WEBVTT - Apple’s Antitrust App-Store Battle With Epic 0:00:15.720 --> 0:00:18.320 Hello, and welcome to the Votes and Verdicts podcast hosted 0:00:18.320 --> 0:00:22.360 by Bloomberg Intelligence, the investment research platform of Bloomberg LP. 0:00:23.200 --> 0:00:25.880 In this podcast series, we talk about the intersection of 0:00:25.920 --> 0:00:29.840 business policy and law. My name is Jennifer Ree, and 0:00:29.920 --> 0:00:33.600 I'm a senior analyst with Bloomberg Intelligence covering US ANTIDRUSS 0:00:33.600 --> 0:00:37.680 litigation and policy. This is the fourth Votes and Verdicts 0:00:37.680 --> 0:00:40.800 podcast series focused on anti trust issues, and for this 0:00:40.840 --> 0:00:43.760 one we did something a little bit different. On January 0:00:43.760 --> 0:00:47.840 twenty fourth, Bloomberg Intelligence hosted a webinar to discuss anti 0:00:47.920 --> 0:00:51.360 trust litigation against Apple that was brought by Epic Games 0:00:51.800 --> 0:00:55.680 over Apple's app store policies and how Apple is responding 0:00:55.720 --> 0:00:57.920 to an injunction that was issued by the court in 0:00:57.960 --> 0:01:01.520 that matter. This podcast is a recording of that webinar. 0:01:01.920 --> 0:01:04.840 My apologies for any references we made to slides we 0:01:04.920 --> 0:01:08.680 used in the webinar that aren't available here. For the webinar, 0:01:08.840 --> 0:01:11.560 we were honored to be joined by Professor Harry First, 0:01:12.000 --> 0:01:15.120 the Charles L. Denison Professor of Law Emeritus at New 0:01:15.200 --> 0:01:18.479 York University School of Law. He is also the co 0:01:18.520 --> 0:01:22.680 director of the law School's Competition, Innovation and Information Law program. 0:01:23.160 --> 0:01:26.280 From nineteen ninety nine to two thousand and one, Professor 0:01:26.360 --> 0:01:28.639 first served as the chief of the Anti Trust Bureau 0:01:28.680 --> 0:01:30.679 of the Office of the Attorney General of the State 0:01:30.720 --> 0:01:33.720 of New York. He teaches in the areas of antitrust, 0:01:34.080 --> 0:01:38.600 regulated industries, international and comparative anti trust, business crime, and 0:01:38.680 --> 0:01:42.600 innovation policy. He has authored or co authored numerous anti 0:01:42.600 --> 0:01:46.200 trust casebooks and scholarly works, and is a well known 0:01:46.240 --> 0:01:49.760 and respected figure in the world of anti trust. Joining 0:01:49.800 --> 0:01:54.400 Professor first are Bloomberg Intelligence analysts anarag Rana, Tamlin Basin, 0:01:54.520 --> 0:01:58.760 and myself. Honorag is a senior analyst covering technology companies 0:01:59.200 --> 0:02:03.000 and Tamlin is senior legal analyst also for technology matters. 0:02:03.640 --> 0:02:06.880 Anurk served as the moderator for the webinar, so with that, 0:02:07.400 --> 0:02:11.320 please enjoy this Boats and Verdicts podcast as usual. Feel 0:02:11.320 --> 0:02:12.959 free to reach out to me if you have any 0:02:13.040 --> 0:02:15.959 questions or comments, or would like to discuss this topic 0:02:16.040 --> 0:02:16.880 in further detail. 0:02:18.560 --> 0:02:23.720 Good morning, everyone, Welcome to Bloomberg Intelligence's webinar that looks 0:02:23.760 --> 0:02:26.760 at Apple's new AFT fee structure and some of the 0:02:26.800 --> 0:02:31.200 other legal battles it's facing right now. I'm very glad 0:02:31.200 --> 0:02:34.840 that we have Professor Harry First as one of our 0:02:34.880 --> 0:02:40.519 guests today. He is joined by my colleague Jennifer Ree 0:02:40.960 --> 0:02:43.880 as well as Hamlin Basin, and the four of us 0:02:43.919 --> 0:02:47.200 are going to brainstorm about of what exactly is happening. 