Speaker 1: Hello, and welcome to the Votes and Verdicts podcast hosted
Speaker 1: by Bloomberg Intelligence, the investment research platform of Bloomberg LP.
Speaker 1: In this podcast series, we talk about the intersection of
Speaker 1: business policy and law. My name is Jennifer Ree, and
Speaker 1: I'm a senior analyst with Bloomberg Intelligence covering US ANTIDRUSS
Speaker 1: litigation and policy. This is the fourth Votes and Verdicts
Speaker 1: podcast series focused on anti trust issues, and for this
Speaker 1: one we did something a little bit different. On January
Speaker 1: twenty fourth, Bloomberg Intelligence hosted a webinar to discuss anti
Speaker 1: trust litigation against Apple that was brought by Epic Games
Speaker 1: over Apple's app store policies and how Apple is responding
Speaker 1: to an injunction that was issued by the court in
Speaker 1: that matter. This podcast is a recording of that webinar.
Speaker 1: My apologies for any references we made to slides we
Speaker 1: used in the webinar that aren't available here. For the webinar,
Speaker 1: we were honored to be joined by Professor Harry First,
Speaker 1: the Charles L. Denison Professor of Law Emeritus at New
Speaker 1: York University School of Law. He is also the co
Speaker 1: director of the law School's Competition, Innovation and Information Law program.
Speaker 1: From nineteen ninety nine to two thousand and one, Professor
Speaker 1: first served as the chief of the Anti Trust Bureau
Speaker 1: of the Office of the Attorney General of the State
Speaker 1: of New York. He teaches in the areas of antitrust,
Speaker 1: regulated industries, international and comparative anti trust, business crime, and
Speaker 1: innovation policy. He has authored or co authored numerous anti
Speaker 1: trust casebooks and scholarly works, and is a well known
Speaker 1: and respected figure in the world of anti trust. Joining
Speaker 1: Professor first are Bloomberg Intelligence analysts anarag Rana, Tamlin Basin,
Speaker 1: and myself. Honorag is a senior analyst covering technology companies
Speaker 1: and Tamlin is senior legal analyst also for technology matters.
Speaker 1: Anurk served as the moderator for the webinar, so with that,
Speaker 1: please enjoy this Boats and Verdicts podcast as usual. Feel
Speaker 1: free to reach out to me if you have any
Speaker 1: questions or comments, or would like to discuss this topic
Speaker 1: in further detail.
Speaker 2: Good morning, everyone, Welcome to Bloomberg Intelligence's webinar that looks
Speaker 2: at Apple's new AFT fee structure and some of the
Speaker 2: other legal battles it's facing right now. I'm very glad
Speaker 2: that we have Professor Harry First as one of our
Speaker 2: guests today. He is joined by my colleague Jennifer Ree
Speaker 2: as well as Hamlin Basin, and the four of us
Speaker 2: are going to brainstorm about of what exactly is happening.
Speaker 2: So we have an agenda today and the agenda is
Speaker 2: talking a lot about what's happening with the epic game
Speaker 2: and the Apple injection and other antitrust risks, what could
Speaker 2: be some of the financial impacts, and then you know,
Speaker 2: ending with d m A as well as the watchband
Speaker 2: options that Apple's facing. So you know, just a couple
Speaker 2: of comments about Bloomberg Intelligence. You know, we have a
Speaker 2: team of over four hundred people at this time, a
Speaker 2: lot of analysts across the world Singapore, Hong Kong, London, Princeton,
Speaker 2: New York. And then talking a lot about almost everything
Speaker 2: that's under the belt, such as credit equity easy as
Speaker 2: she and it's so you know, important for us to
Speaker 2: have experts like Jenry within the group because she helps
Speaker 2: us to understand a lot of what's happening. And in fact,
Speaker 2: every time I talk to her, I feel I've learned something.
Speaker 2: And today we even have even a bit you know,
Speaker 2: I would say a bigger guest that has is an
Speaker 2: anti trust expert. So it's this is something that we
Speaker 2: do fairly often. So, you know, perhaps to start off
Speaker 2: with laying the ground of what we are talking today,
Speaker 2: and let me ask a professor had a little bit
Speaker 2: about the Epic game versus Apple, what were kind of
Speaker 2: the terms of injunction issued against Apple? Now that the
Speaker 2: you know, litigation has concluded, what exactly would the trial
Speaker 2: court found finding against Apple.
Speaker 3: Well, of course we have to set this in a
Speaker 3: general anti trust attack on how both Apple and Google
Speaker 3: control their app stores. So as you point out this,
Speaker 3: this part of the litigation was Epics attack on we
Speaker 3: could say Epic litigation, Epics attack, sorry, Epics attack on
Speaker 3: Apple and the way it handles the app store. And
Speaker 3: although they attacked a number of things, two things in
Speaker 3: particular were important to the litigation. One is not allowing
Speaker 3: out sort of in app purchases but out of off
Speaker 3: of Apple onto Epic's own website or through its own stores.
Speaker 3: And I'm not being able to communicate to consumers, to
Speaker 3: those who were using Epic games, particularly Fortnite, that that
Speaker 3: there were other options available where they could make in
Speaker 3: app purchases in that purchases, as I'm sure all of
Speaker 3: you will tell me, very important to the business model
Speaker 3: for Epic and Key, I'm sure from Epic's point of view,
Speaker 3: is the huge commission that Apple takes on everything forever,
Speaker 3: which is a thirty percent commission. Now. Actually, Epic lost
Speaker 3: the anti trust litigation in the District Court and also
Speaker 3: on appeal. What they did win was a claim under
Speaker 3: California unfair competition law that the anti steering provision was
Speaker 3: and was unfair competition, in other words, not being able
Speaker 3: to tell consumers or steer them to Epics alternative purchase
Speaker 3: system and payment system. So that that is where Epic
Speaker 3: one and the Supreme Court just recently, Apple tried to
Speaker 3: take that case of the Supreme Court, not surprisingly was unsuccessful,
Speaker 3: and that's why we are where we are now. Now.
Speaker 3: The District Court had entered an injunction, very simple injunction
Speaker 3: that was to simply pro Apple had to stop prohibiting
Speaker 3: developers from including in their apps any read it metadata, buttons,
Speaker 3: external links, and so forth that could direct consumers to
Speaker 3: purchasing mechanisms other than Apples in a purchasing or communicating
Speaker 3: to customers. So that's the injunction, Apple can no longer
Speaker 3: do that, and they claim right now that they are
Speaker 3: actually in compliance with that injunction.
Speaker 2: So you know, in terms of the California state laws,
Speaker 2: what you know in terms of the anti steering stuff
Speaker 2: they have done or they have talked about some remediation there.
Speaker 2: How do you you know, how do you I guess
Speaker 2: what's your judgment on what it's trying to do there?
