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Apple Epic Trial

On the ‘frontier’ of antitrust law, a judge recommends a jury make the call in Apple vs. Epic

"When you are taking on the biggest company in the world, when you know it's going to retaliate, you don't lie down in the street and die."

On the ‘frontier’ of antitrust law, a judge recommends a jury make the call in Apple vs. Epic

The hearing teased out the beginning of some of the bigger questions surrounding this case.

Image: Omar Marques/SOPA Images/LightRocket via Getty Images

The legal battle between Apple and Fortnite maker Epic Games continued on Monday in a hearing over whether Fortnite would remain kicked out of the App Store and the fate of Epic Games' Unreal Engine and other app properties as a result.

More than 500 people tried to tune into the hearing, maxing out the number of people who could dial into the Zoom call. Instead, fans of Fortnite violated court rules and started streaming the hearing onto YouTube and Twitch as part of the #FreeFortnite campaign.

But while Epic had its own internet fan base, the game maker hadn't seemed to warm over Judge Yvonne Gonzalez Rogers, who wasn't "particularly persuaded" by some of Epic's arguments, but also called some of Apple's reactions overblown.

She said she will be issuing a written order, but did not give a timeline on when she would make a decision.

The fight between the two companies centers on Apple's control over its App Store. Epic sued both Apple and Google last month for what it claims are monopolistic practices, like charging a 30% commission from all purchases of digital goods and not allowing developers to use their own payment systems. It also recently launched a new Coalition for App Fairness with other app developers like Spotify and Match Group to help lobby the companies to change their guardrails. Apple's core arguments continued to center around customer privacy and security, and Epic's recent actions were, in its mind, proof that controls are needed.

Epic had defied Apple's rules when it added a hotfix to the app and introduced a way for its game users to buy their own V-bucks and bypass Apple's payment systems. The stunt got Fortnite thrown out of the App Store, and it responded in a well-choreographed plan of immediately filing suit against Apple. (It would repeat the tactic against Google, too.)

"There's plenty of people in the public who consider you guys heroes for what you did, but it's still not honest," Gonzalez Rogers said.

Epic's lawyers argued that it was a necessary step it had to take because it showed that there was consumer demand for an alternative payments system after over half the buyers used Epic's option. (Apple's lawyers argued that the fact that it was only half showed that users still trust Apple's products more.)

Epic also defended its #FreeFortnite marketing campaign, which included a shot-by-shot re-creation of Apple's iconic 1984 ad, as necessary preparation.

"When you are taking on the biggest company in the world, when you know it's going to retaliate, you don't lie down in the street and die," said Epic lawyer Katherine Forrest.

But the hearing also teased out the beginning of some of the bigger questions surrounding this case, like whether we're talking about the iOS App Store market as a whole, like Epic would argue, or whether this should be compared to the video game market as an industry instead.

"This particular market has frequently had walled gardens, and it's hard to ignore the economics of the industry, which is what you're asking me to do," Gonzalez Rogers said.

There's also the question of when exactly Apple became a monopoly as Epic argues it now is. One of Apple's defenses is that it's always charged the 30% rate and, if anything, has only lowered that rate for companies offering digital subscription products. The 30% is also in line with other markets like Google's, which doubled down on its right to take a 30% cut and announced Monday that it would soon force companies like Netflix and Spotify into using its own payment systems.

"At what point in time did Apple become a monopolist?" asked Gonzalez Rogers.

It's a question that may end up in the hands of a jury to figure out instead. In the end, the judge recommended that the two sides proceed to a jury trial since she assumed whoever the losing party is will file an appeal and that the appellate court looks more favorably on jury verdicts. (This could have been in reference to the Qualcomm verdict, which was a bench decision overturned by the courts in August). "I know I'm just a stepping stone for all of you," she said.

Jury trial or not, Gonzalez Rogers signaled that it's likely that the Apple vs. Epic case would start next summer and could have a July 2021 trial date.

"As we've noted, these are important cases and they're on the frontier of antitrust law. You might as well find out what the people really think and want," she said.

Protocol | Workplace

The Activision Blizzard lawsuit has opened the floodgates

An employee walkout, a tumbling stock price and damning new reports of misconduct.

Activision Blizzard is being sued for widespread sexism, harassment and discrimination.

