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Trial:
Epic v. Apple

Apple will host its second all-virtual Worldwide Developers Conference starting Monday, giving the iPhone maker its annual opportunity to showcase upcoming changes to its software platforms and maybe some new hardware, too. But more important than in years past is that Apple communicates it cares about developers and actively wants to make their lives easier.

Because looming over this year's conference is the Epic v. Apple antitrust trial that concluded just a couple of weeks ago. At the heart of the case were accusations Apple illegally monopolizes app distribution on its platform, unfairly siphoning off profits from developers and locking consumers into an ecosystem Apple controls with an iron fist.

We won't have a verdict in the case for weeks or maybe even months. But while the trial often provided Apple an opportunity to make a rather convincing case for how it built the iPhone and the App Store and why it runs its mobile business the way it does, the trial also gave Epic and its legal team plenty of opportunities to paint Apple as the greedy overlord of iOS. In the picture Epic painted, Apple has been unwilling to change its behavior to protect profits, and exists in a market devoid of competition that would force it to.

Business as usual

The timing proves tricky for Apple. The company has to square many of the revealing comments its executives made both in private emails and in testimony while on the stand with the often polished, rosy message it sends to the world during events like WWDC. Perhaps most telling were responses from CEO Tim Cook in court where he characterized the App Store's 30% commission as "a return on our IP," and said he believes Apple creates "the entire amount of commerce on the store," justifying whatever commission it chooses.

One might think Apple would feel pressure to reassure developers or possibly throw them a bone. But that may be unlikely, said Ben Bajarin, CEO and technology analyst at Creative Strategies. "I don't think anybody expects them to make some drastic change in IAP," he said, referencing Apple's payment system, which enables its 30% cut. "[Developers] realize they're all stuck with some commission, and it varies between 15 [and] 30%."

Bajarin said Apple may lean on the pain points it feels it can change in subtle ways, like speeding up app review and ironing out inconsistent App Store policy enforcement. But the company likely won't acknowledge its fight with Epic or the dissatisfaction of big developers, even implicitly.

App Store satisfaction

Bajarin is in the process of conducting an iOS developer survey to measure satisfaction with Apple and the App Store, and he told Protocol that early results indicate figures similar to a study cited during the trial, which showed that roughly one-third of all developers feel some level of dissatisfaction. "You're seeing that a lot of really small developers for the most part are pretty happy," he said. But once they're a certain size, Bajarin added, and they no longer qualify for Apple's commission reduction down to 15%, then you start to see some grumbling.

This is consistent with developer Ben Sandofsky's experience working with Apple and building apps for iOS. Sandofsky, who built popular camera apps Halide and Specter with his business partner Sebastiaan de With under the company Lux, said he is still largely happy with how Apple has treated developers over the years.

"Every business owner, in every industry, would jump for joy at lower processing fees. I guess the core question is whether Apple's fees are reasonable for what they deliver," he said. "We're very happy with what we get out of the App Store in exchange for the fees. Compare it to Google Play, or even Nintendo's eShop, which are basically a search field and some lists."

Even the most successful iOS developers have voiced complaints about Apple in recent years, mainly focusing on app review delays and onerous App Store policies that force developers to jump through hoops. But Sandofsky said he tries to put them in the context of what Apple provides, how that offering has improved over the years and the company's core philosophy around closed ecosystems. "I feel like a lot of complaints come from people who expect something like web development. iOS is a closed and proprietary OS, which sounds bad, but it's all about trade-offs," he said.

Because of Apple's tight control of hardware and software, Sandofsky added, developers don't have to worry so much about supporting older versions of iOS thanks to high adoption rates and stable updates. "Compare this to Android or the web, where new feature adoption is incredibly slow and you have to support old things for what seems like forever, and iOS feels like a developer paradise," he said.

In Sandofsky's eyes, the feud between Apple and Epic was "mostly a distracting reality show" hashing out what are largely settled matters. "At its core, Apple justifies its cut by the fact it offers much more than payment processing. It provides an ecosystem. Given consumers spend way more money on the Apple App Store than Google Play, they clearly have a point," Sandofsky said. "In the end though, the case will not impact 99.9% of the developer community. It's a war between billion-dollar companies that happen to make apps."

Perspectives like Sandofsky's are pretty common among small to medium-sized developers, Bajarin said, and those are the people Apple is largely focused on catering to during WWDC.

"There is the idea that you acquired a customer you probably wouldn't have," he said of the App Store. By his estimation, Apple does seem to genuinely believe the creation of the iPhone, iOS and the App Store — in addition to the tools it provides and its ongoing and massive R&D spend — justifies a significant return in perpetuity. "That sentiment is to some degree reflected within the developer community. It does make sense. But it makes sense to your small to midsized developers," he said.