Speaker 3: Well, Apple is trying. Apple has some plausible claims that
Speaker 3: all the district court said was you you have to
Speaker 3: give consumers a choice, and that's it. The district court
Speaker 3: didn't say how to do it or you know, what
Speaker 3: the consequences were and so forth. Just the consumers have
Speaker 3: to be informed. And Apple pointed out in its papers
Speaker 3: that filed and this was just about a week ago,
Speaker 3: January sixteenth, they said the district court judge didn't disagree
Speaker 3: with Apple's business model that it was entitled to charge
Speaker 3: for all of the intellectual property et cetera, et cetera
Speaker 3: involved in the app store. So they said, fine, we're
Speaker 3: doing that. They can they can tell consumers that they can,
Speaker 3: the consumers can make purchases outside of you know, Apple's system.
Speaker 3: They can go to EPIC or any developers system and
Speaker 3: that's fine. All they have to do is get approval
Speaker 3: for what Apple calls entitlement links and and put up
Speaker 3: a little warning on the on the the mobile device
Speaker 3: before consumer switches. And they have a picture of the
Speaker 3: warning which says, I'm surprised they don't have a skull
Speaker 3: and cross bones on the warning. You are about to
Speaker 3: you know, you can hear them. Is not voice, but
Speaker 3: you know you are about to leave the safe space,
Speaker 3: and god knows what will happen to you out there.
Speaker 3: Do you agree? So it's you know, in black and white.
Speaker 3: Sort of reminds me of a cigarette box warning, you know.
Speaker 3: But and they say that's you know, consumers can then
Speaker 3: make a choice. And oh, by the way, of course,
Speaker 3: we're going to charge continue to charge for you know,
Speaker 3: what purchases consumers make through other applications. And oh, by
Speaker 3: the way, since we don't trust you, we're gonna audit
Speaker 3: you all the time. And uh, you know. So basically,
Speaker 3: Apple is viewing the injunction in its narrowest form. Addressed
Speaker 3: to the harm that the judge saw, which was failing
Speaker 3: to give consumers information so they could make a choice,
Speaker 3: said here it is.
Speaker 2: You know, So I'll go back and you know, when
Speaker 2: we first heard about the twelve to twenty seven instent
Speaker 2: of the fifteen to thirty m I mean, my first
Speaker 2: cut reaction to gen was this is crazy. I mean,
Speaker 2: this is still too high compared to that. But Jen
Speaker 2: taught me that, you know, they are not contending if
Speaker 2: the fee was high or not, but they are just
Speaker 2: saying that they will charge for these services. So I
Speaker 2: guess the biggest question in all of this is what
Speaker 2: is the big deal or where does this thirty percent
Speaker 2: come from? Because I've heard, for example, Amazon Marketplaces charges
Speaker 2: at that amount, or you know, if they have a platform,
Speaker 2: they're going to charge some fee. You know, who's to
Speaker 2: decide whether that's ten percent of five or fifteen or thirty.
Speaker 3: Well, they're they're they're probably upset that the gaming industry
Speaker 3: didn't charge higher higher cuts because apparently that's where Steve's
Speaker 3: jobs got the thirty percent figure. It's not based on anything,
Speaker 3: I mean, unless you think they're comparable risks in Las
Speaker 3: Vegas and the app store, So you know that's what
Speaker 3: they charged that, you know, the cut on whatever, I'm
Speaker 3: not sure exactly, And this is what Judge Gonzales Rodgers,
Speaker 3: who tried the case. This is what she found as
Speaker 3: one of the findings in the trial, that it wasn't
Speaker 3: based on cost, and in fact, there was evidence presented
Speaker 3: that the profits on this are enormous over costs, maybe
Speaker 3: you know, seventy percent over costs, So it ain't based
Speaker 3: on anything. Now the fact that others charge it, they
Speaker 3: probably wish that Steve Jobs had picked forty because then
Speaker 3: they would all charge forty. So these aren't This is
Speaker 3: not exactly your competitive market that your duopalist Google also
Speaker 3: charges thirty percent. And you know, on the other hand,
Speaker 3: what is a competitive price. I'll put that out to
Speaker 3: the business people on this call.
Speaker 4: I mean, I'll just throw in here counter age. The
Speaker 4: question came up internally in Bloomberg Intelligence when all of
Speaker 4: these decisions were coming down, as to why is Epic
Speaker 4: so upset about this? Why is Tim Sweeney on what
Speaker 4: was on Twitter and now is X saying this is awful?
Speaker 4: And this is part of the reason because even though
Speaker 4: the judge said the thirty percent fees really not based
Speaker 4: in anything, and Apple didn't present evidence that that was
Speaker 4: really the cost of all the security and protection at
Speaker 4: IP that goes into its system. They hadn't justified that,
Speaker 4: and in fact, she said that its ability to continue
Speaker 4: to charge that fee was from its market power. She
Speaker 4: didn't find that it had monopoly powered, but she did
Speaker 4: find that it had some market power. And really, probably,
Speaker 4: you know, EPIC is left with Apple's continued ability to
Speaker 4: charge these high fees. Not that a judge is going
Speaker 4: to regulate price. That's not really what's going to happen
Speaker 4: in antitrust. And there was an expert for EPIC that
Speaker 4: did some calculations and thought that around a fifteen or
Speaker 4: sixteen percent fee might be competitive. There's some findings that
Speaker 4: a twelve percent fee might be at you know, at
Speaker 4: a loss. So that range is sort of bandied around
Speaker 4: a little bit as to what that competitive fee might be.
Speaker 4: But you know, Apple sort of as we all discussed
Speaker 4: after you heard about that twelve percent and twenty seven percent,
Speaker 4: and I was questioned by by our boss, acting Glenberg Intelligence,
Speaker 4: how can they do this? I kind of said, look,
Speaker 4: I don't. I went back and read the injunction. I
Speaker 4: went back and looked at the decision. I don't really
Speaker 4: think Apple doing this. It's it's it's sort of technically
Speaker 4: aligned with what it was told it had to do,
Speaker 4: and the judge didn't say you have to bring your
Speaker 4: fees down. But on the other hand, it seems really
Speaker 4: reckless to me as we put in our title to
Speaker 4: this webinar, because really it doesn't allow for a cheaper option,
Speaker 4: and that was the whole point.
Speaker 2: You know, are there any old cases going back to
Speaker 2: physical stores, you know, whether that's Walmart using their you know,
Speaker 2: shelf space, or Visa and Mastercart forcing people to use
Speaker 2: their network to process transactions. Is there any other precedent
Speaker 2: that will go back and say that, Okay, if you're
Speaker 2: going to use my platform, you're going to give me
Speaker 2: some fee for it. And you know this is kind
Speaker 2: of the range of the fee that I'm going to
Speaker 2: charge you for it.
