another piece of litigation in California involving Qualcom

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<v Speaker 1>and their patents on phone technology. And the handset makers say,

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<v Speaker 1>you know, we pay you a lot of money for this,

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<v Speaker 1>and this technology is all about making voice calls, and

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<v Speaker 1>you know most people don't use phones for that anymore,

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<v Speaker 1>but we still have to pay you these huge royalties

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<v Speaker 1>based on the sale price of the handset. So in

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<v Speaker 1>that litigation, Qualcom was defending it's very high royalties, while

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<v Speaker 1>the handset makers, including Apple, we're upset with it. So

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<v Speaker 1>a historic a constant eight in intellectual property where sort

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<v Speaker 1>of both sides need each other and one side says

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<v Speaker 1>we're paying you way more than what you contribute to

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<v Speaker 1>the deal, which is what the programmers are saying. And

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<v Speaker 1>I think the judges picking up on that. So a

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<v Speaker 1>lot of legal experts gave Apple the advantage going into

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<v Speaker 1>the trial, but there was a shift after hearing the

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<v Speaker 1>judge questioning Tim Cook. If the judge finds in favor

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<v Speaker 1>of Epic, what kind of remedies might you order? Well,

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<v Speaker 1>she could enjoin Apple from keeping Epic from providing consumers

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<v Speaker 1>information about a different way to process their charges for

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<v Speaker 1>payments they make for things in the application, Epic apparently

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<v Speaker 1>had a screen that they wanted to show consumers, say

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<v Speaker 1>which would you like to do? Pay more to Apple

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<v Speaker 1>or less to us, So she could enjoin Apple from

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<v Speaker 1>stopping Epic from doing that. Whatever she orders, my guess

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<v Speaker 1>is either she will stay her order or the Court

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<v Speaker 1>of Appeals will stay her order. So actually nothing may

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<v Speaker 1>happen immediately no matter how she rules, and it will

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<v Speaker 1>await a decision by the Court of Appeals. Epic, interestingly,

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<v Speaker 1>is not asking for money. They're not asking for damages

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<v Speaker 1>from the high charges. I think it's a clever tactical

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<v Speaker 1>move on Epics lawyer's part. So just saying, give us

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<v Speaker 1>a chance to compete for consumers, give consumers a choice,

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<v Speaker 1>and makes a very clean ask in a way. Could

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<v Speaker 1>the judge ever rule, Okay, you're taking from developers, now

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<v Speaker 1>that's too much you have to take or whatever. So

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<v Speaker 1>one of the interesting aspects of this is, as a

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<v Speaker 1>legal matter, there is no any trust restriction on Apple

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<v Speaker 1>charges even as a monopolis. They can charge whatever heck

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<v Speaker 1>they want and it doesn't violate any trust law. So

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<v Speaker 1>judges are very low to start monkeying with saying your

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<v Speaker 1>prices are too high. And in the qualcom case of

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<v Speaker 1>the District Court, judge did get into that issue and

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<v Speaker 1>the corn appeals to everyone sort of sidestepped back. So

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<v Speaker 1>it's not a violation of the any trust laws to

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<v Speaker 1>charge a high fee, even an exorbitancy. So it's hard

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<v Speaker 1>for a judge. So now say, okay, I'm going to

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<v Speaker 1>price regulate you, and you know you can only charge

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<v Speaker 1>x per cent. I don't see her doing that, and

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<v Speaker 1>I don't see Epic asking for that because I think

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<v Speaker 1>they will get reversed so fast in the court of appeals,

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<v Speaker 1>So I think they're being careful to stay away from that,

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<v Speaker 1>but to try to achieve a similar result in a

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<v Speaker 1>different way. What's your take on this case is Apple

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<v Speaker 1>of Monopolis. Here is Apple violating antitrust laws. So I

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<v Speaker 1>will tell you June that this basically was my exam

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<v Speaker 1>question this year. So I've been reading papers all about this.