0:02:47.639 --> 0:02:50.400 So we have an agenda today and the agenda is 0:02:50.760 --> 0:02:53.360 talking a lot about what's happening with the epic game 0:02:53.400 --> 0:02:58.239 and the Apple injection and other antitrust risks, what could 0:02:58.280 --> 0:03:00.800 be some of the financial impacts, and then you know, 0:03:00.919 --> 0:03:04.240 ending with d m A as well as the watchband 0:03:04.280 --> 0:03:08.519 options that Apple's facing. So you know, just a couple 0:03:08.520 --> 0:03:12.760 of comments about Bloomberg Intelligence. You know, we have a 0:03:12.880 --> 0:03:16.880 team of over four hundred people at this time, a 0:03:16.960 --> 0:03:22.200 lot of analysts across the world Singapore, Hong Kong, London, Princeton, 0:03:22.320 --> 0:03:26.359 New York. And then talking a lot about almost everything 0:03:26.400 --> 0:03:29.760 that's under the belt, such as credit equity easy as 0:03:29.840 --> 0:03:34.160 she and it's so you know, important for us to 0:03:34.240 --> 0:03:38.040 have experts like Jenry within the group because she helps 0:03:38.120 --> 0:03:41.560 us to understand a lot of what's happening. And in fact, 0:03:41.600 --> 0:03:44.000 every time I talk to her, I feel I've learned something. 0:03:44.040 --> 0:03:47.040 And today we even have even a bit you know, 0:03:47.160 --> 0:03:49.360 I would say a bigger guest that has is an 0:03:49.360 --> 0:03:52.240 anti trust expert. So it's this is something that we 0:03:52.360 --> 0:03:55.360 do fairly often. So, you know, perhaps to start off 0:03:55.360 --> 0:03:57.960 with laying the ground of what we are talking today, 0:03:58.600 --> 0:04:01.280 and let me ask a professor had a little bit 0:04:01.320 --> 0:04:05.720 about the Epic game versus Apple, what were kind of 0:04:05.720 --> 0:04:09.640 the terms of injunction issued against Apple? Now that the 0:04:10.520 --> 0:04:14.120 you know, litigation has concluded, what exactly would the trial 0:04:14.200 --> 0:04:16.320 court found finding against Apple. 0:04:17.920 --> 0:04:21.560 Well, of course we have to set this in a 0:04:21.640 --> 0:04:26.960 general anti trust attack on how both Apple and Google 0:04:27.480 --> 0:04:31.160 control their app stores. So as you point out this, 0:04:31.160 --> 0:04:35.680 this part of the litigation was Epics attack on we 0:04:35.720 --> 0:04:40.880 could say Epic litigation, Epics attack, sorry, Epics attack on 0:04:41.960 --> 0:04:49.599 Apple and the way it handles the app store. And 0:04:49.640 --> 0:04:53.120 although they attacked a number of things, two things in 0:04:53.160 --> 0:04:57.000 particular were important to the litigation. One is not allowing 0:04:58.880 --> 0:05:03.000 out sort of in app purchases but out of off 0:05:03.040 --> 0:05:08.360 of Apple onto Epic's own website or through its own stores. 0:05:09.480 --> 0:05:14.480 And I'm not being able to communicate to consumers, to 0:05:14.600 --> 0:05:19.160 those who were using Epic games, particularly Fortnite, that that 0:05:19.440 --> 0:05:22.120 there were other options available where they could make in 0:05:22.240 --> 0:05:25.960 app purchases in that purchases, as I'm sure all of 0:05:26.000 --> 0:05:28.599 you will tell me, very important to the business model 0:05:28.640 --> 0:05:33.200 for Epic and Key, I'm sure from Epic's point of view, 0:05:33.279 --> 0:05:38.000 is the huge commission that Apple takes on everything forever, 0:05:38.880 --> 0:05:45.839 which is a thirty percent commission. Now. Actually, Epic lost 0:05:45.960 --> 0:05:51.880 the anti trust litigation in the District Court and also 0:05:51.960 --> 0:05:55.000 on appeal. What they did win was a claim under 0:05:55.200 --> 0:06:00.840 California unfair competition law that the anti steering provision was 0:06:01.000 --> 0:06:05.760 and was unfair competition, in other words, not being able 0:06:05.800 --> 0:06:12.919 to tell consumers or steer them to Epics alternative purchase 0:06:12.960 --> 0:06:18.400 system and payment system. So that that is where Epic 0:06:18.480 --> 0:06:22.719 one and the Supreme Court just recently, Apple tried to 0:06:22.720 --> 0:06:27.080 take that case of the Supreme Court, not surprisingly was unsuccessful, 0:06:28.320 --> 0:06:31.599 and that's why we are where we are now. Now. 0:06:31.640 --> 0:06:36.039 The District Court had entered an injunction, very simple injunction 0:06:38.320 --> 0:06:45.080 that was to simply pro Apple had to stop prohibiting 0:06:45.120 --> 0:06:51.000 developers from including in their apps any read it metadata, buttons, 0:06:51.040 --> 0:06:55.320 external links, and so forth that could direct consumers to 0:06:56.440 --> 0:07:01.880 purchasing mechanisms other than Apples in a purchasing or communicating 0:07:01.920 --> 0:07:06.480 to customers. So that's the injunction, Apple can no longer 0:07:06.560 --> 0:07:09.360 do that, and they claim right now that they are 0:07:09.480 --> 0:07:12.040 actually in compliance with that injunction. 