Speaker 3: Well, I you know, it's a great question. I think
Speaker 3: at the heart of a lot of this litigation, at
Speaker 3: least on the private side, is motivated by the feeling
Speaker 3: that the plaintiffs are just paying two damn much. Now,
Speaker 3: in the payments litigation, what they did have was fees
Speaker 3: charge in other countries and how things were done in
Speaker 3: other countries. So you did have sort of a yardstick approach,
Speaker 3: so you could look at Canada and see how things
Speaker 3: were managed. You know, if you're a Visa fan, you
Speaker 3: know this probably better than I do. But you know,
Speaker 3: fees for interchange are much different in other countries we
Speaker 3: have we have this problem in a lot of industries
Speaker 3: when you know, so when it comes to any and frankly,
Speaker 3: here's where the patent part comes in. In patent cases,
Speaker 3: people litigate all the time over whether the fees in
Speaker 3: licensing cases are reasonable because lots of licensing agreements don't
Speaker 3: set them out, so they bring in experts and you know,
Speaker 3: as we're talking about what what the fees are that
Speaker 3: Apple's charging, I think of Qualcomm's fees, which as a
Speaker 3: percentage based are not as high, but which handset makers
Speaker 3: feel are exorbitant for what Qualcom provides in in your
Speaker 3: current handset. But they've got a choke hold and they've
Speaker 3: been you know, litigation that's brought against Qualcomm always brings
Speaker 3: up these fees. The interesting legal aspect from any trust
Speaker 3: point of view is that high prices are not a
Speaker 3: violation any trust laws. They may be in any trust harm,
Speaker 3: they may show the party has monopoly power, but they're
Speaker 3: not directly a violation. And the reason why courts and commentators,
Speaker 3: except frankly for a few like me, want to stay
Speaker 3: away from this is they say, we don't want to
Speaker 3: become we don't want to be like a public agility commission,
Speaker 3: we don't want to regulate rates. And both Judge Gonzales
Speaker 3: Rogers and the judge in the Google case now has said,
Speaker 3: I don't want to micromanage this industry. And you know,
Speaker 3: I don't want to sit and say, okay, twenty four
Speaker 3: percent might be okay, but not twenty seven, So I'm
Speaker 3: not going to do that. On the other hand, it's
Speaker 3: actually not so impossible if they wanted to know, if
Speaker 3: the judge wanted to stretch this injunction and say, to
Speaker 3: wipe out the effects over time of this not being
Speaker 3: able to make in app you know, purchases outside of Apple,
Speaker 3: We've got to do something, and this isn't going to
Speaker 3: do it just putting, you know, saying okay, warning, warning,
Speaker 3: you can make it, and then making an uneconomic approach
Speaker 3: to it so that developers are going to say, is
Speaker 3: this worth it? Setting up you know, so the judge
Speaker 3: could take an aggressive view of this. I don't know.
Speaker 3: I mean, I'm a guest, but I really don't know
Speaker 3: whether she will, but you know, I assume EPIC is
Speaker 3: going to come back and say, you know, this is
Speaker 3: not a cure for you know, a long running violation.
Speaker 3: It's it's not going to be effective compliance. But you know,
Speaker 3: judges don't want to regulate rates.
Speaker 2: So that's a very good point that you brought up.
Speaker 2: And again I was surprised that when jen once told
Speaker 2: me that they don't really regulate prices, and in that
Speaker 2: particular case, then what does what options does epech have
Speaker 2: if they're going to say you got to pay me
Speaker 2: twelve to twenty seven, you got to figure out the way,
Speaker 2: or you know, go find another platform to sell your product.
Speaker 3: You should you should have the lawyers for Epic come
Speaker 3: on and ask what they're I assume they're going to
Speaker 3: push and say this is this is not compliance and
Speaker 3: probably wish they had brought suit for damages treble damages
Speaker 3: instead of you know, just an injunction. I don't know,
Speaker 3: this is a you know, it's a conundrum, and it's
Speaker 3: a look, remedy is a problem in a lot of
Speaker 3: any trust cases. They're not unique. And as a guidance,
Speaker 3: the judge in the Google case is going to be
Speaker 3: faced with this shortly and is already you know, saying
Speaker 3: that after we go through the the final motions literally
Speaker 3: and physically from Google to overturned the jury verdict, where
Speaker 3: then gonna then gonna have some sort of proceeding to
Speaker 3: try to figure what the remedy is going to be. Now, uh,
Speaker 3: you sort of get from that that the judge that
Speaker 3: the kind of oh, yes, this is it, fine, we
Speaker 3: don't have to talk about it anymore, is not what
Speaker 3: that judge has in mind. So you know, I don't know,
Speaker 3: I I I guess we'll see what the pushback is
Speaker 3: from Epic, but I would expect them to push back
Speaker 3: pretty strongly. This is not effective compliance, and maybe with
Speaker 3: studies to show that this kind of warning, you know,
Speaker 3: people aren't gonna switch.
Speaker 2: May Yeah, I'll go back, you know, probably fifteen twenty years.
Speaker 2: And I remember the fight between iOS and I guess
Speaker 2: Macintosh and Windows at that point, and part of Apple's
Speaker 2: argument was, you know, my product is very expensive because
Speaker 2: I'm not opening it up to malware and all that
Speaker 2: other things. It's a closed system. This is how I
Speaker 2: run it. And I don't mind losing market share, but
Speaker 2: I want users to have the most I guess, safest
Speaker 2: experience possible, but I'm going to charge your premium for it.
Speaker 2: And that has been Apple's business model since then. So
Speaker 2: this opening a bios outside is kinds of contrary to
Speaker 2: the ethos of the company. You know, do people take
Speaker 2: that into account that you know, they are not I
Speaker 2: guess and like Google selling user information and you know,
Speaker 2: there's a lot of things that go into the Apple
Speaker 2: ecosystem that's fundamentally different than an open ecosystem.
Speaker 3: Well, you know, people, you know, when when when I
Speaker 3: get involved in these discussions, I think, do I understand
Speaker 3: all of this? So? And do users understand all of
Speaker 3: the extent of whatever these protections is supposed to be
Speaker 3: maybe in some general sense, and that may lead them
Speaker 3: not to switch so and particularly if it's not worth
Speaker 3: it to them, you know, use the original bargain, Steve
Speaker 3: Jobs bargain was, you know, I'm going to supercharge you,
Speaker 3: but you're going to get you know, a different sort
Speaker 3: of very integrated, seamless system, you know, as opposed to
Speaker 3: a clone, you know, a less expensive PC. At least
Speaker 3: you can see the bargain, but here it's hard to
Speaker 3: even see what the bargain's going to be from a
Speaker 3: consumer's point of view, why why would you switch? Doesn't
Speaker 3: sound like it's gonna save you anything, so so, uh,
Speaker 3: you know, they're making them an offer that they can refuse.