Spotify, another rival of Apple and routine critic of the App Store, feels much differently. Just as Epic in many respects represents the sentiment of large game developers, Spotify has often come to represent the argument against the App Store from the music industry. Some of the complaints are not the same; Spotify isn't all that interested in alternative app stores, for instance, but it does care about the 30% cut. Still, the large themes are the same: Apple has too much control and too little competition.

"It is clear to me that when it comes to their policies on app stores and the way in which they're treating [not just] competing apps, but a whole variety of apps on their App Store, is just unfair, and I think it deserves regulatory attention, and I think they're getting regulatory attention for it," Horacio Gutierrez, Spotify's chief legal officer, told The Verge's Nilay Patel on the Decoder podcast last week. Spotify's complaint against Apple in the EU ultimately resulted in antitrust charges from the European Commission back in April.

"You can love a company and at the same time be able to point out things that they should be doing differently," Gutierrez added. "The issue is not whether the rate is 30[%] or 15[%] or 10%. The issue is that the rate is arbitrary and they get to set it unilaterally because they've insulated themselves from competition."

'Developers really have no other options'

Steve Troughton-Smith, a macOS and iOS developer who tweets often about the Apple developer community, said he sees an "incredibly positive" relationship between the company and its developers of late thanks to Apple's new M1 chips and the ease with which you can now build apps for multiple Apple platforms. But again, this is the sentiment among small to medium-sized app makers.

"For the higher-profile developers who have followed the Epic lawsuit, and the prior Hey furor, opinions appear to have soured dramatically, but, realistically, what are any of us going to do? It's not like we can viably leave the App Store and go someplace else," Troughton-Smith said. "Few have the kind of resources that Epic has to fight against the system in this way, even if they're not the hero we wanted." That, he added, is the core problem he sees with Apple's ecosystem: You need to be there if you want to make any money at all, Apple knows this and Troughton-Smith thinks the company takes unfair advantage of that.

"For me, it seems very clear that Apple thinks it owns the platform and the users, and thus can demand whatever it wants from developers with little to no recourse available to said developers," Troughton-Smith said. "In their own research, they seemed to identify pretty early on that developers build for Android to try and gain users at scale, and then build for iOS to monetize the app or service off the back of that scale. This means that Apple is acutely aware that developers really have no other options if they want to participate in the modern app-driven economy. If you're not on iOS, you don't exist."

The judge in Epic v. Apple will be the one who decides whether any of Apple's behavior or its business model justify intervention from the court. But it's also clear Apple does care deeply about its public image, both among consumers and the developer community. It strategically released a press release in the middle of the trial touting how much fraud the App Store caught in 2020, not to aid its courtroom fight (witnesses were instructed not to read anything in the media) but as a method to combat Epic's public claims that the App Store is rife with scams.

"The Tim Cook testimony on the final day really rubbed developers the wrong way, when it seemingly became clear that Apple views the App Store as a way to monetize its IP and that if they had to give up control, they would find some other way to squeeze developers for what they 'owe,'" Troughton-Smith said. "It feels like a toxic relationship, and is dramatically asymmetrical: Developers bend over backwards to fit within Apple's ever-changing rules, knowing Apple can end their businesses overnight."

Whether Apple decides it needs to address views like those, or can afford to ignore them, will illustrate on a deeper level how it views challenges like Epic's. In the courtroom, the Fortnite trial was an unprecedented assault on the iPhone, Apple lawyers argued. But at WWDC, it seems more likely than not that developers with similar concerns will be met with business as usual.

Epic v. Apple came to a close on Monday with a series of contentious back-and-forth debates in place of traditional closing arguments.

Judge Yvonne Gonzalez Rogers wanted both companies to make their case for what the relevant market should be — is it mobile gaming, the entire gaming market, or the entirety of the iOS app ecosystem — and what kind of remedy might be appropriate. Should Apple have to open up iOS to alternative app stores, or should it be forced to simply allow alternative payment systems or, even narrower, just the ability to advertise cheaper payment systems outside the App Store?

Apple CEO Tim Cook made clear on Friday the company sees any such outcome as a serious blow to the iPhone, though some are clearly more harmful than others. Yet the judge's tough questioning finally forced an Apple executive to admit some uncomfortable truths about how financially valuable they see the App Store.

  • Cook argued Apple creates "the entire amount of commerce on the store." It also sees its restrictions and 30% cut as a way to both control access to the customer base and, as a result, see a return on its IP and R&D investment.
  • It was the first time we heard anyone from Apple speak so plainly about how it views the App Store as a product, the company's relationship with its developers, and why it feels justified in keeping companies like Epic from launching competing stores of their own.

