The epic Apple lawsuit may boil down to a legal issue


Epic v. Apple’s antitrust trial will become complicated. Experts from both sides will introduce consumer data and economic theory. Executives will be attracted by business practices and forced to explain the culprit in the email. The lawyer will have his own opinion on all this means. But in the end, case A seemingly simple question may be drawn: What is a market?

In its Epic Games lawsuit, the company strongly supports large-scale video games like this Fort night, Accusing Apple of monopolizing iPhone and iPad games by requiring all applications to be downloaded through its App Store. The lawsuit claims that Apple uses this monopoly to charge developers unfairly high fees (up to 30% reduction in all transactions). If they want to attract users, they have no choice but to use Apple’s payment system. (Epic also filed a similar complaint against Android in its lawsuit against Google, but there is no trial date yet.)

In its defense, Apple put forward many objections, but the most important thing is: App Store is not a monopoly. People can download games in various other places, such as Android phones, game consoles and desktop operating systems. If Epic doesn’t like Apple’s terms of service, it can focus on attracting customers on these platforms.

The key to resolving the dispute lies in how the judge, Yvonne Gonzalez Rogers, who presided over the federal trial that began this week, chooses to define the relevant market. In many antitrust cases, this is a crucial step, because to prove its monopoly, you must prove that there is a dominant market. If Rogers accepts Apple’s market definition, then Apple will win. In markets including Android, Xbox and laptops, there is no way to say that Apple has a monopoly on game publishing. If there is no monopoly, Epic’s other allegations are irrelevant.

This means that Epic needs to convince the judge to define the market as a simpler iOS application. Of course, Apple has 100% of the mobile application distribution market share on its own platform. (Some owners have hacked their devices to enable them to run unapproved applications. This process is called “jailbreaking,” but this is only a small percentage of users.) Therefore, if Epic wins the market definition , It will automatically prove that Apple has a monopoly. This is probably the biggest legal obstacle it must remove.

It may sound strange to say that a brand can be counted as an entire market, but there are precedents in antitrust laws. In a major case in 1992, Kodak was sued for pushing customers to its own maintenance services, squeezing out the independent business of providing maintenance and equipment for Kodak photocopiers. Kodak believes that anyone who does not like it can stop buying Kodak machines.But the Supreme Court disagree. The court pointed out that sometimes, “a product brand can constitute a separate market.” In this case, from the customer’s point of view, once someone owns a Kodak copier, other brands on the market do not matter. Kodak has created an “aftermarket” for maintenance. The key point is the so-called interchangeability: “The services and parts of Kodak equipment are not interchangeable with those of other manufacturers.”

Epic has a similar statement to Apple: The iPhone has created an aftermarket for apps. In that aftermarket, you can’t say that iPhone games are interchangeable with Android games, let alone Xbox downloads. However, some legal experts doubt the validity of this statement. Denver antitrust lawyer Paul Swanson pointed out that Kodak allowed the third-party repair market to develop for many years before deciding to overwhelm its competitors, while Apple designed the iPhone (and iPad) as a walled garden almost from the beginning. . : Since the App Store was launched in 2008, one year after the birth of the iPhone, developers must always accept it and accept its terms before they can attract customers. Courts are often shy about forcing companies to change their business models.



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