Speaker 4: Yeah, it's it sort of blocks out small developers too,
Speaker 4: from even being able to provide options because the limitation
Speaker 4: that Apple's putting is that the payment outside the app
Speaker 4: store has to be made in a website owned by
Speaker 4: the developer or managed and controlled by the developer, And
Speaker 4: there are probably just loads of small, sort of mom
Speaker 4: and pop developers out there that aren't going to want
Speaker 4: the costs or or have the resources to run into
Speaker 4: their own website and do this, and you know, prevents
Speaker 4: some third party coming in and providing a hub on
Speaker 4: the on the web. And so it also really limits
Speaker 4: the extent to which users actually have that choice and
Speaker 4: developers have a choice.
Speaker 3: Oh interesting, Yeah, yeah, one of it.
Speaker 2: One of the things I've noted again, you know, and
Speaker 2: just studying into change over the post twenty years is
Speaker 2: even you know, go back thirty forty years, I think
Speaker 2: interchange was as north as seven percent in those days.
Speaker 2: Now it's come down to somewhere around two percent. For processing.
Speaker 2: You know, if do you have an idea of what
Speaker 2: have been the forces other than the merchants just getting
Speaker 2: stronger and stronger, and in this case, it doesn't look
Speaker 2: like the overall population is going to be you know,
Speaker 2: I guess that powerful that that can depress this fifteen
Speaker 2: to thirty percent commission structure that they have to you know,
Speaker 2: let's say half of that. I'm trying to get to
Speaker 2: a point as to where it finally ends up in.
Speaker 3: Yeah, I don't know. I mean what you're describing is interesting.
Speaker 3: So there's a whole maybe ecosystem around interchange where you
Speaker 3: have independent companies who provide processing services, and you have
Speaker 3: I guess on the visa MasterCards side, the change in
Speaker 3: ownership from cooperative ownership to a separate company, a lot
Speaker 3: of market forces, and a lot of money. I mean,
Speaker 3: there's a lot of money in this industry, as you know,
Speaker 3: but also money changed to hands, you know, in anti
Speaker 3: trust cases. I had a research assistant a number of
Speaker 3: years ago who I think has spent his whole professional
Speaker 3: life doing these on the planeiff side, uh these uh,
Speaker 3: these are MasterCard cases and been very successful at it
Speaker 3: and on behalf of his clients and he had very
Speaker 3: big clients. So so I don't know, it's interesting to
Speaker 3: think that, you know, are there more epics? I don't.
Speaker 3: I don't know. I mean, market forces are important, but
Speaker 3: you know they need a little dynamite here.
Speaker 4: And you know, you know, Honor, I also when I
Speaker 4: think about a lot and this is is really early.
Speaker 4: This is a way down the road thing. But you know,
Speaker 4: there's there was testimony and just dicussion in trial as
Speaker 4: to how easy it is to switch between Android and iOS,
Speaker 4: how often people actually do that?
Speaker 3: And what I.
Speaker 4: Wonder is if things change more for Google Android than
Speaker 4: they do for iOS, given the jury verdict against Google
Speaker 4: down the road, are we actually and let's say it
Speaker 4: is cheaper, it actually becomes cheaper because of competition for
Speaker 4: consumers on an Android to buy an app or that
Speaker 4: make the inn app purchase. Is that going to put
Speaker 4: downward pressure.
Speaker 3: On the That's so I wonder that in the in
Speaker 3: the video game market, right, multi platform and subscription video games.
Speaker 3: So I was always skeptical of the switching. Oh yeah,
Speaker 3: I'll throw over my my iPhone, uh, you know for
Speaker 3: an Android iPhone. I don't want to talk about the
Speaker 3: snobbishness of iPhone users, but you know that they're really
Speaker 3: going to do that because they can make those their
Speaker 3: kids can buy a sword in app a little less expensively.
Speaker 3: It just didn't seem to me to scan. But I
Speaker 3: wonder with the multi platform video game subscriptions, and one
Speaker 3: of the things that I'm actually not clear about in
Speaker 3: the compliances is the fee for subscriptions. So as gaming
Speaker 3: does move to subscriptions, there's a provision that says something
Speaker 3: about twelve percent for subscriptions forever, which is, you know,
Speaker 3: puts the magazine industry to shame. But I wonder I
Speaker 3: couldn't tell whether that was just it was in the
Speaker 3: twenty seven and twelve part, but it didn't seem to
Speaker 3: be limited to small users. I couldn't quite figure that out.
Speaker 3: And it seems to me that as that business model
Speaker 3: changes and it's it's gaming that's a that's the real
Speaker 3: money behind a lot of this problem and issue, whether
Speaker 3: that may be the market force because that might lead,
Speaker 3: you know, people who love these games to say, you know,
Speaker 3: give me an Android phone because you're making me take
Speaker 3: a subscription out of my allowance, and it's a lot
Speaker 3: less on you know, if I subscribe on an android phone.
Speaker 3: So so I don't know, I just that was I
Speaker 3: quess what I wondered.
Speaker 2: About So with him, in my view is people who
Speaker 2: buy thousand dollars phones are not sensitive to a few
Speaker 2: you know, dollars of I mean, but that's I mean.
Speaker 2: But but again, philosophically, this is going to go on
Speaker 2: for a while. And you know, part of again, as
Speaker 2: I said, I completely agreed with Jen when this thing
Speaker 2: came out that this seems a bit odd. But I well,
Speaker 2: I'll take the counter argument to it is if I
Speaker 2: look at Apple's business model, they have let's say about
Speaker 2: four hundred billion in revenue right now. Out of that,
Speaker 2: you know, over three hundred or so comes from products,
Speaker 2: you know, sell stuff that they sell, and their total
Speaker 2: operating margin is somewhere around thirty percent. That is well
Speaker 2: below what Visa and MasterCard at around fifty percent is.
Speaker 2: So if I was Apple, I would argue that I am,
Speaker 2: you know, my products are the ones that are let's
Speaker 2: say three hundred billion in size, and I'm making services,
Speaker 2: which is all sorts of different things, you know, I
Speaker 2: Cloud and Apple Care, and we'll talk about the Google
Speaker 2: fee and all the other things that go into it.
Speaker 2: Is you know, a portion of it. So I'm subsidizing
Speaker 2: my products, which I don't think is true. But you know,
Speaker 2: but there's that argument that holds true that as a whole,
Speaker 2: Apple's operating margins are nowhere close to industry high. Their
Speaker 2: dollar amount is big just because the size of the company.
Speaker 4: Well, except in the app store, the margins are somewhere
Speaker 4: between seventy and eighty percent. It was determined in the trial.
Speaker 2: No, that's fair. Again, Again, I'm talking about the whole
Speaker 2: ecosystem when I would look at the products itself, and
Speaker 2: you know, all the other things that they put into it.