Monday's courtroom exchanges went even further in distilling the three-week trial down to its essence, helping minimize many of the hard-to-follow tangents and bringing into focus the core arguments we've heard over close to 100 hours of testimony. The first topic was how to define the market, which in turn will determine the scope of the judge's ruling.

  • Apple hoped to establish the market as the entire gaming market, in which the App Store is just one complete digital marketplace among many and in which consumers substitute purchases on one platform for another. In that context, it's clear Apple doesn't have a monopoly.
  • Epic lawyer Gary Bornstein pushed for more. Epic wants the market to be defined as the iOS app distribution market, over which it has argued Apple has an illegal monopoly that results in higher prices and reduced competition. As evidence, Bornstein said Apple feels no pressure to lower its prices, that there's a lack of innovation in the store, and that in the event of a price increase, it's unlikely developers would leave the iOS platform.
  • The judge didn't seem to find either side particularly convincing. Instead, she hinted at a compromise. "How would it affect you if I decided the relevant market was mobile gaming?" Gonzalez Rogers pondered, to which Apple counsel Daniel Swanson said, "That would make me very sad."

The judge often resisted efforts from both sides to get mired in conversations around technical definitions and semantics and instead hinted at a ruling that could appease both sides: forcing Apple to adjust its anti-steering provisions, but potentially leaving the iOS ecosystem largely intact. Those rules, which bar developers from advertising cheaper payment options, were another big focus of Monday's debates.

  • Epic has asked for a ruling addressing the entire app market, meaning it's focused less on the anti-steering rules despite the judge's increasing interest in the topic. Apple lawyer Veronica Moye latched onto that on Monday, saying Epic has done little to prove it's been harmed by those rules and calling anti-steering provisions "nothing unique or unusual" in retail. Bornstein retorted that those rules are in fact one of the guidelines Epic is challenging, but that Epic is indeed asking for far more than that.
  • The argument devolved into extensive debate on both sides over what Apple does and does not allow regarding consumer marketing, exposing in many ways how byzantine the App Store guidelines are. The end result was mostly confusion all around, suggesting any ruling addressing Apple's anti-steering rules could be very narrow and even content-specific to a distinct app category such as cross-platform games (like Fortnite).
  • In one notable exchange, Gonzalez Rogers rejected the notion that anti-steering rules are in place to improve transaction "efficiency," as Moye tried arguing. "[Tim] Cook conceded that it's a method of being compensated for intellectual property," the judge said. It was a strong example of Cook's frank Friday testimony undermining the Apple legal team's more sugar coated justifications behind its iOS restrictions.

The most contentious part of the day came in the closing debate centered on remedies, in effect how the court should rule and what the effects of that might be. Both sides made passionate pleas to the judge. Epic's Bornstein argued that Apple has committed anticompetitive conduct and should be compelled to allow competition, while Apple lawyer Richard Doren painted a grim picture of a future where Apple's control of iOS is loosened even slightly.

  • Bornstein argued in favor of opening iOS to competing app stores, saying Apple could still do app review and keep iPhone owners in its ecosystem by default, but that they'd now have choice. He pointed to the Mac as a viable model for what the iPhone should look like and characterized Apple's strategy as "scaring the court" into protecting the App Store.
  • Apple's Doren argued the opposite, saying consumer choice exists today in the form of iOS versus Android, and that changes to the iOS ecosystem would destroy the iPhone and make it a poor imitation of Android that is less secure and impossible to curate or moderate. Epic, he argued, wants Apple to "drop its gloves and stand in the middle of the arena and take what comes without any meaningful defense."

Judge Gonzalez Rogers ended the session after a little more than three hours of courtroom debate, saying she anticipates a ruling to take a considerable amount of time but declining to give a firm date. Her earlier deadline of Aug. 13, the anniversary of the Fortnite hot fix that kicked off the whole legal saga in the first place, was merely a joke. Let's hope it's sooner.

What is clear is that with thousands of pages of court documents, roughly 4,500 pages of court testimony, and the fate of some of the largest, most lucrative technology products in her hands, Gonzalez Rogers has her work cut out for her. Whatever she decides will almost certainly result in an appeal, but the fate of both Fortnite and the future of the iOS platform now rests in her hands,

The stakes in the Epic v. Apple trial go far beyond one video game company's complaints about the App Store.

Now that testimony has wrapped, the decision is in Judge Yvonne Gonzalez Rogers's hands — and federal and state antitrust prosecutors who are already scrutinizing Apple are watching to see how she rules on issues that would likely be central to any case they might bring.