0:07:12.680 --> 0:07:15.679 So you know, in terms of the California state laws, 0:07:15.680 --> 0:07:18.679 what you know in terms of the anti steering stuff 0:07:18.920 --> 0:07:21.880 they have done or they have talked about some remediation there. 0:07:22.760 --> 0:07:25.880 How do you you know, how do you I guess 0:07:25.920 --> 0:07:28.440 what's your judgment on what it's trying to do there? 0:07:29.880 --> 0:07:36.240 Well, Apple is trying. Apple has some plausible claims that 0:07:36.840 --> 0:07:41.240 all the district court said was you you have to 0:07:41.240 --> 0:07:46.320 give consumers a choice, and that's it. The district court 0:07:46.360 --> 0:07:51.240 didn't say how to do it or you know, what 0:07:51.280 --> 0:07:53.920 the consequences were and so forth. Just the consumers have 0:07:54.040 --> 0:07:59.160 to be informed. And Apple pointed out in its papers 0:07:59.200 --> 0:08:02.480 that filed and this was just about a week ago, 0:08:02.600 --> 0:08:08.160 January sixteenth, they said the district court judge didn't disagree 0:08:08.200 --> 0:08:11.720 with Apple's business model that it was entitled to charge 0:08:11.720 --> 0:08:15.400 for all of the intellectual property et cetera, et cetera 0:08:15.520 --> 0:08:19.360 involved in the app store. So they said, fine, we're 0:08:19.400 --> 0:08:25.200 doing that. They can they can tell consumers that they can, 0:08:25.360 --> 0:08:31.760 the consumers can make purchases outside of you know, Apple's system. 0:08:32.360 --> 0:08:35.840 They can go to EPIC or any developers system and 0:08:35.880 --> 0:08:38.800 that's fine. All they have to do is get approval 0:08:38.920 --> 0:08:45.720 for what Apple calls entitlement links and and put up 0:08:45.720 --> 0:08:49.679 a little warning on the on the the mobile device 0:08:50.280 --> 0:08:54.160 before consumer switches. And they have a picture of the 0:08:54.200 --> 0:08:59.360 warning which says, I'm surprised they don't have a skull 0:08:59.400 --> 0:09:03.520 and cross bones on the warning. You are about to 0:09:03.720 --> 0:09:06.000 you know, you can hear them. Is not voice, but 0:09:06.320 --> 0:09:09.319 you know you are about to leave the safe space, 0:09:09.679 --> 0:09:12.160 and god knows what will happen to you out there. 0:09:12.400 --> 0:09:16.440 Do you agree? So it's you know, in black and white. 0:09:16.440 --> 0:09:19.320 Sort of reminds me of a cigarette box warning, you know. 0:09:19.440 --> 0:09:23.400 But and they say that's you know, consumers can then 0:09:23.480 --> 0:09:27.080 make a choice. And oh, by the way, of course, 0:09:27.360 --> 0:09:32.400 we're going to charge continue to charge for you know, 0:09:32.480 --> 0:09:38.719 what purchases consumers make through other applications. And oh, by 0:09:38.760 --> 0:09:43.439 the way, since we don't trust you, we're gonna audit 0:09:43.520 --> 0:09:49.920 you all the time. And uh, you know. So basically, 0:09:49.960 --> 0:09:57.400 Apple is viewing the injunction in its narrowest form. Addressed 0:09:57.440 --> 0:10:00.840 to the harm that the judge saw, which was failing 0:10:00.920 --> 0:10:04.800 to give consumers information so they could make a choice, 0:10:05.600 --> 0:10:06.440 said here it is. 0:10:07.400 --> 0:10:09.240 You know, So I'll go back and you know, when 0:10:09.600 --> 0:10:12.480 we first heard about the twelve to twenty seven instent 0:10:12.600 --> 0:10:15.240 of the fifteen to thirty m I mean, my first 0:10:15.240 --> 0:10:17.760 cut reaction to gen was this is crazy. I mean, 0:10:17.760 --> 0:10:20.600 this is still too high