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<v Speaker 1>So there's a real question how we want to think

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<v Speaker 1>of these markets. And I think the courts are gonna

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<v Speaker 1>have a little trouble with this. But my view is

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<v Speaker 1>in the end, they do have monopoly power over the

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<v Speaker 1>distribution of Apple apps to the iPhone, And I think

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<v Speaker 1>that the hard question really is, well, what's the anti

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<v Speaker 1>competitive effect? Who's harmed in terms of competition, and how

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<v Speaker 1>do we think about it? Pretty clear that the harm

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<v Speaker 1>is that they're being charged a high fee. At one point,

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<v Speaker 1>Epic calls that attacks on their business. But since we

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<v Speaker 1>can't say that that's the harm, exactly, where's the competitive harm.

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<v Speaker 1>They don't compete with Epic, they don't have their own

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<v Speaker 1>games that compete. There are other Fellers who complain about

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<v Speaker 1>Apple and are competing with them, so it's not that

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<v Speaker 1>so exactly, how is competition, you know, which we tend

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<v Speaker 1>to think of as rivalry among different sellers of products.

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<v Speaker 1>How is it that effected? Is an Epics being forced

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<v Speaker 1>at all? Developers being forced to pay a lot of money?

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<v Speaker 1>How a court is going to deal with that? Now?

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<v Speaker 1>I would like to see courts deal with that a

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<v Speaker 1>little more, but I think that's gonna be a difficult issue.

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<v Speaker 1>It may end up going to the Supreme Court. Thanks Harry.

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<v Speaker 1>That's Professor Harry First of n y U Law School.

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<v Speaker 1>Billions of dollars are at stake, and at the end

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<v Speaker 1>of the three week trial, the judge will decide the

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<v Speaker 1>Apple Epic case has signaled that neither Apple nor Epic

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<v Speaker 1>Games will get what they want from her ruling. Joining

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<v Speaker 1>me is molefy Nayak, Bloomberg Legal reporter. The judge made

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<v Speaker 1>some telling remarks at the end of the trial. Tell

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<v Speaker 1>us a little bit about what she said to the

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<v Speaker 1>jetting this case. You know, towards the end of this

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<v Speaker 1>trial had some really tough questions for both sides, and

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<v Speaker 1>it was sort of selling because I think that you know,

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<v Speaker 1>to the trial and some of these questions team up.

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<v Speaker 1>But toward the end she talked about how Apple but

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<v Speaker 1>then she need does face any real competition in the

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<v Speaker 1>market for app distribution. And on the other side, she

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<v Speaker 1>also questioned um epics motives and asked, you know where

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<v Speaker 1>the Epic was suing because they were doing it to

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<v Speaker 1>become richer than they are as a gaming company currently.

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<v Speaker 1>What are her options here? So the joet has a

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<v Speaker 1>few options. Obviously she's very powerful here, and this is

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<v Speaker 1>an ant attract case that is extremely complex. She can

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<v Speaker 1>either grant Epics request for a ruling that would block

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<v Speaker 1>the apps Florence policies in their current form. She could

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<v Speaker 1>perhaps go step further and even ask Apple to change

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<v Speaker 1>the percent commission rates that its currently charges developers. On

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<v Speaker 1>the other hand, she could maybe decide not to go

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<v Speaker 1>that far and take a step back, because sometimes judges

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<v Speaker 1>are reluctant to really rule in a way that would

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<v Speaker 1>disrupt a market. So it's possible that she it's not

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<v Speaker 1>to go that far and says that Apple's app store

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<v Speaker 1>as it is is fine and isn't a monopoly, And

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<v Speaker 1>she could also choose something in the middle, which is

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<v Speaker 1>something she inted that during the course of the trial.

