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Judge hints at Apple Epic Games compromise

by on13 May 2021

Depends on Apple admitting that there are better and cheaper products out there

The judge overseeing the high-stakes trial between Epic Games and Apple hinted at a compromise that turns on the iPhone maker allowing developers to inform users through their mobile apps that they can buy virtual goods on the web at a cheaper cost.

US District Judge Yvonne Gonzalez Rogers appeared to be looking for a middle ground while hearing from economists called by companies as expert witnesses in a case that threatens to upend the multibillion-dollar marketplace for apps that run on mobile phones around the world.

The judge questioned Apple's App Store rule that blocks developers from including a link or other information in their apps to steer users away from the store to buy virtual goods elsewhere online at a discounted rate. The anti-steering policy is at the heart of Epic's argument that Apple maintains a near-monopoly and juices profits by barring developers from offering alternative payment options in their apps.

Unfortunately, Rogers seemed to be steering towards common sense, which is not the sort of thing that Apple has built its business model on. However, some of her questions are the sorts of things that would have been mentioned in any board meeting outside a company like Apple.

For example, she asked what was so bad about Apple giving customers a choice. She asked that of Richard Schmalensee, an economist and Massachusetts Institute of Technology professor, who was testifying Wednesday as an expert witness for Apple in the second week of trial in Oakland, California.

Her question drew pushback from Schmalensee, who noted that the US Supreme Court, in a 2018 ruling, threw out a lawsuit that accused American Express of thwarting competition by prohibiting merchants from steering customers to cards with lower fees.

"If the app vendor can say, if you press this button you can buy this for less, that means the App Store can't collect its commission", Schmalensee said. That amounts to "undercutting" Apple's App Store sales, he said.

Gonzalez Rogers said she didn't think the situations were "factually the same".

Last modified on 13 May 2021
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