Speaker 3: So I guess my question is to whom are they
Speaker 3: making this argument. I mean, this is not it's not
Speaker 3: a legal argument. It's not any trust argument. It's an
Speaker 3: argument to investors. It's an argument. I'm not quite sure.
Speaker 3: I'm not quite sure.
Speaker 2: For me, the argument would be whoever wants to I mean,
Speaker 2: if somebody takes this in front of a judge and
Speaker 2: say these fees are egregious, and you know, that's that's
Speaker 2: the picture I would paint that if I look at
Speaker 2: other platforms or other ecosystems, this to me, you know,
Speaker 2: if as as an Apple, again Apple speaking in this case,
Speaker 2: not me. This is fair because my total margin structure
Speaker 2: is still much lower than what the the rest of
Speaker 2: the world is enjoying.
Speaker 3: Yeah, it's hard for me to see the legal context
Speaker 3: in which that argument gets made, because usually attacks are
Speaker 3: you know, by product markets. So the fact I mean,
Speaker 3: either you're making money or not making money, or it's
Speaker 3: above cost or not. The fact that you're making and
Speaker 3: in the end, you mean, this two trillion dollar company
Speaker 3: is going to come in and say, oh, poor me.
Speaker 3: I mean, I don't I don't.
Speaker 4: Know, you know, in a micro sense. They made that
Speaker 4: argument in the epic trial, just just as it applies
Speaker 4: to gaming apps, right, and you know, they said, well,
Speaker 4: this is what everybody else is charging, and it still
Speaker 4: didn't really matter. The judge said, no, you haven't justified.
Speaker 4: You haven't justified your fees, and we think those fees
Speaker 4: really come from your market power and not be because
Speaker 4: it's the value, not because of the value provide. So
Speaker 4: they they didn't really work for them making that argument.
Speaker 3: In that matter.
Speaker 2: And Professor Harritt's three trillion now.
Speaker 3: So three trillion. Sorry, yeah, that's right, you know, I'm sorry.
Speaker 3: I looked at last year's figures.
Speaker 2: No, no, I'm just just taking a joke out of it.
Speaker 2: Let's switch to the impact of the DOJ lawsuits. Now
Speaker 2: there's a we've heard there's a potential lawsuits that's going
Speaker 2: to be brought up by the Department of Justice. We
Speaker 2: also have the dog's ongoing litigation against Google over the
Speaker 2: alleged monopolization of search and the search advertising markets. And
Speaker 2: this is something that we'll love to hit your opinion
Speaker 2: on because it's humored. Because we don't have the exact
Speaker 2: numbers that Google pays Apple somewhere around fifteen to twenty
Speaker 2: billion some it's a it's a big amount, you know,
Speaker 2: we don't I don't have the right number, but imagine
Speaker 2: that fifteen to twenty billion falls straight to the bottom line.
Speaker 2: If you want to talk margins, it's this has probably
Speaker 2: I don't know, it has full margins. There is there
Speaker 2: is no cost to that stuff. So that's a very
Speaker 2: big fee. I love to get your opinion on what
Speaker 2: happens next.
Speaker 3: So I sometimes say that the god of anti trust
Speaker 3: is the god of irony. So here you're suing you're
Speaker 3: suing Google for making these huge payments for default. So
Speaker 3: if the judge finds, which I think the judge is
Speaker 3: going to find. My sense of it that this that
Speaker 3: Google has a monopoly in search, that searches a product market,
Speaker 3: and Google has monopoly power in it, and that the
Speaker 3: paying for default is monopolizing conduct, and so the most
Speaker 3: obvious remedy is they can't do that anymore. So they've
Speaker 3: just saved Google. I don't know the figure that came
Speaker 3: out total, it's not just Apple, was what twenty six
Speaker 3: billion dollars in one year? I mean Google. They are
Speaker 3: they saying to their any Trust lawyer, Yes, let's lose
Speaker 3: this case because we're gonna you know, now, we'll still people.
Speaker 3: You know, we're we're we're embedded on everyone's phones, but
Speaker 3: now we don't have to pay for it anymore. Thank you.
Speaker 3: And Apple, who they just assumed vanquished if they could, says,
Speaker 3: oh crap, we're not the defendants, but we don't get
Speaker 3: the money anymore. And you know what are we going
Speaker 3: to do? Banish the Google search bar from no and
Speaker 3: people will just download it anyway. Oh, we love any Trust.
Speaker 3: So I think that's sort of one of the ironies
Speaker 3: of what may turn out to be the remedy. And
Speaker 3: in the litigation. Now there'll probably be other things, but
Speaker 3: I do think that the the plaintiff Justice Department and
Speaker 3: the states in the government's case are going to win.
Speaker 3: And there's a there's a companion case too, brought by
Speaker 3: the thirty six forty eight states, I forget how many
Speaker 3: thirty eight. Maybe that's led by Colorado. That's a little broader,
Speaker 3: and we'll see how that one goes because it involves
Speaker 3: their search advertising tool as well. So there's still a
Speaker 3: there's still a distance to go, and there's still some
Speaker 3: open important open legal questions that the judge left when
Speaker 3: Google had filed a motion for some rejudgment, which the
Speaker 3: court denied, but left open some questions that the judge had,
Speaker 3: you know, particularly about what the butt for World might
Speaker 3: have looked like had there had this you know, they
Speaker 3: not paid for the full Yeah.
Speaker 4: I have a question about that, and I'll have to
Speaker 4: say I have to say the dj made a believer
Speaker 4: of me in this case because I recall when the
Speaker 4: complaint was first file. In my mind, I thought, well,
Speaker 4: this isn't true foreclosure because Google's not really doing anything
Speaker 4: technically or contractually that prevents users from changing their default.
Speaker 4: But then after listening to some of a trial and
Speaker 4: reading some trial transcriptsite, I really changed my mind because
Speaker 4: I felt like there was pretty compelling evidence about how
Speaker 4: sticky default is, and to the extent it's sticky, then
Speaker 4: it becomes foreclosure and rivals are being foreclosed, and that's
Speaker 4: a pretty straightforward and old antitrust claim, one of the
Speaker 4: simpler ones I think. So I also think that the
Speaker 4: DOJ is going to win. But one of the questions
Speaker 4: I had was whether or not there was testimony in
Speaker 4: the trial about the fact that having been the default
Speaker 4: search for so long, Google is better because it was
Speaker 4: able to collect so much data and get so educated
Speaker 4: from all the searches being done. And that's why the
Speaker 4: others haven't been able to approve, because they need to
Speaker 4: improve by having more searches done using that search engine.
Speaker 4: And so one of the remedies I thought could be
Speaker 4: possible here is some force sharing of that massive collection
Speaker 4: of data that Googles over the years by being the
Speaker 4: deep ault search. Do you see that as a possibility.
Speaker 3: Professor, Well, I what what I'm so? I'm uncertain about
Speaker 3: either what the Justice Department wants or of course what
Speaker 3: a judge would order. Sharing is a difficult concept from
Speaker 3: nursery school on. Uh So, and sharing implies also continued supervision.
