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In Apple vs Epic Games, the battle of the experts becomes personal, Marketing & Advertising News, AND BrandEquity


In its pending case against Apple Inc, the creator of “Fortnite” Epic Games is relying on testimony this week from its star expert witness David Evans, chairman of the Global Economics Group, to argue that Apple is an anti-competitive monopoly on application developers.

Apple called in its own experts to refute Evans’ views on the market, but with an added personal touch: he called in MIT economist Richard Schmalensee, who wrote numerous books and academic papers with Evans, to accuse Evans to contradict his own previous research. .

Legal experts have said Apple’s goal is to undermine Evans’ credibility in the eyes of the judge who will rule on the case.

The former collaborators – who together have written works widely cited by the U.S. Supreme Court in landmark antitrust rulings – are arguing over the central issue of the three-week trial in federal court in Oakland, Calif.: What is the relevant market in the Case?

Like Epic, Apple and its app store are a monopoly that abuses control over the mobile software market to extract commissions for payments made in apps. But Apple argues that this is just one of many competitors in a healthy market for video game purchases.

Also Read: Is Epic Games’ Showdown With Apple Turning Into A Lag?

Whichever side prevails to persuade Judge Yvonne Gonzalez Rogers on the issue of market definition, according to antitrust experts, will likely win the whole case.

“Epic absolutely has to win market definition,” said Daniel Lyons, professor at Boston College Law School. “If Apple is correct that ‘Fortnite’ on iOS is only a small part of the larger ‘Fortnite’ universe, then Apple has no market power and all they do is little. likely to harm consumers because consumers can change.

At the stand this week, Evans testified that Apple is what’s called a single-brand market, saying that once consumers buy an iPhone, the costs of switching to an Android are so high they do. rarely the jump.

Since about 2010, Evans testified, Apple’s App Store has indeed been its own market, and users rarely venture outside. After Apple launched “Fortnite” from the App Store, Evans said, only a small fraction of Apple users jumped onto other devices like PCs or game consoles to play “Fortnite”.

Schmalensee, on the other hand, argues that the relevant market is that of game transactions, where Apple is just one platform among many – Microsoft Corp’s Xbox and Sony Group Corp’s PlayStation – falling between game developers and players and charging commissions to facilitate transactions.

Apple’s App Store is a two-sided market, said Schmalensee, a concept he and Evans have written about extensively, most notably in an amicus curiae brief on behalf of American Express in a Supreme Court case. of the United States in 2018.

American Express had banned merchants from referring their customers to competing cards with lower swipe fees, arguing that its higher fees helped fund cardholder benefits that benefited consumers. The court sided with American Express, citing Evans and Schmalensee extensively in its decision.

Schmalensee said Apple’s rules that prohibit apps from directing consumers to cheaper payment presented an almost identical problem, and that Evans contradicted many aspects of his previous work.

Outside observers were surprised by the split between the two star economists.

“I would say that (Evans’s) opinions on AmEx haven’t changed, but what he would say is that the facts here are different and therefore the same outcome is not appropriate,” said Geoff Manne, President and Founder of the International Center for Center for Research in Law and Economics. “Personally, I don’t see how he does it and holds it up.”

Also read: User sues Sony over PlayStation ‘digital store’ monopoly

Part of Apple’s strategy in putting Schmalensee at the helm was to point out the differences between Evans’ past work and his current view of the Epic case in an effort to make his testimony less credible, observers said.

“Each of them knows, however, that any opinions they have said in the past must be consistent with what they are saying now,” said Steven Salop, professor of economics and law at Georgetown University. and Epic’s self-proclaimed consultant on his case.

Schmalensee declined to comment and Evans did not immediately return requests for comment.


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