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<v Speaker 1>You know, one of the the issues that Ethics had,

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<v Speaker 1>and this came up in the case two during the trial,

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<v Speaker 1>was that currently Apple's app store policies don't let users

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<v Speaker 1>go outside an app to buy a virtual good to

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<v Speaker 1>the cheaper rate. So, for instance, what Ethic wanted to

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<v Speaker 1>do was have some sort of an alternative payment system

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<v Speaker 1>where users could go, you know, outside the app store

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<v Speaker 1>and you know, on the on the fortnighte app and

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<v Speaker 1>buy virtually good directly to sort of circumvent the thirty

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<v Speaker 1>percent commission. And one of the appture policies currently doesn't

0:13:50.240 --> 0:13:53.640
<v Speaker 1>let um developers include a link some sort of a

0:13:53.679 --> 0:13:56.800
<v Speaker 1>button that maybe users can click on that would take

0:13:56.880 --> 0:13:59.839
<v Speaker 1>the user to the web where online they could for

0:14:00.080 --> 0:14:04.480
<v Speaker 1>just the same virtual goods like in Apparency, at a

0:14:04.559 --> 0:14:07.640
<v Speaker 1>cheaper rate. So that was an issue that came up.

0:14:07.720 --> 0:14:10.480
<v Speaker 1>This is sort of called um an anti steering rule

0:14:10.640 --> 0:14:15.880
<v Speaker 1>that Apple has where developers can't hear a customer outside

0:14:16.120 --> 0:14:20.400
<v Speaker 1>the realm of the iOS ecosystem to make cheaper purchases outside,

0:14:20.400 --> 0:14:23.920
<v Speaker 1>for instance, on a web browser. So the judge kept

0:14:23.960 --> 0:14:27.360
<v Speaker 1>asking during a child you know, why can't Apple this allow?

0:14:27.560 --> 0:14:30.480
<v Speaker 1>She exactually asked apples see you can cook this, why

0:14:30.480 --> 0:14:34.760
<v Speaker 1>can't Apple just give consumers this choice either through some

0:14:34.800 --> 0:14:36.880
<v Speaker 1>sort of a link or a button that a development

0:14:37.160 --> 0:14:40.320
<v Speaker 1>can place within an app so that the consumer has

0:14:40.400 --> 0:14:43.440
<v Speaker 1>a choice to go outside the app store and make

0:14:43.480 --> 0:14:46.200
<v Speaker 1>a purchase potentially on the web, you know, at a

0:14:46.240 --> 0:14:49.480
<v Speaker 1>discounted price. So it's possible that she chooses some sort

0:14:49.480 --> 0:14:52.960
<v Speaker 1>of a compromise where maybe she asked for some sort

0:14:52.960 --> 0:14:57.040
<v Speaker 1>of tweaks to some of these actual policies that Epic

0:14:57.120 --> 0:14:59.320
<v Speaker 1>has an issue with. So she could also sort of

0:14:59.320 --> 0:15:02.840
<v Speaker 1>find something the middle ground here. Instead of giving Epic

0:15:02.960 --> 0:15:06.160
<v Speaker 1>or Apple an entire wind, she could give them a parction.

0:15:06.360 --> 0:15:10.000
<v Speaker 1>She could give Epic a partial wing. So legal experts

0:15:10.040 --> 0:15:14.480
<v Speaker 1>going into the trial gave Apple the advantage until Tim Cook,

0:15:14.920 --> 0:15:19.840
<v Speaker 1>the CEO of Apple, testified. Was it the judges questions

0:15:19.880 --> 0:15:24.520
<v Speaker 1>were harsh? Was it that he didn't have the right answers? Yeah,

0:15:24.520 --> 0:15:26.520
<v Speaker 1>it was very interesting to see. Didn't could seek the

0:15:26.520 --> 0:15:30.160
<v Speaker 1>Britness stand for the first time ever, and the judge

0:15:30.240 --> 0:15:33.880
<v Speaker 1>definitely had some very very touch questions for him. And

0:15:33.920 --> 0:15:37.880
<v Speaker 1>I think, you know, again this whole question of consumer choice,