The tech world is also keeping an eye out to see whether the drumbeat of complaints, investigations and lawsuits against giant companies will now translate into actual court victories for plaintiffs.

Indeed, while the practices and legal concerns at issue among the big tech companies are different, at least some in the tech industry see the Epic v. Apple trial as a battle over the extent to which any big tech firm can control its own platforms, and how to handle the complaints from rivals on those platforms.

One key issue will be whether Gonzalez Rogers accepts Epic's definition of Apple's markets as an app distributor and, separately, a provider of payment processing for those apps. Market definition is a key to most antitrust trials because it determines whether defendants actually have a monopoly.

If Apple wins, particularly on a question of market definition, efforts to sue the iPhone maker could take a hit, a person familiar with the Justice Department's thinking in the Apple probe told Protocol.

"It would just put a cloud over" a similar case, said the person, who confirmed U.S. investigators are watching the trial closely. The person asked not to be named discussing a law enforcement probe.

In extended questioning of Apple CEO Tim Cook on Friday, Gonzalez Rogers said that she was skeptical Apple faced "any pressure or competition to actually change the manner in which you act to address the concerns of the developers." She also suggested again that users deserve information about where they can engage in transactions without paying for the commissions Apple takes from many in-app purchases. Those are two key tenets of Epic's case.

Gonzalez Rogers's decision is likely to face appeal no matter who wins, and her eventual ruling doesn't necessarily bind judges in most other U.S. courts. Still, a win for Apple would provide future cases with an early, high-profile, and detailed legal rationale by a judge who heard extensive testimony on why she thinks the entire direction of enforcement against Apple has been wrong-headed.

Such a decision could prove bothersome to enforcers in part because major antitrust rulings from federal district courts are less common than decisions in other areas of law, said Sam Weinstein, a former attorney in the Justice Department's antitrust division.

"It's not as though we get a million of these decisions all the time," Weinstein, now a professor at Cardozo School of Law in New York, told Protocol. "You get a district court decision out there that plants a flag, that might mean a little bit more."

The probe into Apple by the U.S. Justice Department and several states, which is reportedly focused on the App Store, has not received as much attention as enforcers' lawsuits against Google and Facebook, and the government could always decide to close its investigations without filing any charges — particularly given the long list of labor-intensive cases it's confronting.

Yet there's little doubt of the pressure on the company. Epic is one of many app developers that have objected to the way Apple controls its App Store, how it extracts commissions from transactions in apps, and how it handles smaller companies' intellectual property. A similar complaint from Spotify, which said the fees disadvantage rivals to Apple's own offerings, led to EU antitrust chief Margrethe Vestager announcing preliminary antitrust charges against the App Store in April.

The U.S. Senate similarly heard from furious iOS developers at a recent hearing.

Apple says it faces robust competition from Android as well as from distributors of digital content on other platforms such as desktop computers or even game consoles. The company insists its App Store rules pay for a safe environment that has thrilled customers and allowed small businesses to thrive.

The other big tech companies have put forward similar arguments as they weather their own antitrust battles — that they must innovate and focus on consumers as relentlessly as less powerful firms do if they want to survive.

"If Judge Gonzalez Rogers affirms that Apple can set its own rules to please customers even if they disadvantage sellers, that will set back current and potential antitrust cases against Amazon's marketplace, Apple's App Store or Google's search results," said Adam Kovacevich, CEO of the tech-allied Chamber of Progress trade association and a former policy director at Google.

Still, the antitrust experts said that a defeat for Epic would be unlikely to stop an investigation that was otherwise on track.

"A win would be great, but I'm not sure a loss is going to derail anything," said Harry First, an antitrust professor at New York University's law school, who added that prosecutors in future cases might even "learn something about what to avoid."

Antitrust experts have also suggested that a win for Apple could put momentum behind efforts to change competition laws as a way to tackle the power of big tech. So far, business allies in Washington have said the investigations and lawsuits show that current law is up to the task of policing the industry, but even some conservatives are beginning to doubt there is enough enforcement.

"If I'm Apple, I worry about it in the long run," Weinstein said. "If I win enough, Congress will step in."

Judge Yvonne Gonzalez Rogers, who is presiding over the Epic v. Apple antitrust trial, saved her best for last. As Apple CEO Tim Cook prepared to leave the stand on Friday afternoon on the 15th and final day of courtroom testimony, Gonzalez Rogers took nearly 10 minutes — the longest singular line of questioning she's put to a witness in the trial — to grill Cook about both the business model of the App Store and the very nature of its relationship with developers.

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Apple CEO Tim Cook took the stand on Friday for the final day of testimony in the Epic v. Apple antitrust trial. It was Cook's first time testifying in court, though he was well prepared to argue Apple's point of view around the dangers of opening up the iOS ecosystem and why Apple operates its business the way it does.