Speaker 3: So there's gonna be a reluctance for that. I'm not
Speaker 3: sure just department is gonna ask for that, and they're
Speaker 3: presumably technical issues as well. Yeah, so so I don't know.
Speaker 3: And there is the problem with all these cases where
Speaker 3: you know, the firm acquires and retainsment of power through
Speaker 3: consumer behavior. That doesn't get broken simply by saying, oh
Speaker 3: my god, that's how you got it. That's the you know,
Speaker 3: that's power of default. So so giving consumers a choice
Speaker 3: doesn't mean consumers will choose the other. And I think
Speaker 3: that's been the result in Europe that went through a
Speaker 3: very similar case to the Justice Department's case. And you know,
Speaker 3: choice screens and so forth have not been shown to
Speaker 3: be all that effective. So it's a bit of a dilemma.
Speaker 3: I don't know what they have in mind. And you're right,
Speaker 3: sharing data would sort of recognize the there's an underlying
Speaker 3: paradox in the case because if the idea is you
Speaker 3: need to get more and more searches to get scale,
Speaker 3: and more and more is better and better, So why
Speaker 3: do we want to search engines. So I'm not sure
Speaker 3: how justice is going to deal with this, and remedy
Speaker 3: is going to be big issues in all of these cases.
Speaker 4: I mean, there's no doubt the most straightforward and simple
Speaker 4: remedy for exclusive agreements that are legal as to get
Speaker 4: rid of the exclusive agreements.
Speaker 3: Yeah, that's yeah, So you know, no more agreements. You know,
Speaker 3: there are a lot of That's why contractual cases are
Speaker 3: the easiest to bring. If the contracts are the restraints
Speaker 3: of trade. You just say you can't have these contracts anymore.
Speaker 3: So that's true, but maybe not effective.
Speaker 4: Right right, So just I guess we should talk on
Speaker 4: our for a few minutes about this potential JAY lawsuit
Speaker 4: against Apple and then we can move on to you know,
Speaker 4: some of your your discussion on what what Apple can
Speaker 4: do about all this on the business side. So we've
Speaker 4: seen the news about the lawsuit, this possible lawsuit. I
Speaker 4: suspect it's going to get filed. I mean, we know
Speaker 4: the DEOJ has been investigating Apple for a long time
Speaker 4: now and focused on Google first, and those cases are
Speaker 4: well underway at this point. So I've seen news talk
Speaker 4: about I message, I've seen them talk about top ties
Speaker 4: between hardware and software. I mean, what what kind of
Speaker 4: allegations do you think would be in a lawsuit that
Speaker 4: the deja.
Speaker 3: Well, I'm I'm obviously I'm not sure. I'm I'm always
Speaker 3: a little skeptical about whether these cases are actually going
Speaker 3: to go. But look, they you know, they did file it.
Speaker 3: They see filed against Amazon after no threatening forever. Yesterday
Speaker 3: I went to look for news articles about the Justice
Speaker 3: Department's potential suit, you know, against Apple, and I went
Speaker 3: to the Wall Street Journal. So I came up with
Speaker 3: the story and then I read the date on the story,
Speaker 3: so it was a year ago. So uh, but you know,
Speaker 3: they better file now because who knows what's going to
Speaker 3: be now. And thinking about a little further, it seems
Speaker 3: to me they will not It will not involve the
Speaker 3: app store, simply because they haven't done it in Google
Speaker 3: in the Google litigation. They've gone other after other aspects
Speaker 3: of Google's business, but not the app store. And you know,
Speaker 3: you can make a legitimate claim that private parties are
Speaker 3: are involved with that, and as are the states, and
Speaker 3: we can put our resources elsewhere, and it muddles the
Speaker 3: competition stuff because we're not doing that for Google. So
Speaker 3: so what will they do. I think a lot of
Speaker 3: the stuff is going to involve some kind of interoperability
Speaker 3: where they they disadvantage firms that need to work with
Speaker 3: Apple Apple devices. Now you know what that's you know
Speaker 3: what products that's going to be. I don't know. I
Speaker 3: mean I staw mentioned of tile and the tracking devices,
Speaker 3: and you know, those cases frankly are not all that
Speaker 3: easy strike that They're actually hard in today's legal environment
Speaker 3: to win those cases on monopoly grounds. But maybe they've
Speaker 3: got some contractual stuff that they can go after. So
Speaker 3: so I don't know. I think as a generality, it's
Speaker 3: going to be disadvantaging competing products that need to interact
Speaker 3: with the Apple ecosystem in some way, whether it's the
Speaker 3: watch or you know, the iPhone or you know that
Speaker 3: sort of thing.
Speaker 4: Yeah, okay, yeah, I think about it all the time
Speaker 4: in terms of the like case. I try to figure
Speaker 4: out how a case could be brought that similar to
Speaker 4: that one, and it really I don't. I can't come
Speaker 4: up with one. Because they were unsuccessful in attempt to
Speaker 4: monopolize a browser market.
Speaker 3: Right.
Speaker 4: They were successful in maintaining right, but.
Speaker 3: On sort of silly technical grounds. I mean, yes, they
Speaker 3: were unsuccessful. I mean leveraging a leveraging theory into another market.
Speaker 3: That's the problem with the tracker thing, as you point out,
Speaker 3: But the reason the attempt is a different reason for
Speaker 3: not being successful, and ultimately it didn't matter in the case.
Speaker 3: But the problem of which is really a problem of
Speaker 3: platforms and what you know is commonly referred to as ecosystems,
Speaker 3: but is not a legal term, which are complements or
Speaker 3: adjacent markets, which is if you don't have if you're
Speaker 3: not going to get monopoly in that other market, or
Speaker 3: you don't have it, it's not a monopolization offense. The
Speaker 3: courts really read those out in the United States, not
Speaker 3: in Europe, but the United States, and you know that
Speaker 3: that's a roadblock for you know, a lot of these
Speaker 3: cases where Apple doesn't have a monopoly in that complementary product,
Speaker 3: but all of it put together keeps everyone in the
Speaker 3: Apple ecosystem.
Speaker 4: Yeah, honor, Actually we moved to the next slide, and.
Speaker 2: Yeah, let's you know, let me make a couple of
Speaker 2: comments on what our research things going to happen. My
Speaker 2: colleague when they published a note on it about what
Speaker 2: could happen in the Google and the Apple App Store
Speaker 2: and we did some math around where it could lead financially,
Speaker 2: so you know, we are kind of in agreement that
Speaker 2: the fees are going to go down. I mean, it's
Speaker 2: it's it is too it's higher than other marketplaces. You know,
Speaker 2: let's say you get a ten twelve percent reduction in
Speaker 2: the way they are doing things, and I mean what
Speaker 2: it could do is, you know, in our next slide
Speaker 2: we show, for example, Consensus right now has Apple lap
Speaker 2: store to be about twenty twenty one billion in sales.
