District Court judge questions expert testimony in App Store lawsuit
The U.S. District Court Judge presiding over a lawsuit accusing Apple of price-gouging on the App Store criticized the math of one of the case's expert witnesses.
Credit: Apple
Daniel McFadden, a Nobel prize-winning economist, prepared an analysis backing a claim that Apple's App Store requirements cost consumers billions of dollars. However, U.S. District Court Judge Yvonne Gonzalez Rogers didn't appear to buy that argument, Bloomberg has reported.
During questioning lawyers for the consumers in the case, Judge Gonzalez Rogers knocked McFadden's work, claiming that he provided only six paragraphs to explain his methodology and adding that he isn't "an expert in any of it."
The lawsuit alleges that Apple owes iPhone customers between $7 billion and $10 billion for charging "supra-competitive" prices for app and in-app purchases on the App Store. However, the case can only be certified as a class action representing nearly 400 million App Store users if Judge Gonzalez Rogers allows it to move forward.
At this point, it isn't clear if she will green-light the lawsuit. For example, the judge cast doubt on the way that McFadden used the Epic Games store as a benchmark for how Apple overcharges customers.
"What about the fact that it's operating at a loss for the foreseeable future?" Judge Gonzalez Rogers asked lawyers. "If you cherry pick your numbers, how is that methodology? And if I don't agree with that, doesn't the entire model fall?"
Lawyers for customers defended McFadden's work, saying that the methodology he used is "widely accepted by economists to determine and measure the effects of anticompetitive conduct on market prices" and calling the analysis "relevant, reliable, and admissible."
Earlier in 2021, Judge Gonzalez Rogers ruled largely in favor of Apple in a similar lawsuit levied by Epic Games. Despite championing her decision as a "resounding victory," Apple has appealed one portion of the ruling that would force it to allow third-party payment links or buttons within apps.
Read on AppleInsider
Credit: Apple
Daniel McFadden, a Nobel prize-winning economist, prepared an analysis backing a claim that Apple's App Store requirements cost consumers billions of dollars. However, U.S. District Court Judge Yvonne Gonzalez Rogers didn't appear to buy that argument, Bloomberg has reported.
During questioning lawyers for the consumers in the case, Judge Gonzalez Rogers knocked McFadden's work, claiming that he provided only six paragraphs to explain his methodology and adding that he isn't "an expert in any of it."
The lawsuit alleges that Apple owes iPhone customers between $7 billion and $10 billion for charging "supra-competitive" prices for app and in-app purchases on the App Store. However, the case can only be certified as a class action representing nearly 400 million App Store users if Judge Gonzalez Rogers allows it to move forward.
At this point, it isn't clear if she will green-light the lawsuit. For example, the judge cast doubt on the way that McFadden used the Epic Games store as a benchmark for how Apple overcharges customers.
"What about the fact that it's operating at a loss for the foreseeable future?" Judge Gonzalez Rogers asked lawyers. "If you cherry pick your numbers, how is that methodology? And if I don't agree with that, doesn't the entire model fall?"
Lawyers for customers defended McFadden's work, saying that the methodology he used is "widely accepted by economists to determine and measure the effects of anticompetitive conduct on market prices" and calling the analysis "relevant, reliable, and admissible."
Earlier in 2021, Judge Gonzalez Rogers ruled largely in favor of Apple in a similar lawsuit levied by Epic Games. Despite championing her decision as a "resounding victory," Apple has appealed one portion of the ruling that would force it to allow third-party payment links or buttons within apps.
Read on AppleInsider
Comments
If you see an app (or IAP) and you think it’s too expensive, don’t buy it. Easy. Pick any category and there are tons of apps at all different price points. The prices are all listed up front in the App Store. You can even research all this online before you buy an iPhone/iPad, so none of this should be a surprise.
I wonder how much they’re paying their lawyers. I’ll bet it’s more in an hour or two than they’ll ever spend in two lifetimes on apps.
People think that if these lawsuits succeed, everything will just be free. Developing and maintaining 5 platforms, plus the infrastructure of the App Store, ain’t free.
Could it be that these developers are passing the cost of Apple commission to their customers and are now trying their best to increase their profits, by finding ways to not pay Apple a commission? A commission that they already factored into the price of their apps or in-app purchases, that the customers are actually paying?
The customers buying apps and making in-app purchases are only paying what the developer charges. Apple charges the developers the commission, not the buyers. It's up to the developers to pass on what portion of it to the customers buying their apps, in order to be as profitable they they want. If they have a high gross margin, like in-app purchases of virtual dollars to buy virtual goods that cost almost nothing to produce, then the developer can choose to absorb all of the commission or only pass on a portion of it to the customers. However, if the app has a low gross margin, then the developers will have to pass all or most of the commission to the customers. It's not up to Apple to determine how much of their commission is paid for by the customers purchasing apps or with in-app purchases from the developers and how much the developers are willing to absorb.
Apple is not forcing app purchasers to pay more for an app or for in-app purchases, than they want to pay. And Apple is not forcing developers to lose money or not make as much money as they want from selling apps or with in-app purchases, by not being able to include the cost of the commission in the price of their apps or in-app purchases.
But is sure seems pretty greedy for developers to include the cost of Apple commission into the price of their apps or in-app purchases and then try to avoid paying Apple a commission that they already collected.