Hearing for Apple Violating Epic’s Injunction
games fray (PDF, via Michael Love):
Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California, who presided over the 2021 Epic v. Apple trial and made the ruling in question, has now reached the preliminary conclusion that Apple is presently out of compliance with the injunction, which could (if not resolved) result in contempt-of-court sanctions. Instead of holding only a short hearing on the matter which was scheduled for April 30, 2024, Judge Gonzalez Rogers has now scheduled a three-day evidentiary hearing for May 8, 10 and 17 in Oakland, California.
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The hearing will serve the purpose of looking at what requirements Apple imposes on app makers, such as by looking at the sequence and appearance of on-screen messages and required user interface actions, and to discuss the commission Apple imposes on purchases made within seven days of clicking on an in-app link. It is possible that Apple will make some adjustments, but at this point the most likely next step is that Judge Gonzalez Rogers will, with or without further measures taken by Apple, hold Apple in civil contempt, and Apple will appeal her decision to the Ninth Circuit.
[…]
“[…] the Court FINDS that Epic Games has made a sufficient preliminary showing that, viewed holistically, Apple’s practice changes undermine the spirit of the injunction by limiting competition, impeding the free flow of information, and constraining user choice.”
Previously:
Update (2024-05-08): Michael Love:
Apple has gotten a total of 38 applications for external link entitlements since January.
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Some pushback from judge on the fact that this is a hyperlink with a website URL and Apple is nevertheless insisting on putting up an alert about it.
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Apple also insisting that nobody reading the screen is going to think that Apple is warning that outside purchases are less safe, which the judge is exceedingly skeptical of.
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And now we’re juxtaposing the Apple HIGs with the requirement that the external purchase link be a meek little un-bordered button, which is great fun.
Judge asking for a logical reason why external purchase link buttons should be less prominent and App Store head can’t think of one.
Also, she keeps asking about discussions and he has to ‘not remember’ because he can’t admit that he was sitting in a meeting where they decided to do this deliberately and yet also is steering clear of perjuring himself.
Update (2024-05-10): Sarah Jeong (Hacker News):
But this interjection, from Judge Rogers, doesn’t look good for Apple:
I can’t imagine a logical reason why Apple would demand that of competitor apps. What’s a logical competitive reason, not for suggesting it, but demanding it? … Other than to stifle competition, I see no other answer. Can you give me one?
Update (2024-05-15): Matt Stoller:
This twitter thread has some of the blow-by-blows, but the gist is that Apple executives sat in court and pretty much told the judge that they were trying to flout her order and maintain their business model. And she wasn’t having it. For instance, at one point she asked a key Apple witness, “Where in the injunction did I say you could add all sorts of requirements?” At other points she near accused Apple witnesses of lying, and said a number of times that if a witness couldn’t explain why Apple was doing what it was doing, she would assume it was to prevent or minimize competition.
That said, it’s not clear what she’s going to do. She could rule for Apple, which seems unlikely. She could rule for Epic Games, but allow Apple to continue charging 27%, which would be a win for Apple. Or she could say that Apple doesn’t get to charge and has to allow links without encumbrances. That would be a multi-billion dollar annual loss of revenue, largely due to arrogance.
Update (2024-05-20): Charles Martin:
Judge Yvonne Gonzalez-Rogers remains unconvinced of Apple’s rationale for claiming it is complying with her original order, following testimony from Apple Fellow Phil Schiller.
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Schiller also said that he wasn’t personally opposed to the outbound link requirement. His view contradicts Apple’s previous defense that outbound linking would “detract from the user experience.”
He noted that “the world has changed, and linking out is being required” in the EU and other regions. “I do not have a preference against link-out. I want to make the solution safe for our customers, that is what I’m focused on,” he told the court.
Update (2024-05-28): Michael Liedtke and the Associated Press (Slashdot):
Longtime Apple executive Phil Schiller on Wednesday acknowledged a court-ordered makeover of the U.S. payment system in its iPhone app store hasn’t done much to increase competition — a shortcoming that could result in a federal judge demanding more changes.
Update (2024-05-29): Lauren Feiner:
But when Even asked if Oliver understood that a goal of the court’s injunction “was to increase the threat of leakage so that IAP [Apple’s in-app purchase system] would feel the competitive pressure and transactions outside the app,” Oliver said he “understood it differently.” That prompted an exasperated-sounding response from the judge, who asked Oliver directly, “Did you understand the fundamental point was to increase competition?” Oliver said he did, and after a brief interjection by Even, Gonzalez Rogers said, “doesn’t seem likely you do, but go ahead,” before the questioning resumed.
Throughout that day’s proceedings, Oliver described the analysis his team commissioned from an outside consultancy group, and Epic’s lawyer pressed on the reasons they did or did not assess certain aspects of the IAP and compliance with the court order. Later on, the judge said to Oliver, “I don’t recall seeing any slides so far that identifies the value to a single developer.” She said the model Apple came up with basically “has one group of developers subsidizing everyone else because you don’t charge many developers anything other than the application fee, or the developer fee.” Oliver said the consultant’s analysis represented value to individual developers, but the judge did not seem moved by his answer.
Update (2024-06-04): Leah Nylen:
Carson Oliver, senior director for business management for the App Store, testified that Apple hired economic consulting firm Analysis Group Inc. to help create a new commission rate for purchases.
But Rogers repeatedly chastised Oliver for statements about how Apple decided it would charge developers 27% for purchases of digital goods or services made outside its App Store, given that the lowest end of the range in the Analysis Group study is 12.3%.
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Apple provides a number of services to developers including discovery of apps, distribution, developer tools and platform technology, along with additional privacy, user trust and safety that aren’t comparable to other platforms, Oliver testified. He said Apple estimates the true low-end was 17%.
M.G. Siegler (via Ryan Jones):
Because when all is said and done, after the payment processing fees and other overhead, they’re now going to be paying more than 30%. Apple’s committee on the matter – Schiller, Tim Cook, and CFO Luca Maestri – clearly came to 27% for that exact reason. And the effect is exactly what they’d hope for: the status quo remaining intact (security and all, to throw Schiller a bone here).
My read is that the 17% is not really an estimate of anything, just the lowest amount that Apple can easily justify by comparing to what other companies are charging.
Ben Simon from Down Dog, a subscription-based yoga app, is testifying now.
They had button on Android with direct link to their website, and did A/B testing on app.
- 90% chose to purchase on website vs 10% google pay
- without direct link within app, fell to 50/50
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This small yoga app is bringing way more concrete and specific empirical data than Apple has come up with for this proceeding.
Nonetheless, Apple cross-exam criticizes the yoga app for not having adequate data about customer confusion or A/B tests on Apple’s specific screens.
Also suggests Down Dog is biased b/c they would benefit from lower fees. (Is that supposed to be a gotcha? 🤣)
Apple then unsuccessfully tried to link them with the Coalition for App Fairness.
Previously:
This finding should serve to temper down any anti-EU sentiment based on the belief that Apple's non-conformance there on simply pushback against specific DMA overreach.
With multiple lodged and ongoing anti-trust cases around the world, I'm just wondering how much longer it will take for Apple to reign itself globally in rather than trying to eke out every last $ of super-profits it possibly can in each separate jurisdiction.