compared to that. But Jen 0:10:20.640 --> 0:10:22.840 taught me that, you know, they are not contending if 0:10:22.880 --> 0:10:24.640 the fee was high or not, but they are just 0:10:24.679 --> 0:10:29.760 saying that they will charge for these services. So I 0:10:29.760 --> 0:10:32.720 guess the biggest question in all of this is what 0:10:32.960 --> 0:10:35.760 is the big deal or where does this thirty percent 0:10:35.840 --> 0:10:39.800 come from? Because I've heard, for example, Amazon Marketplaces charges 0:10:39.880 --> 0:10:42.199 at that amount, or you know, if they have a platform, 0:10:42.200 --> 0:10:45.000 they're going to charge some fee. You know, who's to 0:10:45.080 --> 0:10:48.439 decide whether that's ten percent of five or fifteen or thirty. 0:10:49.679 --> 0:10:54.920 Well, they're they're they're probably upset that the gaming industry 0:10:55.040 --> 0:11:01.040 didn't charge higher higher cuts because apparently that's where Steve's 0:11:01.160 --> 0:11:07.400 jobs got the thirty percent figure. It's not based on anything, 0:11:08.120 --> 0:11:11.800 I mean, unless you think they're comparable risks in Las 0:11:12.520 --> 0:11:16.400 Vegas and the app store, So you know that's what 0:11:16.520 --> 0:11:20.719 they charged that, you know, the cut on whatever, I'm 0:11:20.760 --> 0:11:24.480 not sure exactly, And this is what Judge Gonzales Rodgers, 0:11:24.520 --> 0:11:27.520 who tried the case. This is what she found as 0:11:27.559 --> 0:11:30.800 one of the findings in the trial, that it wasn't 0:11:30.840 --> 0:11:35.000 based on cost, and in fact, there was evidence presented 0:11:35.120 --> 0:11:40.079 that the profits on this are enormous over costs, maybe 0:11:40.679 --> 0:11:46.000 you know, seventy percent over costs, So it ain't based 0:11:46.040 --> 0:11:48.800 on anything. Now the fact that others charge it, they 0:11:48.840 --> 0:11:52.040 probably wish that Steve Jobs had picked forty because then 0:11:52.040 --> 0:11:57.679 they would all charge forty. So these aren't This is 0:11:57.800 --> 0:12:03.600 not exactly your competitive market that your duopalist Google also 0:12:03.720 --> 0:12:09.360 charges thirty percent. And you know, on the other hand, 0:12:10.240 --> 0:12:14.960 what is a competitive price. I'll put that out to 0:12:15.640 --> 0:12:17.720 the business people on this call. 0:12:18.360 --> 0:12:20.800 I mean, I'll just throw in here counter age. The 0:12:20.880 --> 0:12:24.280 question came up internally in Bloomberg Intelligence when all of 0:12:24.280 --> 0:12:26.720 these decisions were coming down, as to why is Epic 0:12:26.840 --> 0:12:29.040 so upset about this? Why is Tim Sweeney on what 0:12:29.200 --> 0:12:31.920 was on Twitter and now is X saying this is awful? 0:12:32.000 --> 0:12:34.760 And this is part of the reason because even though 0:12:34.800 --> 0:12:37.680 the judge said the thirty percent fees really not based 0:12:37.720 --> 0:12:40.520 in anything, and Apple didn't present evidence that that was 0:12:40.559 --> 0:12:43.160 really the cost of all the security and protection at 0:12:43.200 --> 0:12:47.200 IP that goes into its system. They hadn't justified that, 0:12:47.440 --> 0:12:50.640 and in fact, she said that its ability to continue 0:12:50.679 --> 0:12:54.000 to charge that fee was from its market power. She 0:12:54.040 --> 0:12:56.360 didn't find that it had monopoly powered, but she did 0:12:56.360 --> 0:12:59.679 find that it had some market power. And really, probably, 0:13:00.080 --> 0:13:03.920 you know, EPIC is left with Apple's continued ability to 0:13:04.000 --> 0:13:07.000 charge these high fees. Not that a judge is going 0:13:07.040 --> 0:13:09.760 to regulate price. That's not really what's going to happen 0:13:09.800 --> 0:13:13.200 in antitrust. And there was an expert for EPIC that 0:13:13.240 --> 0:13:16.520 did some calculations and thought that around a fifteen or 0:13:16.559 --> 0:13:20.080 sixteen percent fee might be competitive. There's some findings that 0:13:20.120 --> 0:13:23.120 a twelve percent fee might be at you know, at 