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,