0:15:37.920 --> 0:15:44.440
<v Speaker 1>that why can't Apple just let developers provide users alternative

0:15:44.480 --> 0:15:48.080
<v Speaker 1>options to to buy virtually good outside the app store

0:15:48.200 --> 0:15:50.760
<v Speaker 1>was one of the questions she had, and Tim Cook

0:15:50.840 --> 0:15:53.960
<v Speaker 1>said that, you know, but we have all this intellectual

0:15:54.040 --> 0:15:58.200
<v Speaker 1>property that we've invested millions on and we've helped these

0:15:58.200 --> 0:16:02.240
<v Speaker 1>developers create these businesses on top of our ecosystem, so

0:16:02.360 --> 0:16:05.440
<v Speaker 1>we need to return on investment. And that was his

0:16:05.520 --> 0:16:09.000
<v Speaker 1>response in terms of having a return on investment for

0:16:09.120 --> 0:16:12.360
<v Speaker 1>all the i P that they've been providing developers. And

0:16:12.440 --> 0:16:15.160
<v Speaker 1>I think one of the the arguments that Apple also

0:16:15.240 --> 0:16:18.760
<v Speaker 1>need was that Epic was basically just getting a free

0:16:18.840 --> 0:16:21.520
<v Speaker 1>ride on the App Store and building out this big

0:16:21.560 --> 0:16:25.080
<v Speaker 1>business making use of its i P. And she also

0:16:25.200 --> 0:16:29.120
<v Speaker 1>asked him Cook another question, which was decently Apples introduced

0:16:29.120 --> 0:16:31.800
<v Speaker 1>this to the small business program where they reduced the

0:16:31.880 --> 0:16:37.640
<v Speaker 1>submission from fifteen percent for small businesses and UM, this

0:16:37.760 --> 0:16:41.080
<v Speaker 1>happened sometime around the pandemic, and at that time there

0:16:41.160 --> 0:16:45.280
<v Speaker 1>was a lot of scrutiny from U S lawmakers, regulators

0:16:45.320 --> 0:16:49.080
<v Speaker 1>in Europe, this whole discussion around the app store and

0:16:49.360 --> 0:16:52.360
<v Speaker 1>how Apple controls the app So the debt asked him

0:16:52.400 --> 0:16:55.800
<v Speaker 1>Cook whether it was, you know, all the regulatory scrutiny

0:16:55.840 --> 0:16:58.080
<v Speaker 1>that was pushing the company to to to sort of

0:16:58.200 --> 0:17:02.239
<v Speaker 1>introduce this new program where they were giving small businesses

0:17:02.360 --> 0:17:07.640
<v Speaker 1>this smaller commission fifteen percent commission. And she asked him

0:17:07.680 --> 0:17:10.480
<v Speaker 1>what the motive behind that was, and you know, sim

0:17:10.520 --> 0:17:12.640
<v Speaker 1>Cook said, oh, no, you know, of course, the law

0:17:12.920 --> 0:17:16.920
<v Speaker 1>that Epics filed and all the regulatory strupany was at

0:17:16.920 --> 0:17:18.639
<v Speaker 1>the back of my mind. But you know, it was

0:17:18.680 --> 0:17:22.280
<v Speaker 1>a pandemic and we wanted to do something for the developers.