0:13:23.160 --> 0:13:27.040 a loss. So that range is sort of bandied around 0:13:27.040 --> 0:13:29.560 a little bit as to what that competitive fee might be. 0:13:29.640 --> 0:13:34.160 But you know, Apple sort of as we all discussed 0:13:34.200 --> 0:13:37.000 after you heard about that twelve percent and twenty seven percent, 0:13:37.360 --> 0:13:41.959 and I was questioned by by our boss, acting Glenberg Intelligence, 0:13:42.280 --> 0:13:44.360 how can they do this? I kind of said, look, 0:13:44.720 --> 0:13:47.240 I don't. I went back and read the injunction. I 0:13:47.280 --> 0:13:49.280 went back and looked at the decision. I don't really 0:13:49.320 --> 0:13:53.880 think Apple doing this. It's it's it's sort of technically 0:13:53.920 --> 0:13:56.080 aligned with what it was told it had to do, 0:13:56.720 --> 0:13:59.280 and the judge didn't say you have to bring your 0:13:59.280 --> 0:14:03.199 fees down. But on the other hand, it seems really 0:14:03.760 --> 0:14:05.880 reckless to me as we put in our title to 0:14:05.920 --> 0:14:09.839 this webinar, because really it doesn't allow for a cheaper option, 0:14:10.160 --> 0:14:11.319 and that was the whole point. 0:14:12.160 --> 0:14:14.440 You know, are there any old cases going back to 0:14:14.760 --> 0:14:18.720 physical stores, you know, whether that's Walmart using their you know, 0:14:18.800 --> 0:14:22.560 shelf space, or Visa and Mastercart forcing people to use 0:14:22.600 --> 0:14:27.160 their network to process transactions. Is there any other precedent 0:14:27.240 --> 0:14:29.320 that will go back and say that, Okay, if you're 0:14:29.320 --> 0:14:31.400 going to use my platform, you're going to give me 0:14:31.440 --> 0:14:33.800 some fee for it. And you know this is kind 0:14:33.800 --> 0:14:35.720 of the range of the fee that I'm going to 0:14:35.800 --> 0:14:36.560 charge you for it. 0:14:38.320 --> 0:14:41.040 Well, I you know, it's a great question. I think 0:14:41.320 --> 0:14:44.120 at the heart of a lot of this litigation, at 0:14:44.200 --> 0:14:49.280 least on the private side, is motivated by the feeling 0:14:49.320 --> 0:14:54.040 that the plaintiffs are just paying two damn much. Now, 0:14:54.080 --> 0:14:59.600 in the payments litigation, what they did have was fees 0:14:59.720 --> 0:15:02.800 charge in other countries and how things were done in 0:15:02.840 --> 0:15:07.760 other countries. So you did have sort of a yardstick approach, 0:15:07.800 --> 0:15:10.320 so you could look at Canada and see how things 0:15:10.320 --> 0:15:14.520 were managed. You know, if you're a Visa fan, you 0:15:14.600 --> 0:15:17.520 know this probably better than I do. But you know, 0:15:18.560 --> 0:15:22.760 fees for interchange are much different in other countries we 0:15:22.840 --> 0:15:25.040 have we have this problem in a lot of industries 0:15:25.480 --> 0:15:29.280 when you know, so when it comes to any and frankly, 0:15:30.320 --> 0:15:34.600 here's where the patent part comes in. In patent cases, 0:15:34.800 --> 0:15:39.640 people litigate all the time over whether the fees in 0:15:39.800 --> 0:15:44.840 licensing cases are reasonable because lots of licensing agreements don't 0:15:44.840 --> 0:15:50.400 set them out, so they bring in experts and you know, 0:15:50.480 --> 0:15:53.640 as we're talking about what what the fees are that 0:15:53.720 --> 0:15:58.880 Apple's charging, I think of Qualcomm's fees, which as a 0:15:58.920 --> 0:16:04.080 percentage based are not as high, but which handset makers 0:16:04.800 --> 0:16:10.160 feel are exorbitant for what Qualcom provides in in your 0:16:10.200 --> 0:16:14.800 current handset. But they've got a choke hold and they've 0:16:14.840 --> 0:16:19.520 been you know, litigation that's brought against Qualcomm always brings 0:16:19.560 --> 0:16:23.960 up these fees. The interesting legal aspect from any trust 0:16:23.960 --> 0:16:27.080 point of view is that high prices are not a 0:16:27.200 --> 0:16:31.520 violation any trust laws. They may be in any trust harm, 0:16:31.600 --> 0:16:35.040 they may show the party has