Speaker 2: So if you look at a ten percent compression, that's
Speaker 2: about a two billion dollar head to the to the
Speaker 2: revenue line, and about let's say if he you know,
Speaker 2: take that down to twenty percent, that's about four billion,
Speaker 2: So two to four billion, which is not a small amount,
Speaker 2: but for Apple with four hundred billion in sales, it's
Speaker 2: still one percentage points. But it does, you know, have
Speaker 2: an impact on one particular way they do business. And
Speaker 2: I'd love to get Professor Harry's opinion on it. There
Speaker 2: is no shortage of avenue for them to make money
Speaker 2: right now. What one area they have not touched on
Speaker 2: is in app advertising or advertising, you know, targeting you
Speaker 2: and me at the same time, that's something that they
Speaker 2: have philosophically stayed away from. But that's a trillion dollar market.
Speaker 2: I mean, if they want, they can go out and
Speaker 2: you know, if they'll lose let's say, out of this
Speaker 2: twenty billion, let's say, sake of arguments, say they lose
Speaker 2: ten billion dollars in high margin fee. This is a
Speaker 2: seventy five percent operating margin business. Let's again assume that
Speaker 2: they can go out and say, you know what, I'm
Speaker 2: going to use your data to sell stuff back to you,
Speaker 2: and I'm going to take market share away from Facebook
Speaker 2: and Google and others. They can do that, and I
Speaker 2: mean it will take a few years, but that has
Speaker 2: been against their philosophy to sell things, so you know
Speaker 2: what I mean. But I mean if they do that,
Speaker 2: that obviously harms their customer and the trust that they
Speaker 2: have built in. But you know what, would Coats or
Speaker 2: or somebody in the legal profession say to that that
Speaker 2: it's actually harming the consumer in the end.
Speaker 3: Well, it's hard for any trust people to say that
Speaker 3: more competition is bad. And you know, it strikes me
Speaker 3: that's that's the scenario you're saying. If they're going to
Speaker 3: compete with Google and Facebook, for as a landing spot
Speaker 3: for advertisers. That means that advertising rates should go down,
Speaker 3: which should in some way we'redown to consumer benefit. Now,
Speaker 3: the fact that your data are being used, you know,
Speaker 3: means that once again you are paying in a different way,
Speaker 3: you know, the old I mean, it's it's the old dilemma.
Speaker 3: If if it's free, you're paying. So you know, whether
Speaker 3: in the end they would I mean, I assume it's
Speaker 3: a business proposition for them. Whether that so changes the
Speaker 3: way consumers perceive Apple products that that consumers would you know,
Speaker 3: be more willing to buy the Android phone or buy
Speaker 3: you know, PC or so forth. So, but from just
Speaker 3: from an any trust point of view, having them enter
Speaker 3: the advertising market is a plus.
Speaker 2: Quickly jumped to Toamblin with a lot of book that
Speaker 2: he has done on what's happening in Europe and all
Speaker 2: the different cases that he follows, and let me post
Speaker 2: to you Tomblin.
Speaker 5: Yeah sure, thanks An. So I'm going to briefly talk
Speaker 5: about the Digital Markets Act, and this is a broad,
Speaker 5: sweeping competition package. It's really intended to curb sort of
Speaker 5: the market power of large tech platforms, especially those that
Speaker 5: have been identified as gatekeepers by the European Commission. Now,
Speaker 5: many of the rules contained in the DMA are based
Speaker 5: at at least in large part on past competition cases
Speaker 5: that were brought by European regulators, and this does include
Speaker 5: an ongoing investigation against Apple's astore policies. This investigation began
Speaker 5: back in twenty twenty at the urging of Spotify. Now, again,
Speaker 5: the DMA is really far reaching, so I'm really just
Speaker 5: going to focus on sort of those app store impacts.
Speaker 5: So I think it's instructive to really look at the
Speaker 5: DMNA verse the injunction that came out of the epic
Speaker 5: litigation that Professor first went over. So first of all,
Speaker 5: both the injunction and the DMA do are going to
Speaker 5: prohibit anti steering or prohibit apples sort of policies against
Speaker 5: a developer reaching out consumers, against communicating with consumers about
Speaker 5: offers outside of the app. Where the DMA goes further
Speaker 5: is it's going to allow users to download apps outside
Speaker 5: of the app store, so sideloading, which is definitely something
Speaker 5: that Apple certainly is pushed back on in the past. However,
Speaker 5: I think it's it's very important to point out that
Speaker 5: what DMA does not prohibit, which is Apple or Google
Speaker 5: or anybody to impose a service fee on third party
Speaker 5: payment systems. So what that means is if in Europe,
Speaker 5: Apple Google sort of adopt a similar twenty seven and
Speaker 5: fail policy, that's not necessarily prohibited by the d m A. Now,
Speaker 5: now a little bit about timing is that the DMA
Speaker 5: takes effect March seventh, and prior to that, these gatekeepers
Speaker 5: are supposed to meet with the regulators and sort of
Speaker 5: outline how they intend to comply with this, and I
Speaker 5: think there were there were news reports recently that Apple
Speaker 5: has not done that yet, but we do think it's
Speaker 5: going to do that in the next few weeks. From
Speaker 5: March seventh, the European Commission is going to be directly
Speaker 5: in charge of enforcing the d m A, and I
Speaker 5: think from there we might see whether or not some
Speaker 5: investigations developed. Now, to go back to the there's no
Speaker 5: prohibition on service fees, but I think what's important to
Speaker 5: note is that there is this this requirement to access
Speaker 5: two app stores, be fair reasonable and non compliance, and
Speaker 5: Professor Fir sort of hinted at that standard as it's
Speaker 5: applies in patent cases. In patent cases, brand is sort
Speaker 5: of what is applied to the licensing of standard essential patents.
Speaker 5: It's very very difficult to their term and what brand is.
Speaker 5: It's even more difficult to reach an agreement on what
Speaker 5: brand is. Where I think these where we might see
Speaker 5: things going in Europe is I think Apple, Google, these
Speaker 5: parties are going to roll out with their DMA compliance
Speaker 5: in the next few weeks. I think regulators are going
Speaker 5: to look very closely at how these app store policies,
Speaker 5: at whether or not there is fair, reasonable and non
Speaker 5: discriminatory access to the app stores. And I think if
Speaker 5: a regulator thinks they're you know, it's either clearly not
Speaker 5: brand or maybe even just thinks there might be some
Speaker 5: morgal room there and to sort of, you know, try
Speaker 5: to set some precedent, we may see some investigations developed
Speaker 5: leading to I think litigation under the dmay so. I
Speaker 5: think there is a possibility, especially in Europe, which I
Speaker 5: think is a little bit less squeamish than judges in
Speaker 5: the US, about potentially setting a frand rate. I think
Speaker 5: we could see litigation going that way where we're regulars
Speaker 5: are really forced to weigh all of the evidence and
Speaker 5: try to reach a determination over whether the name.