0:17:22.640 --> 0:17:26.080
<v Speaker 1>Tell us a little about Apple's argument that this is

0:17:26.119 --> 0:17:30.200
<v Speaker 1>all about security on their platform. So yeah, I think

0:17:30.400 --> 0:17:33.080
<v Speaker 1>this whole argument that Apple has been making that you

0:17:33.119 --> 0:17:38.880
<v Speaker 1>know that what they're doing here in terms of restrictings. UM,

0:17:39.000 --> 0:17:41.920
<v Speaker 1>the app store or like, you know, having these these

0:17:41.920 --> 0:17:45.919
<v Speaker 1>sustringent rules and regulations around the app store. Um. You know,

0:17:45.960 --> 0:17:48.399
<v Speaker 1>they keep arguing that it is for the benefit of

0:17:48.440 --> 0:17:52.080
<v Speaker 1>developers or it's for the benefits of customers, that they

0:17:52.119 --> 0:17:56.200
<v Speaker 1>need to have these restrictions in place so that consumers

0:17:56.280 --> 0:18:01.000
<v Speaker 1>have a safe and trusted experience when they have UM

0:18:01.080 --> 0:18:04.200
<v Speaker 1>when they're playing games or using their iPhones. And I'm

0:18:04.240 --> 0:18:07.440
<v Speaker 1>not entirely sure the judge was convinced because you know,

0:18:08.200 --> 0:18:13.439
<v Speaker 1>she was questioning whether Apple or um Epic me have

0:18:13.600 --> 0:18:17.119
<v Speaker 1>some sort of you know, monetary motives or sort of

0:18:17.320 --> 0:18:20.600
<v Speaker 1>monetary must be thinking of Monday benefits. Uh, you know

0:18:20.680 --> 0:18:25.240
<v Speaker 1>at this point, So did you sense tension between them

0:18:25.320 --> 0:18:28.719
<v Speaker 1>or was it just tough questioning? There was definitely, you know,

0:18:28.880 --> 0:18:33.240
<v Speaker 1>some attention. I mean when when we had Tim Cook

0:18:33.359 --> 0:18:36.840
<v Speaker 1>being questioned Apples lawyer, it was definitely a lot a

0:18:36.840 --> 0:18:40.240
<v Speaker 1>friendlier and you know, typically, uh, you see a lot

0:18:40.240 --> 0:18:44.080
<v Speaker 1>of these executives when they, uh, when they're questioned by

0:18:44.160 --> 0:18:48.600
<v Speaker 1>their own lawyers, they're definitely more relaxed. Um. But the judge,

0:18:48.640 --> 0:18:52.360
<v Speaker 1>you know, he definitely was a bit if he did

0:18:52.480 --> 0:18:57.600
<v Speaker 1>have justifications, but they just didn't seem convincing enough. Um,

0:18:58.119 --> 0:19:01.720
<v Speaker 1>I think so at feel like he was. Um. He

0:19:01.800 --> 0:19:06.480
<v Speaker 1>definitely had justifications, but this whole um argument about how

0:19:07.240 --> 0:19:12.160
<v Speaker 1>the Act restrictions are necessary because the health developers and customers,

0:19:12.800 --> 0:19:15.760
<v Speaker 1>I'm not sure it was. I'm not sure the judge

0:19:15.840 --> 0:19:20.080
<v Speaker 1>was entirely persuaded. Bada. Did she question all the witnesses

0:19:20.280 --> 0:19:24.960
<v Speaker 1>or just Tim Cook? She questions, you know a number

0:19:24.960 --> 0:19:29.320
<v Speaker 1>of witnesses. There were other executives from Apple as well.

0:19:29.600 --> 0:19:33.800
<v Speaker 1>There was Phil Schiller, who is um now an Apple fellow,

0:19:33.920 --> 0:19:37.520
<v Speaker 1>but you know, has been a Apple's marketing chief for

0:19:37.560 --> 0:19:39.920
<v Speaker 1>a very long time. She even quest in simce Me,

0:19:40.320 --> 0:19:43.520
<v Speaker 1>who was at the stand whose Epics CEO as well.