monopoly power, but they're 0:16:35.080 --> 0:16:40.240 not directly a violation. And the reason why courts and commentators, 0:16:40.800 --> 0:16:44.560 except frankly for a few like me, want to stay 0:16:44.600 --> 0:16:47.080 away from this is they say, we don't want to 0:16:47.120 --> 0:16:49.800 become we don't want to be like a public agility commission, 0:16:49.800 --> 0:16:57.520 we don't want to regulate rates. And both Judge Gonzales 0:16:57.880 --> 0:17:02.920 Rogers and the judge in the Google case now has said, 0:17:03.000 --> 0:17:06.639 I don't want to micromanage this industry. And you know, 0:17:06.840 --> 0:17:10.200 I don't want to sit and say, okay, twenty four 0:17:10.280 --> 0:17:14.240 percent might be okay, but not twenty seven, So I'm 0:17:14.280 --> 0:17:17.080 not going to do that. On the other hand, it's 0:17:17.119 --> 0:17:19.840 actually not so impossible if they wanted to know, if 0:17:19.840 --> 0:17:23.159 the judge wanted to stretch this injunction and say, to 0:17:23.320 --> 0:17:28.520 wipe out the effects over time of this not being 0:17:28.560 --> 0:17:32.640 able to make in app you know, purchases outside of Apple, 0:17:33.640 --> 0:17:35.920 We've got to do something, and this isn't going to 0:17:36.040 --> 0:17:40.240 do it just putting, you know, saying okay, warning, warning, 0:17:40.280 --> 0:17:44.000 you can make it, and then making an uneconomic approach 0:17:44.040 --> 0:17:47.119 to it so that developers are going to say, is 0:17:47.160 --> 0:17:51.320 this worth it? Setting up you know, so the judge 0:17:51.359 --> 0:17:55.520 could take an aggressive view of this. I don't know. 0:17:56.640 --> 0:17:58.479 I mean, I'm a guest, but I really don't know 0:17:58.640 --> 0:18:03.800 whether she will, but you know, I assume EPIC is 0:18:03.800 --> 0:18:06.240 going to come back and say, you know, this is 0:18:06.359 --> 0:18:11.040 not a cure for you know, a long running violation. 0:18:12.520 --> 0:18:17.840 It's it's not going to be effective compliance. But you know, 0:18:18.000 --> 0:18:20.119 judges don't want to regulate rates. 0:18:21.240 --> 0:18:23.080 So that's a very good point that you brought up. 0:18:23.119 --> 0:18:26.320 And again I was surprised that when jen once told 0:18:26.320 --> 0:18:30.199 me that they don't really regulate prices, and in that 0:18:30.280 --> 0:18:33.040 particular case, then what does what options does epech have 0:18:33.400 --> 0:18:34.760 if they're going to say you got to pay me 0:18:34.760 --> 0:18:37.320 twelve to twenty seven, you got to figure out the way, 0:18:37.440 --> 0:18:40.159 or you know, go find another platform to sell your product. 0:18:42.920 --> 0:18:46.080 You should you should have the lawyers for Epic come 0:18:46.119 --> 0:18:48.680 on and ask what they're I assume they're going to 0:18:48.760 --> 0:18:52.760 push and say this is this is not compliance and 0:18:53.359 --> 0:18:56.720 probably wish they had brought suit for damages treble damages 0:18:56.800 --> 0:19:00.199 instead of you know, just an injunction. I don't know, 0:19:00.480 --> 0:19:02.480 this is a you know, it's a conundrum, and it's 0:19:02.480 --> 0:19:04.920 a look, remedy is a problem in a lot of 0:19:04.960 --> 0:19:10.400 any trust cases. They're not unique. And as a guidance, 0:19:11.560 --> 0:19:13.119 the judge in the Google case is going to be 0:19:13.160 --> 0:19:19.240 faced with this shortly and is already you know, saying 0:19:19.280 --> 0:19:23.920 that after we go through the the final motions literally 0:19:23.960 --> 0:19:27.960 and physically from Google to overturned the jury verdict, where 0:19:27.960 --> 0:19:31.399 then gonna then gonna have some sort of proceeding to 0:19:31.440 --> 0:19:35.879 try to figure what the remedy is going to be. Now, uh, 0:19:36.160 --> 0:19:38.480 you sort of get from that that the judge that 0:19:38.560 --> 0:19:40.720 the kind of oh, yes, this is it, fine, we 0:19:40.760 --> 0:19:43.000 don't have to talk about it anymore, is not what 0:19:43.200 --> 0:19:50.760 that judge has in mind. So you know, I don't know, 0:19:50.880 --> 0:19:54.920 I I I guess we'll see what the pushback is 0:19:54.960 --> 0:19:59.240 from Epic, but I would expect them to push back 0:19:59.280 --> 0:20:02.959 pretty strongly. This is not effective compliance, and maybe with 0:20:03.119 --> 0:20:07.119 studies to show that this kind of warning, you know, 0:20:07.160 --> 0:20:08.280 people aren't gonna switch. 