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Apple pursued a bold, rather unexpected strategy in court on Wednesday in its antitrust fight with Epic Games: It had Craig Federighi criticize the level of security on the Mac.

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Phil Schiller, one of the longest-serving and most public faces at Apple, consumed nearly two full days of testimony in the ongoing Epic v. Apple antitrust trial this week, having left the stand Tuesday afternoon. Despite the hours upon hours of questioning and cross-examination, Schiller and Apple largely came out unscathed due to the former marketing chief's skillful storytelling and artful dodging of some of the thornier lines of Epic's attack.

Schiller spent nearly six hours being questioned by Apple lawyer Richard Doren, who gave the executive ample opportunity to recount his days working with former CEO Steve Jobs in the '90s rebuilding and reorganizing the company into the powerhouse that would in 2007 release the iPhone. Schiller was given a chance to reveal that he in fact shares a patent on the iPod click wheel. Doren asked: How can a marketer have been involved in an aspect of such fundamental product design? Because even as a marketer he was "entirely involved in the definition and creation of our products from the very first concept up to when we bring it to market," Schiller gleefully explained.

Much of Apple's strategy here involved hammering home that point: that Apple is one big team working in unison, as Jobs envisioned it when he returned to save the company. That became an especially important tool for Apple on Tuesday when Schiller used it to deny any knowledge of the App Store's profitability.

The App Store, he said, is just one of many interwoven business units at Apple without a distinct P&L, or profit and loss statement. It's not fair to say the App Store makes an unjust amount of profit on the backs of developers because it's impossible to say how much it costs to operate the store; it's just one cog in the wheel of Apple and just one component of the overall iOS ecosystem. Even WWDC, which Schiller revealed Apple spends about $50 million per year on, isn't factored into the App Store's operating costs, even though arguably it should be.

That line of reasoning gave Schiller the ammunition he needed to fend off Epic lawyer Katherine Forrest, who grilled him on how it was possible no one at Apple knows how much money the App Store generates. "How is it as the executive responsible for this major business in the country, you don't know if it's profitable?" Forrest asked Schiller, who as an Apple Fellow still oversees the App Store. "It's not what we focus on. It doesn't come up," Schiller responded. Time and again, Forrest brought up the App Store's profitability, and Schiller would say it was not information he possessed because no one at Apple had calculated it.

"Doesn't anybody ever wonder, 'Hey, is the App Store profitable?'" Forrest asked, pressing the issue further at one point. When Schiller dodged once more, Forrest insinuated it was because Apple finds it "convenient not to" know, as a way of fending off antitrust pressure and developer backlash. "We don't deny that it likely is. It's just that we haven't managed the business that way," Schiller said, conceding at last that the App Store, estimated by Sensor Tower to have generated $22 billion in commissions for Apple last year, is likely a profitable enterprise.

This wasn't just a stubborn back-and-forth to get Schiller to admit to something plainly obvious, that of course the App Store makes money. The App Store's profitability is central to Epic's case because Epic has argued Apple slowly tuned the store in its early years to siphon away profits from developers and lock out competitors by adding restrictions and adjusting the rules to favor its bottom line.

Forrest went to great lengths to try to show that Apple designed the App Store without profit in mind, quoting Jobs's concession in 2008 that Apple did not "intend to make money off the App Store." But in 2010, Epic argues, Apple changed its mind when it saw it could use the marketplace and the closed nature of iOS to create a lucrative ecosystem it controlled.

Forrest pressed Schiller on the "whole plan," a reference to a line in an email he sent former iOS software chief Scott Forstall in 2008 arguing against letting Yahoo build a custom iOS widget engine. She also brought up decisions like introducing IAP, Apple's in-app purchase payment platform, and support for subscriptions after the App Store had launched, all of which Forrest argued were possible without having to fork over 30% to Apple.

But, she said, Apple implemented those specifically to ensure all revenue streams happening on the iPhone were under Apple's control. Schiller again maneuvered his way around that. "You keep going back to that sentence referring to 'the plan,' as if there was one special plan that we referred to," he said. Later on, Schiller retorted, "If there's any plan here, it's simply to come up with new features to help protect users from security and privacy scams."

Schiller wasn't flawless in his performance. He was on noticeably weaker ground when the obvious reality of Apple's business and policy interests ran up against the clean narrative he's helped construct over his 30 years at the company.

For instance, Forrest got Schiller to admit that one consideration of Apple's in lowering its commission for small businesses late last year was not just pandemic relief, but also antitrust pressure, regulatory scrutiny and the very lawsuit they were participating in: "The lawsuit was not the only thing that mattered, and there has been scrutiny and criticism of the App Store around the world and that mattered," Schiller said. "These were all contributing factors to doing this."