0:19:43.640 --> 0:19:45.639
<v Speaker 1>So this was in the first week of the trial,

0:19:46.000 --> 0:19:49.800
<v Speaker 1>so she definitely had a lot of questions. But towards

0:19:49.920 --> 0:19:51.879
<v Speaker 1>the end of the trial as it wrapped up, this

0:19:52.040 --> 0:19:56.000
<v Speaker 1>exchange which Tim Cook was definitely an interesting one, and

0:19:56.520 --> 0:19:59.280
<v Speaker 1>though I was listening to the audio field, the pension

0:19:59.359 --> 0:20:02.480
<v Speaker 1>in the room was definitely possible. I have know much

0:20:02.520 --> 0:20:06.520
<v Speaker 1>about gaming or Epic, but it's not some new upstart

0:20:06.680 --> 0:20:10.960
<v Speaker 1>fighting to keep its company going. Fortnite generated five billion

0:20:11.000 --> 0:20:14.879
<v Speaker 1>dollars for Epic and the app store for Apple possibly

0:20:15.000 --> 0:20:18.680
<v Speaker 1>about twenty billion a year. So oh no, definitely not

0:20:19.000 --> 0:20:24.240
<v Speaker 1>this This um game business is well and Fortnite is

0:20:24.280 --> 0:20:28.120
<v Speaker 1>a very very popular game. So and and I think

0:20:28.560 --> 0:20:31.360
<v Speaker 1>the big question is if Epic didn't have to pay

0:20:31.440 --> 0:20:34.879
<v Speaker 1>that Apple, it'd probably be richer than they are today.

0:20:35.280 --> 0:20:39.320
<v Speaker 1>So um, although in this fight, interestingly enough, Epic isn't

0:20:39.320 --> 0:20:42.760
<v Speaker 1>speaking any damages. You know, it's more a fight on

0:20:42.800 --> 0:20:45.200
<v Speaker 1>principle in terms of we want this app store to

0:20:45.359 --> 0:20:50.399
<v Speaker 1>be the one where developers have the feeding in terms

0:20:50.480 --> 0:20:54.240
<v Speaker 1>of deciding what what sort of famous systems need to

0:20:54.240 --> 0:20:58.960
<v Speaker 1>be in place, and also, um, you know, how customers

0:20:58.960 --> 0:21:03.200
<v Speaker 1>should sort of experience and apps. So let's say the

0:21:03.280 --> 0:21:07.320
<v Speaker 1>judge does take the compromise fruit and says that Apple

0:21:07.440 --> 0:21:11.280
<v Speaker 1>has to allow the gamers to put a link in

0:21:11.840 --> 0:21:14.679
<v Speaker 1>so that people can buy from them directly. Has there

0:21:14.760 --> 0:21:17.560
<v Speaker 1>been an estimate about how much Apple would lose and

0:21:17.640 --> 0:21:21.040
<v Speaker 1>revenue from that? So, you know, it's very interesting because

0:21:21.119 --> 0:21:27.320
<v Speaker 1>Apple so far has not shared its app store revenues.

0:21:27.880 --> 0:21:30.879
<v Speaker 1>So it says that, you know, as for the accounting rules,

0:21:30.880 --> 0:21:34.160
<v Speaker 1>that they doesn't have to separate the app store out

0:21:34.240 --> 0:21:38.480
<v Speaker 1>is a separate business unit. So so this there is

0:21:38.480 --> 0:21:40.600
<v Speaker 1>a sort of mystery around what then when there is

0:21:40.640 --> 0:21:44.000
<v Speaker 1>a supposed to we have estimates in place UM and

0:21:44.800 --> 0:21:47.680
<v Speaker 1>you know it is supposed to be somewhere to the

0:21:47.760 --> 0:21:50.919
<v Speaker 1>tune of twenty billions. But they will definitely lose a

0:21:50.960 --> 0:21:54.440
<v Speaker 1>lot of money because we're talking about you know, UM

0:21:55.320 --> 0:21:58.280
<v Speaker 1>houses and thousands of developers and millions of apps, and

0:21:58.320 --> 0:22:02.440
<v Speaker 1>if they don't get this thirty percent commission UM, then

0:22:02.640 --> 0:22:06.040
<v Speaker 1>you know it is going to definitely um be a