0:20:09.800 --> 0:20:13.440 May Yeah, I'll go back, you know, probably fifteen twenty years. 0:20:13.480 --> 0:20:17.119 And I remember the fight between iOS and I guess 0:20:17.160 --> 0:20:20.960 Macintosh and Windows at that point, and part of Apple's 0:20:21.040 --> 0:20:24.160 argument was, you know, my product is very expensive because 0:20:24.200 --> 0:20:26.640 I'm not opening it up to malware and all that 0:20:26.680 --> 0:20:29.040 other things. It's a closed system. This is how I 0:20:29.119 --> 0:20:32.119 run it. And I don't mind losing market share, but 0:20:32.359 --> 0:20:35.520 I want users to have the most I guess, safest 0:20:35.840 --> 0:20:38.760 experience possible, but I'm going to charge your premium for it. 0:20:38.800 --> 0:20:41.520 And that has been Apple's business model since then. So 0:20:42.160 --> 0:20:45.840 this opening a bios outside is kinds of contrary to 0:20:45.920 --> 0:20:49.640 the ethos of the company. You know, do people take 0:20:49.680 --> 0:20:51.879 that into account that you know, they are not I 0:20:52.080 --> 0:20:55.680 guess and like Google selling user information and you know, 0:20:55.840 --> 0:20:57.600 there's a lot of things that go into the Apple 0:20:57.640 --> 0:21:00.919 ecosystem that's fundamentally different than an open ecosystem. 0:21:02.359 --> 0:21:08.000 Well, you know, people, you know, when when when I 0:21:08.000 --> 0:21:10.720 get involved in these discussions, I think, do I understand 0:21:10.760 --> 0:21:15.520 all of this? So? And do users understand all of 0:21:15.520 --> 0:21:19.080 the extent of whatever these protections is supposed to be 0:21:19.160 --> 0:21:22.080 maybe in some general sense, and that may lead them 0:21:22.240 --> 0:21:26.879 not to switch so and particularly if it's not worth 0:21:26.880 --> 0:21:32.480 it to them, you know, use the original bargain, Steve 0:21:32.640 --> 0:21:35.360 Jobs bargain was, you know, I'm going to supercharge you, 0:21:35.800 --> 0:21:39.600 but you're going to get you know, a different sort 0:21:39.600 --> 0:21:47.520 of very integrated, seamless system, you know, as opposed to 0:21:48.359 --> 0:21:51.920 a clone, you know, a less expensive PC. At least 0:21:51.920 --> 0:21:54.280 you can see the bargain, but here it's hard to 0:21:54.320 --> 0:21:56.159 even see what the bargain's going to be from a 0:21:56.200 --> 0:22:01.199 consumer's point of view, why why would you switch? Doesn't 0:22:01.240 --> 0:22:05.719 sound like it's gonna save you anything, so so, uh, 0:22:05.920 --> 0:22:09.200 you know, they're making them an offer that they can refuse. 0:22:10.800 --> 0:22:13.920 Yeah, it's it sort of blocks out small developers too, 0:22:13.960 --> 0:22:18.399 from even being able to provide options because the limitation 0:22:18.560 --> 0:22:21.280 that Apple's putting is that the payment outside the app 0:22:21.320 --> 0:22:23.920 store has to be made in a website owned by 0:22:23.920 --> 0:22:26.760 the developer or managed and controlled by the developer, And 0:22:26.840 --> 0:22:30.080 there are probably just loads of small, sort of mom 0:22:30.200 --> 0:22:32.360 and pop developers out there that aren't going to want 0:22:32.440 --> 0:22:36.320 the costs or or have the resources to run into 0:22:36.359 --> 0:22:39.240 their own website and do this, and you know, prevents 0:22:39.280 --> 0:22:42.840 some third party coming in and providing a hub on 0:22:42.880 --> 0:22:46.960 the on the web. And so it also really limits 0:22:47.240 --> 0:22:51.359 the extent to which users actually have that choice and 0:22:51.440 --> 0:22:52.679 developers have a choice. 