Schiller also seemed to be stretching when he argued that email exchanges between him, Forstall, Jobs and other executives discussing ways to make iOS more sticky and to increase lock-in were about security and nothing else. "Simply that if users are better protected from phishing scams on our systems, they're going to want to use our systems," he said. Schiller was also asked why in 2011 he wrote an email to fellow executives saying, "Food for thought: Do we think the 70/30 cut will last forever?" Schiller didn't have much to say, and he wouldn't agree with Forrest who suggested it was inevitable the commission structure would one day change.

But Epic at times also declined to pursue some of the more obvious arguments against Apple. Forrest chose not to dig in deeper on iMessage lock-in, despite emails produced as part of discovery showing Apple executives Eddy Cue and Craig Federighi discussing how keeping iMessage off the Google Play Store kept families from buying Android phones for their children. (Cue and Federighi are set to take the stand later this week, and perhaps Epic plans to question them directly on this point.) Instead, she homed in on password managers and TV show rentals as points of Apple lock-in, which Schiller dismissed as trivial because users can change passwords at will and most people stream media nowadays anyway.

Forrest also spent a fair amount of time on content moderation and App Store slip-ups, at one point going through a series of sexually explicit apps, including one called "Sex Positions 3D," and asking Schiller if he'd ever visited Reddit or knew what the website Pornhub was for. The implication was clear: The iPhone has a Safari browser, and it also contains apps featuring user-generated content, all of which can be just as harmful and readily accessible as a native app.

Even native apps can contain this content, too, if they disguise it well or carefully maneuver the App Store guidelines. But Schiller wiggled out of those points as well, with Apple's lawyer on redirect helping him lay out the defense that Apple has rules against pornography and nudity and requires platforms like Discord, Reddit and others to have adequate content moderation policies.

Perhaps the biggest opening Epic left unchecked was when Schiller laid out Apple's central concern with allowing competing app stores. "We make rules that apply to all developers," Schiller said. "If it's a rule that allows stores-within-stores, it allows every developer to have a store-within-a store if they choose to. I don't know how the idea of unreviewed apps within other apps an endless amount of times can be reviewed." It would be a free-for-all, he argued, and the iPhone ecosystem would crumble.

But Apple doesn't apply its rules equally, and internal documents have proven that. Apple courted Netflix with a list of perks and other benefits to try and convince the streaming platform to continue offering in-app subscriptions, ensuring a cut of that revenue would go to Apple. Netflix ultimately decided to remove its in-app signup option altogether. Amazon, too, got special treatment when Apple agreed to lower its commission rate for Prime Video in 2017.

Epic brought up neither of those, so Schiller didn't have to justify them as standard negotiations with trusted partners. If he did, it might have opened up the possibility that Apple would be asked to do the same for Epic's store or other app stores that want to compete on the iPhone, so long as Apple reviewed them beforehand, like with any other app.

Instead, Schiller left the stand late Tuesday having reminded us yet again how vital a role he plays as Apple's proudest and most well-mannered representative. Schiller, who was scheduled for the longest length of testimony of any of Apple's executive leadership, was largely unflappable, and it's unlikely Epic will get another chance before the end of the trial next Monday to dive this deep into the heart of its rival's inner workings.

Apple earned at least $100 million in commissions taken from in-app purchases in Fortnite on iOS, according to Michael Schmid, Apple's head of game business development for the App Store. Schmid testified Wednesday in court as part of the ongoing Epic v. Apple antitrust trial, where he spoke about the relationship between Apple and Epic and how the App Store handles game distribution more generally. But the real number, which Schmid wouldn't clarify, is likely far higher.

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Apple spends about $50 million hosting its annual developer conference, known as WWDC, every summer. That is until the event, which has been held in recent years at the San Jose McEnery Convention Center, went all-virtual last year amid the coronavirus pandemic.

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Week two of Epic v. Apple is coming to a close, and while it provided far fewer fireworks than last week, it's been much more focused on the actual antitrust substance at the center of the App Store dispute.

Last week featured some of the biggest names from both Apple and Epic's executive leadership, including Epic CEO Tim Sweeney, App Store VP Matt Fischer and Epic Game Store chief Steve Allison. It also contained a flurry of sloppy document dumps and corporate secrets spilling onto the internet, making for plenty of courtroom drama as third parties scrambled to have their competitive dealmaking sealed and away from the prying eyes of the public.