Photo: Bloomberg/Getty Images

Activision Blizzard is in crisis mode. The World of Warcraft publisher was the subject of a shocking lawsuit filed by California's Department of Fair Employment and Housing last week over claims of widespread sexism, harassment and discrimination against female employees. The resulting fallout has only intensified by the day, culminating in a 500-person walkout at the headquarters of Blizzard Entertainment in Irvine on Wednesday.

The company's stock price has tumbled nearly 10% this week, and CEO Bobby Kotick acknowledged in a message to employees Tuesday that Activision Blizzard's initial response was "tone deaf." Meanwhile, there has been a continuous stream of new reports unearthing horrendous misconduct as more and more former and current employees speak out about the working conditions and alleged rampant misogyny at one of the video game industry's largest and most powerful employers.

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Nick Statt
Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.

Over the last year, financial institutions have experienced unprecedented demand from their customers for exposure to cryptocurrency, and we've seen an inflow of institutional dollars driving bitcoin and other cryptocurrencies to record prices. Some banks have already launched cryptocurrency programs, but many more are evaluating the market.

That's why we've created the Crypto Maturity Model: an iterative roadmap for cryptocurrency product rollout, enabling financial institutions to evaluate market opportunities while addressing compliance requirements.

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Caitlin Barnett, Chainanalysis
Caitlin’s legal and compliance experience encompasses both cryptocurrency and traditional finance. As Director of Regulation and Compliance at Chainalysis, she helps leading financial institutions strategize and build compliance programs in order to adopt cryptocurrencies and offer new products to their customers. In addition, Caitlin helps facilitate dialogue with regulators and the industry on key policy issues within the cryptocurrency industry.
Protocol | Workplace

Founder sues the company that acquired her startup

Knoq founder Kendall Hope Tucker is suing the company that acquired her startup for discrimination, retaliation and fraud.

Kendall Hope Tucker, founder of Knoq, is suing Ad Practitioners, which acquired her company last year.

Photo: Kendall Hope Tucker

Kendall Hope Tucker felt excited when she sold her startup last December. Tucker, the founder of Knoq, was sad to "give up control of a company [she] had poured five years of [her] heart, soul and energy into building," she told Protocol, but ultimately felt hopeful that selling it to digital media company Ad Practitioners was the best financial outcome for her, her team and her investors. Now, seven months later, Tucker is suing Ad Practitioners alleging discrimination, retaliation and fraud.

Knoq found success selling its door-to-door sales and analytics services to companies such as Google Fiber, Inspire Energy, Fluent Home and others. Knoq representatives would walk around neighborhoods, knocking on doors to market its customers' products and services. The pandemic, however, threw a wrench in its business. Prior to the acquisition, Knoq says it raised $6.5 million from Initialized Capital, Haystack.vc, Techstars and others.

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Megan Rose Dickey
Megan Rose Dickey is a senior reporter at Protocol covering labor and diversity in tech. Prior to joining Protocol, she was a senior reporter at TechCrunch and a reporter at Business Insider.
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Protocol | Workplace

What’s the purpose of a chief purpose officer?

Cisco's EVP and chief people, policy & purpose officer shares how the company is creating a more conscious and hybrid work culture.

Like many large organizations, the leaders at Cisco spent much of the past year working to ensure their employees had an inclusive and flexible workplace while everyone worked from home during the pandemic. In doing so, they brought a new role into the mix. In March 2021 Francine Katsoudas transitioned from EVP and chief people officer to chief people, policy & purpose Officer.

For many, the role of a purpose officer is new. Purpose officers hold their companies accountable to their mission and the people who work for them. In a conversation with Protocol, Katsoudas shared how she is thinking about the expanded role and the future of hybrid work at Cisco.

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Amber Burton

Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.

Protocol | Fintech

The digital dollar is coming. The payments industry is worried.

Jodie Kelley heads the Electronic Transactions Association. The trade group's members, who process $7 trillion a year in payments, want a say in the digital currency.

Jodie Kelley is CEO of the Electronic Transactions Association.

Photo: Electronic Transactions Association

The Electronic Transactions Association launched in 1990 just as new technologies, led by the World Wide Web, began upending the world of commerce and finance.

The disruption hasn't stopped.

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Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Signal at (510)731-8429.

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