0:22:06.119 --> 0:22:10.119
<v Speaker 1>big financial sort of set back because they're not going

0:22:10.160 --> 0:22:14.040
<v Speaker 1>to make those UM fees that they have been collecting

0:22:14.040 --> 0:22:17.240
<v Speaker 1>in permissions. And it's interesting too, is that this business

0:22:17.400 --> 0:22:20.399
<v Speaker 1>with the app store that Apple has created is a

0:22:20.480 --> 0:22:23.040
<v Speaker 1>high margin business, so you know, they're getting a lot

0:22:23.280 --> 0:22:27.639
<v Speaker 1>in return, we're not really investing as much. So for instance,

0:22:27.680 --> 0:22:29.680
<v Speaker 1>they do have this I T in place and everything,

0:22:30.080 --> 0:22:32.879
<v Speaker 1>but this uh, but the commissions that are coming in

0:22:33.000 --> 0:22:37.640
<v Speaker 1>are are coming in it at high margins. And so

0:22:37.800 --> 0:22:40.280
<v Speaker 1>how long did the judge say how long before she

0:22:40.800 --> 0:22:45.160
<v Speaker 1>gives her decisions? So she didn't specify a specific date,

0:22:45.280 --> 0:22:47.360
<v Speaker 1>but she did say that she would rule as soon

0:22:47.400 --> 0:22:51.119
<v Speaker 1>as possible, you know, while all of the arguments and

0:22:51.720 --> 0:22:55.280
<v Speaker 1>um testimony and evidence to fresh in her memory. Um,

0:22:55.359 --> 0:22:58.520
<v Speaker 1>she is going into trial the first week of June,

0:22:58.600 --> 0:23:02.080
<v Speaker 1>so we'll expect think something perhaps later this summer. But

0:23:02.200 --> 0:23:04.919
<v Speaker 1>she didn't specify a lead, but we should. We should

0:23:04.960 --> 0:23:09.879
<v Speaker 1>probably have a ruling incoming months. And um, you know,

0:23:09.920 --> 0:23:12.159
<v Speaker 1>everyone is definitely going to set in nyaut for that,

0:23:12.680 --> 0:23:16.880
<v Speaker 1>and she's anticipating already. I mean, everyone assumes that whoever

0:23:17.359 --> 0:23:20.359
<v Speaker 1>loses is going to appeal. In front of the judge

0:23:20.359 --> 0:23:22.840
<v Speaker 1>herself actually said that, you know, she wanted to build

0:23:22.840 --> 0:23:25.159
<v Speaker 1>out a very clear record of the evidence because she

0:23:25.320 --> 0:23:28.359
<v Speaker 1>expects an appeal in this case. And um, you know,

0:23:28.440 --> 0:23:32.119
<v Speaker 1>legally put to expect, you know, the losing side to

0:23:32.200 --> 0:23:35.360
<v Speaker 1>file an appeal. If there is just sort of compromise

0:23:36.119 --> 0:23:40.080
<v Speaker 1>or middle grounds situation that we end up with, then

0:23:40.160 --> 0:23:42.640
<v Speaker 1>it's possible that both sides to feel as well. So

0:23:43.240 --> 0:23:45.200
<v Speaker 1>we'd have to see how it bangs out once we

0:23:45.320 --> 0:23:48.160
<v Speaker 1>have the ruling. Now, that would be an interesting appeal.

0:23:48.600 --> 0:23:50.560
<v Speaker 1>Thanks so much for being on the Bloomberg Law Show.

0:23:51.160 --> 0:23:54.800
<v Speaker 1>That's Mollothy Niac, Bloomberg Legal Reporter. And that's it for

0:23:54.840 --> 0:23:57.880
<v Speaker 1>this edition of the Bloomberg Law Show. I'm June Grosso

0:23:58.119 --> 0:23:59.679
<v Speaker 1>and you're listening to Bloomberg