0:22:52.760 --> 0:22:55.199 Oh interesting, Yeah, yeah, one of it. 0:22:56.080 --> 0:22:58.399 One of the things I've noted again, you know, and 0:22:58.520 --> 0:23:00.800 just studying into change over the post twenty years is 0:23:01.320 --> 0:23:03.640 even you know, go back thirty forty years, I think 0:23:03.680 --> 0:23:06.600 interchange was as north as seven percent in those days. 0:23:06.840 --> 0:23:10.320 Now it's come down to somewhere around two percent. For processing. 0:23:10.800 --> 0:23:12.560 You know, if do you have an idea of what 0:23:12.760 --> 0:23:15.359 have been the forces other than the merchants just getting 0:23:15.359 --> 0:23:18.000 stronger and stronger, and in this case, it doesn't look 0:23:18.119 --> 0:23:21.560 like the overall population is going to be you know, 0:23:21.600 --> 0:23:24.640 I guess that powerful that that can depress this fifteen 0:23:24.680 --> 0:23:28.320 to thirty percent commission structure that they have to you know, 0:23:28.480 --> 0:23:30.760 let's say half of that. I'm trying to get to 0:23:30.800 --> 0:23:33.040 a point as to where it finally ends up in. 0:23:33.800 --> 0:23:36.880 Yeah, I don't know. I mean what you're describing is interesting. 0:23:36.920 --> 0:23:41.240 So there's a whole maybe ecosystem around interchange where you 0:23:41.320 --> 0:23:49.040 have independent companies who provide processing services, and you have 0:23:50.760 --> 0:23:56.320 I guess on the visa MasterCards side, the change in 0:23:56.440 --> 0:24:00.920 ownership from cooperative ownership to a separate company, a lot 0:24:00.920 --> 0:24:06.080 of market forces, and a lot of money. I mean, 0:24:06.200 --> 0:24:08.919 there's a lot of money in this industry, as you know, 0:24:09.200 --> 0:24:13.240 but also money changed to hands, you know, in anti 0:24:13.280 --> 0:24:19.639 trust cases. I had a research assistant a number of 0:24:19.720 --> 0:24:23.200 years ago who I think has spent his whole professional 0:24:23.240 --> 0:24:28.280 life doing these on the planeiff side, uh these uh, 0:24:28.480 --> 0:24:32.000 these are MasterCard cases and been very successful at it 0:24:32.080 --> 0:24:35.560 and on behalf of his clients and he had very 0:24:35.560 --> 0:24:39.320 big clients. So so I don't know, it's interesting to 0:24:39.359 --> 0:24:43.359 think that, you know, are there more epics? I don't. 0:24:43.400 --> 0:24:48.240 I don't know. I mean, market forces are important, but 0:24:48.920 --> 0:24:51.000 you know they need a little dynamite here. 0:24:51.600 --> 0:24:53.840 And you know, you know, Honor, I also when I 0:24:53.840 --> 0:24:55.879 think about a lot and this is is really early. 0:24:56.240 --> 0:24:57.960 This is a way down the road thing. But you know, 0:24:58.040 --> 0:25:00.959 there's there was testimony and just dicussion in trial as 0:25:00.960 --> 0:25:04.760 to how easy it is to switch between Android and iOS, 0:25:05.000 --> 0:25:06.680 how often people actually do that? 0:25:07.040 --> 0:25:07.639 And what I. 0:25:07.760 --> 0:25:11.880 Wonder is if things change more for Google Android than 0:25:11.880 --> 0:25:15.320 they do for iOS, given the jury verdict against Google 0:25:16.080 --> 0:25:19.560 down the road, are we actually and let's say it 0:25:19.640 --> 0:25:23.480 is cheaper, it actually becomes cheaper because of competition for 0:25:23.600 --> 0:25:27.320 consumers on an Android to buy an app or that 0:25:27.440 --> 0:25:30.960 make the inn app purchase. Is that going to put 0:25:31.040 --> 0:25:32.399 downward pressure. 0:25:32.160 --> 0:25:36.719 On the That's so I wonder that in the in 0:25:36.800 --> 0:25:42.880 the video game market, right, multi platform and subscription video games. 0:25:44.400 --> 0:25:47.600 So I was always skeptical of the switching. Oh yeah, 0:25:47.800 --> 0:25:52.879 I'll throw over my my iPhone, uh, you know for 0:25:53.040 --> 0:25:56.800 an Android iPhone. I don't want to talk about the 0:25:56.840 --> 0:26:00.720 snobbishness of iPhone users, but you know that they're really 0:26:00.760 --> 0:26:04.280 going to do that because they can make those their 0:26:04.359 --> 0:26:08.800