Apple provides written witness testimony ahead of Epic trial

Posted:
in iOS edited April 27
Apple has filed official written testimonies from its seven expert witnesses ahead of the Apple v. Epic Games bench trial on May 3.

Apple provides written expert witness testimonies to the court
Apple provides written expert witness testimonies to the court


Epic hopes to convince the court of Apple's dominance and abuse of power within its own ecosystem. If Epic succeeds, Apple may be required to open up the iPhone to alternate app stores, external payment methods, or change how the App Store functions fundamentally on its platforms.

Apple's defense against Epic's monopoly claims will include proving the existence of a diverse marketplace filled with customer choice. The witnesses vary between economics professors, legal representatives, and marketing experts.

The witnesses include:
  • Lorin M. Hitt, Ph.D
  • Francine Lafontaine, Ph.D
  • Richard Schmalensee, Ph.D
  • Daniel L. Rubinfeld
  • Dominique Hanssens, Ph.D
  • Aviel D. Rubin, Ph.D
  • James E. Malackowski
One witness previously claimed that Apple would need to redesign hardware and software to enable third-party app stores. The changes required would likely only be able to affect future iPhones if this was the case. Though, some have contradicted this claim by pointing out the existence of the Apple Enterprise Program, which enables installing apps from Safari.

MacRumors spotted the court documents on Tuesday along with interesting snippets of commentary from the witnesses. The 256-page document can be found there for further examination.

University of Pennsylvania Professor in Operations, Information, and Decisions Lorin Hitt calculated Apple's digital game transaction market share. Her argument is that Apple doesn't have a monopoly and points out Apple's fees are the same as other game platforms like Sony or Microsoft.

"Apple's share of the digital game transaction market lies between 23.3% and 37.5%," says Hitt. "In light of my conservative approach, these market share estimates, especially at the high end, are likely to overstate Apple's true market share and are, in any event, inconsistent with Apple having substantial market power. The entry of new game transaction platforms is also inconsistent with Apple having market power."

University of Michigan Professor of Economics Dean Francine Lafontaine shares Apple's position that Safari is a viable alternative to the App Store for paying for game items. Developers can't say that alternate purchase options are available but can make customers aware outside of the app.

Epic could circumvent Apple's 30% fee using physical cards for sale elsewhere
Epic could circumvent Apple's 30% fee using physical cards for sale elsewhere


"Even the rare consumer who has access to only an iOS device has a readily available game transaction alternative to the App Store--the Safari browser," argues Lafontaine. "For example, any Fortnite player can use Safari (or Chrome) to purchase Fortnite's in-game currency, 'V-Bucks,' a transaction that generates no commission for Apple."

Similar methods have been employed by Netflix, Amazon, and Spotify. Epic has even used this method before, offering V-Bucks via cards sold at physical retailers or Amazon.

Johns Hopkins University Information Security Institute technical director Aviel Rubin says that third-party app stores would decrease iOS security, safety, and trustworthiness. Epic argues that Apple's App Store isn't as safe and secure as Apple lets on, which is a view shared by other developers.

Apple has a long battle ahead of them when the first hearing is held on May 3. Besides these expert witnesses, Apple will produce Tim Cook and Eddy Cue as witnesses. Epic has even asked that former iOS software chief Scott Forstall appear.

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Comments

  • Reply 1 of 7
    I just wonder how long this can run. I mean, Epic's investors (in for around $4.4B and include Sony, Vulcan - Paul and Jody Allen's company, and Tencent) are seemingly deeply committed to the company (financially), so it's not like they want to see the company fail. But this lawsuit surely must be a huge financial drain for them.

    I just don't see Epic generating much revenue these days. Fortnite still generates revenue, but it's certainly down from its peak. They're spending quite a bit giving away weekly games trying to compete with Valve/Steam. So I do just wonder if the Epic investors (each of whom would seem to have something to gain by an Apple loss) are using the company as a front for this lawsuit.

    But really, this case is certainly holding my interest.
    watto_cobra
  • Reply 2 of 7
    With Epic not making the exact same argument and legal battle against Microsoft and Sony, how can anyone take their arguments at face value?  30% is the standard....do they plan on winning against Apple and then going after the others?  PlayStation and Xbox are as much a monopoly as Apple!  
    Beatswatto_cobra
  • Reply 3 of 7
    I just wonder how long this can run. I mean, Epic's investors (in for around $4.4B and include Sony, Vulcan - Paul and Jody Allen's company, and Tencent) are seemingly deeply committed to the company (financially), so it's not like they want to see the company fail. But this lawsuit surely must be a huge financial drain for them.

    I just don't see Epic generating much revenue these days. Fortnite still generates revenue, but it's certainly down from its peak. They're spending quite a bit giving away weekly games trying to compete with Valve/Steam. So I do just wonder if the Epic investors (each of whom would seem to have something to gain by an Apple loss) are using the company as a front for this lawsuit.

    But really, this case is certainly holding my interest.
    Epic generates a lot of revenue. Epic is the most popular AAA engine by far. It is embraced by Hollywood studios and Disney. The new Marvel and Star Wars shows are using unreal engine as part of their effects workflow. It has been very popular for architectural and other visualizations. Epic isn’t hurting and their investors have a lot to gain if they win or lose since even a loss may still be a grassroots win.

    Full disclosure, I’m not on Epic’s side on this. I think both sides are wrong, but I feel Epic is more wrong in their position.
  • Reply 4 of 7
    chasmchasm Posts: 2,365member
    Epic generates a lot of revenue. Epic is the most popular AAA engine by far. It is embraced by Hollywood studios and Disney. The new Marvel and Star Wars shows are using unreal engine as part of their effects workflow. It has been very popular for architectural and other visualizations. Epic isn’t hurting and their investors have a lot to gain if they win or lose since even a loss may still be a grassroots win.


    Full disclosure, I’m not on Epic’s side on this. I think both sides are wrong, but I feel Epic is more wrong in their position.
    I can’t comment on Epic’s popularity too much, but I would point out that their biggest product (Unreal Engine) is, legally speaking, a separate company.

    Whether Epic is actually profitable is open to question. They continue to require funding from VCs despite having made over $3B in revenue last year. Their user numbers are way up lately, because they are giving away billions in free games right now, but revenues appear to be flat — suggesting, alonside the need for funding, that they are presently in negative income territory.

    https://clutchpoints.com/epic-games-store-gained-millions-users-2020-revenues-stayed-flat/
    watto_cobra
  • Reply 5 of 7
    BeatsBeats Posts: 2,292member
    Apple needs an Unreal Engine alternative for M1 products and above. 
  • Reply 6 of 7
    Beats said:
    Apple needs an Unreal Engine alternative for M1 products and above. 
    RealityKit maybe. I could see it being a big deal in AR games. I also think AR could be used for very immersive top down perspective games which may increase their appeal. I personally love these games since there is virtually no VR sickness. I think there is a good chance Apple could make an AR/VR product that other companies will have trouble competing with. Combine that with the fact that AR apps are hard to get right and could benefit more from a platform specific toolkit.
    edited April 27 watto_cobra
  • Reply 7 of 7
    "Even the rare consumer who has access to only an iOS device has a readily available game transaction alternative to the App Store--the Safari browser"

    Epic themselves confirmed this to be true when they ran adverts urging iOS users to play Fortnite on other platforms. They didn't really believe there was a barrier themselves.
    jas99jony0watto_cobra
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