This week has been pretty much the opposite, with almost no executive testimony and a lot of attention paid to the arguments of both sides' expert witnesses. Here are the main takeaways from Epic v. Apple week two, what big questions are left unanswered and which courtroom highlights are on the horizon.

1. Whether Fortnite is a game or something more is a crucial point

Lawyers on both sides and plenty of witnesses have all at various points of this trial spent time trying to argue their own definitions of what Fortnite is and, more broadly, what constitutes a video game. This line of argument felt muddy and at times meandering last week, but it's become more clear throughout expert testimony in week two that both Apple and Epic are intent on trying to define the market in ways that advantage their respective arguments.

Epic is hoping for a ruling that covers the entire iOS app ecosystem, and Apple is hoping for a narrower scope that positions the App Store as just one player in a much larger digital game market full of plenty of other competitors. Depending on which interpretation Judge Yvonne Gonzalez Rogers finds more convincing, the outcome of the case could result in a big win for all developers eager for App Store changes or just minor changes or compromises that benefit a select few major game and app makers, but keeps control in Apple's court. This is precisely why so much of the testimony so far has focused on consumers' ability to move Fortnite purchases across platforms, whether some platforms (like Sony's) restrict how one can purchase in-game currency, and whether Fortnite is in fact more than just a video game, as Epic CEO Tim Sweeney has argued.

No one expert this past week made an especially convincing case one way or the other. Epic's experts think the App Store is a monopoly because, among other reasons, it's hard to switch to Android and very few App Store purchases can be migrated to other platforms. Meanwhile, Apple's experts disagree, naturally, and said the App Store competes on an even playing field with the digital stores available on game consoles and computers. Apple's lawyers and experts have also sown doubt about the distinction between game consoles and phones, arguing there's no reason why platforms like Xbox, PlayStation and Nintendo Switch are exempt from Epic's line of reasoning, in effect trying to imply they could be next if Epic wins in this case.

2. Bypassing the App Store using web browsers offers a route for a split decision

At a few points, Gonzalez Rogers interrupted lawyers' questioning to interrogate witnesses herself about Apple's so-called anti-steering provisions — the restrictions on apps telling users that they can make purchases for cheaper, without Apple's fee, on the web and elsewhere.

"What's so bad about it anyway, for consumers to have choice?" Gonzalez Rogers asked economist Richard Schmalensee, a Massachusetts Institute of Technology professor and one of Apple's key expert witnesses. (Schmalensee also happened to testify in favor of Microsoft during its landmark '90s antitrust case.) Earlier in the week, Epic witness and economist David Evans, an occasional collaborator of Schmalensee with whom he disagrees on this case, was on the stand. Gonzalez Rogers asked him whether removing the anti-steering rules in the App Store could offer some remedy. "That wouldn't eliminate the market power Apple has here, but it would certainly diminish it," Evans replied.

Gonzalez Rogers mostly didn't tip her hand about whether she would or even could rule along these lines, or if she was just satisfying intellectual curiosity. At one point, however, she explicitly rejected the notion that the App Store's restrictions had a lot in common with a 2018 Supreme Court case that upheld anti-steering provisions in credit card markets. Nominally, a ruling banning the anti-steering provisions would be a win for Epic, but it would fall short of many of its bigger demands, including being allowed to bypass the App Store commission directly and to install sideload apps and alternative app stores onto the iPhone. It would also be appealable and could come with guardrails that restrict how much developers could inform their customers about alternative purchase options with potentially lower prices.

3. Game console comparisons are the cause of plenty of courtroom drama

A big focus in week one of the trial was whether iOS is comparable to a game console platform, and to what extent that should play a factor in this case. Apple thinks it does because, again, it wants the market defined here to be the digital game transaction market, of which it is one of many competitors that all seemingly followed Valve and its Steam store in establishing a 30% cut. But Epic's counter to that has been to draw a distinction between phones and game consoles, and between Apple's business model and the business model of console makers to hammer home the point that the App Store should be treated as a distinct market, one Apple monopolizes.

To do that, Epic called Xbox executive Lori Wright to testify both that Apple blocked Microsoft's cloud gaming app using onerous App Store restrictions and that the Xbox business model is to sell hardware at a loss and make up for it in software and services. The logic is that game consoles are not phones, they're special purpose devices that compete primarily with one another, justify their 30% cut through their business models, and that the companies that make them have to earn developer goodwill.

Apple's legal team took an aggressive approach to trying to undermine Wright's testimony by filing a motion in the court declaring she had not produced relevant evidence to support her claims. Epic has opposed the motion and filed a proposed order to deny Apple's motion, along with documents from Microsoft that back up Wright's claims. Microsoft now has until Monday to file its own response, while Apple will then have until May 24 to reply. It seems like a petty back-and-forth, but Wright's testimony could go a long way in helping build Epic's arguments that this goes beyond just the gaming market and that Apple is unique in the way it operates its platform.