Speaker 3: Uh uh, These.
Speaker 5: Servicing fees are a fair, reasonable and non discrimination, non discriminatory.
Speaker 5: You know that said, that's really going to take I
Speaker 5: think quite some time to develop. So again, first of all,
Speaker 5: you can have to have compliance. Then you're going to
Speaker 5: have to have the regulators conducting these these really thorough investigations,
Speaker 5: and then it is going to go to the courts.
Speaker 5: But I think this is where we might see sort
Speaker 5: of diverging paths in Europe and the US, is that
Speaker 5: there is this FRAND requirement under the d m A,
Speaker 5: and I think it's definitely gonna be very interesting to
Speaker 5: see how that develops.
Speaker 3: Simly, can I just ask you a question as to
Speaker 3: who's going to do the enforcement in the European Commission
Speaker 3: on frand?
Speaker 5: Yeah, Well, well, the European Commission does have an investigator
Speaker 5: in the sactory branch. They did give themselves direct power
Speaker 5: under the DMA. They didn't sort of want it to be.
Speaker 5: I think what they learned with a lot of their
Speaker 5: long litigations as they are recently trying to enforce competition
Speaker 5: rules is that it went on forever and ever. So
Speaker 5: what they tried to do is give I'm not gonna
Speaker 5: say bright line rules, but sort of more clear rules
Speaker 5: under the DMA, and then they are directly going to
Speaker 5: have a division within the European Commission that's going to
Speaker 5: try to enforce that. That said, there is the requirement
Speaker 5: that it's going to go to the courts to determine
Speaker 5: whether or not the enforcement was in line with the regulations.
Speaker 5: So it's not a you know, a the European Commission
Speaker 5: isn't doesn't have carb blanche to impose its will on it.
Speaker 5: It is going to be constrained by judicial interpretation of
Speaker 5: the Digital Markets Act. The europe Condition is going to
Speaker 5: have first bite out of that. I don't think it's
Speaker 5: going to be the competition the vesterger.
Speaker 3: So I think, yeah, because referring to the regulator, Yeah, yeah,
Speaker 3: is uh is a difficult term I've fold. Yeah, you know,
Speaker 3: particularly if it's not competition d G comp and you know,
Speaker 3: I my I mean, my feeling is this is still
Speaker 3: going to be a slow slog, because.
Speaker 5: Yeah, I think it's it's absolutely definitely going to be
Speaker 5: a slow slog. And again we're just we're not even
Speaker 5: at the time when the DNA texts effect that that's
Speaker 5: not till March seventh, and from there, I do think
Speaker 5: things are going to develop slowly. I think the European Commission,
Speaker 5: at least when the rules were being drafted, they had
Speaker 5: an idea of where they wanted it to go. But
Speaker 5: I think if if you even look back to how
Speaker 5: GDPR was rolled out and in force, it took really
Speaker 5: four or five years into you really started to see
Speaker 5: even the first opinions by regulators, and those have not
Speaker 5: yet made it through sort of the European court system.
Speaker 5: So I do think we're years and years away from
Speaker 5: potential branded terminations. But if you squint that that does
Speaker 5: look like that might be where things are headed here
Speaker 5: and here.
Speaker 4: In the meantime, the part of the reason that that
Speaker 4: well on, one of the many reasons for the d
Speaker 4: m A was that the abuse of dominance investigations and
Speaker 4: challenges took so long, and now you have these somewhat
Speaker 4: vague aspects of the DMA that are going to take
Speaker 4: just as long. Yeah, some of it's clear, but then
Speaker 4: you've got these more subjective brand you know issues, And
Speaker 4: in the meantime it's going to take another couple of years,
Speaker 4: and the rates that are being charged are still going
Speaker 4: to be charged.
Speaker 2: Thanks Samblin. Just one final question of both of you,
Speaker 2: Professor Hattie and Jen, you know, a year from now
Speaker 2: when we said down and then pick up this discussion again,
Speaker 2: do you think do you think Apple is going to
Speaker 2: be in a you know, in a in a better
Speaker 2: spot than where it is right now, or do you
Speaker 2: think things are going to be very difficult for them
Speaker 2: over the next twelve months.
Speaker 3: Well, I don't think they're going to be in a
Speaker 3: better spot, but I'm not sure how much worse it's
Speaker 3: going to be. I guess that's I wonder if where
Speaker 3: they are right now is going to make all that
Speaker 3: much difference to the app store unless the judge doesn't find,
Speaker 3: you know, Apple's compliance adequate. Whatever the judge finds, I
Speaker 3: assume the parties are going to appeal to the Ninth Circuit.
Speaker 3: So there's time some Who is it who said time
Speaker 3: is money? I mean time is money here I'm listening
Speaker 3: to Tamlin. I would think, geez, if it's going to
Speaker 3: take five years to decide whether our fees are franned,
Speaker 3: let's not set them too low, because you know, whatever
Speaker 3: we set them at, the Europeans are going to find
Speaker 3: they're too high. So if we can collect them for
Speaker 3: five years, Let's do it. I don't know if that's
Speaker 3: going to be a strategy or so, you know, it's
Speaker 3: this is a long game, and we always hope that
Speaker 3: anti trust or whatever tool we pick will be fast.
Speaker 3: It won't be. The thing is to not drop the ball,
Speaker 3: and um, you know, it's hard for me to predict
Speaker 3: whether the ball is going to drop in the future
Speaker 3: if this even if litigation is filed in the current
Speaker 3: Biden administration.
Speaker 4: Yeah, and you know, honor are given all of that,
Speaker 4: and I totally agree with that. I think, you know,
Speaker 4: the single thing in the next twelve months that maybe
Speaker 4: could have some impact on Apple that's negative from a
Speaker 4: business perspective is the case in which it's not even
Speaker 4: a defendant that we talked about, the DJ versus Google Search.
Speaker 4: Because if those payments stop, that's, as you mentioned, the
Speaker 4: twenty billion or whatever it is, it's a pretty big hit.
Speaker 4: And that's you know, that's something that could happen that
Speaker 4: Apple has No there's nothing Apple can really do about that.
Speaker 4: But right in terms of these challenges directly to Apple
Speaker 4: and its fleas and it's app store and its other businesses,
Speaker 4: I don't I just don't think anything. I think status
Speaker 4: will from the next moments.
Speaker 2: Now, this is great. This has been a very good
Speaker 2: discussion from all of you. Thank you so much, and
Speaker 2: we hope to have this you know, if we get
Speaker 2: new information on any of the cases. So thanks, thanks everybody,
Speaker 2: and have a good days there.
Speaker 4: Taken