4. Nobody seems to agree on what the App Store is

At the heart of the lawsuit is the App Store and whether it's an illegal monopoly. To debate that, lawyers and experts delved deep into the structure of the store and, at a high level, what kind of marketplace it even qualifies as. Like all good debates of this nature, that means metaphors, tortured ones included.

Epic's version of the question is that the App Store is a way to sell and supply mobile apps. There are only really two ways in Epic's scheme — the other being Android. Because users don't tend to switch, Apple's store can act like a monopoly. In-app purchases in the App Store is a separate pure monopoly, Epic contends, and the devices and hardware are distinct as well.

Apple says it's all one thing: a way to get games, dating apps, maps and more, on whatever device you want them, and that the payment processing, privacy and security of the store and the iOS platform itself are all inseparable. For the purposes of the case, Apple focuses on providing those games, especially those with transactions. It says the App Store distinguishes itself as a safe and reliable environment as it competes with a whole lot of ways of getting digital goods and services, from apps on desktop computers to consoles and Epic's own game store.

Neither seems to quite capture how users themselves think about the App Store, but it all matters very much because the monopoly cases hinge on the presence or absence of monopoly. The court and experts have groped for metaphors to explain this all — from supermarkets that sell all kinds of goods (as an Apple expert suggested) to railroads that control access to bridges (as the judge proposed) to car dealerships that shouldn't get a cut of gas station sales (Epic's lawyer). Cows, somehow, came up, too, when Schmalensee waved away allegations that Apple makes monopoly profits by saying it's hard to determine whether the cost of feeding a cow goes more to selling meat or leather, so estimating profit on the store is tough.

What to expect for next week

Higher-up Apple executives (and some Epic ones) will take the stand.

Arguably the most consequential testimony in Epic v. Apple has yet to occur, as many members of the company's executive leadership haven't taken the stand. That's expected to change next week, when executives like Apple fellow and former marketing chief Phil Schiller and Eddy Cue, head of internet software and services, are slated for hours upon hours of testimony related to their roles as architects of the early App Store. We're also expecting to hear from former exec Scott Forstall, who was head of iOS software, about his early role in helping shape the iOS platform and other products and services responsible for creating the iPhone ecosystem as we know it.

We're also going to hear from some members of Epic's executive leadership, including co-founder and President Mark Rein and Chief Operating Officer Dave Vogel. Both Rein and Vogel have featured prominently in emails and other documents discussing Epic's "Project Liberty," the company's plan to bypass the App Store and launch antitrust lawsuits against Apple and Google, and many other critical parts of Epic's business and its dealings with partners.

Apple will start laying out its defense.

So far, Epic has been the one taking the lead in the trial as the plaintiff, and the structure of these proceedings has meant that Epic's lawyers have been laying out their case first, though with plenty of room for Apple to get its own in. Starting next week, Apple will begin laying out its official defense, a process expected to last through the end of the trial and culminating with CEO Tim Cook taking the stand.

Cook, who interestingly was only called to testify by Apple and not Epic, will discuss "Apple's corporate values, Apple's business and operations, development and launch of the App Store, and competition faced by Apple'' for one hour and an additional 30 minutes of cross-examination. Far more important we expect will be Schiller's testimony, which will last six hours with an additional three of cross-examinations.

However, don't expect Epic to "rest its case," so to speak. The company told Protocol that the unique structure of the trial means both sides will continue to build their arguments through direct and cross-examination of witnesses all the way through to the final day of testimony.

Unanswered questions

What does Gonzalez Rogers think the market is?

With both sides pushing so hard to define the App Store market(s), and thus whether Apple has any monopoly, Gonzalez Rogers has given contradictory signals on which definition she finds persuasive. On the one hand, she's suggested that Evans, who testified for Epic, lacked empiric basis for some of his conclusions, and she seemed to be frustrated by the way that he would chop up the App Store into pieces like app distribution and payments. On the other hand, she said iOS exists in a "duopoly," which is more or less Epic's whole argument. Whichever line of thinking she tends toward will probably determine a lot about how she rules.

Does she really think Apple has any duty to deal?

At one point, Gonzalez Rogers also lamented that both sides seemed to be avoiding the question of whether companies, particularly dominant ones that control prerequisites for competition, have a duty to deal with rivals. The doctrine would probably help Epic in the short term, but it is also highly controversial, what law professor Chris Sagers called "a topic of special, virulent hatred" for conservatives and moderates alike. That could tee up big issues for an appeal, and might steer the judge from really incorporating it.