Written by Stephen Nellis and Paresh Dave
SAN FRANCISCO (Reuters) – The founder of “Fortnight” Epic Games testified this week in its lawsuit against Apple Inc. that David Evans, chairman of the Global Economics Group, whose star expert witness, claims that Apple is an unexpected monopolist. On application developers.
Apple has called its own experts to refute Evans’ comments on the market, but with an additional personal twist: this is what MIT economist Richard Schmalensi, who has co-authored numerous books and academic papers with Evans, has accused Evans of contradicting his own previous research.
Legal experts say Apple’s intention is to undermine Evans’ credibility in the eyes of the judge in the case.
At a three-week trial in federal court in Auckland, California, previous collaborators who wrote extensively on the milestone hopeless results by the U.S. Supreme Court: What is the central market? The case?
The way of the structured epic is that Apple and its app store are monopolized, abusing control of the mobile software market to get commissions for the fees paid within apps. But Apple argues that it is one of the many competitors in the healthy market for video game purchases.
When asked about the market definition, Judge Yvonne Gonzalez Rogers said there was no side to the persuasion that the whole case would win.
“Epic must completely overcome market definition,” said Daniel Lyons, a professor at Boston College of Law School. “If Apple is right that ‘Fortnight’ on iOS is only a small part of the larger ‘Fortnight’ universe, then Apple has no market power and nothing they do is likely to harm consumers because consumers can change.”
In this week’s stand, Evans testified that Apple is known as a single-brand market, and that once consumers buy an iPhone, they rarely jump because the costs of switching to Android are so high.
Since about 2010, Evans has testified that Apple’s App Store has effectively been its own marketplace, and users rarely go outside. After kicking “Fortnight” out of the Apple App Store, Evans testified that only a small fraction of Apple users jumped on other devices such as PCs or gaming consoles to play “Fortnight”.
In contrast, Schmalency argues that the relevant market is gaming transactions, where Apple is a platform for many – Microsoft Corp.’s Xbox and Sony Group Corp.’s PlayStation – that sit between game developers and gamers and charge commissions to facilitate transactions.
Apple’s App Store is a two-sided marketplace, Schmeinzi testified, in an amicus curiae summary on behalf of American Express in the 2018 U.S. Supreme Court case, a comment he and Evans wrote in detail.
American Express barred merchants from moving their customers toward competing cards with lower swipe fees, arguing that its higher fees helped fund cardholder offers that benefited consumers. The court, in conjunction with the American Express, cited Evans and Schmeinzi in detail at its conclusion.
Schmalensi said Apple’s rules barring consumers from paying for the steering wheel at a low price posed an almost identical problem, and that Evans was inconsistent with many aspects of his previous work.
Outsiders have been surprised by the split between the two star economists.
“I would say that (Evans’) views on Amex have not changed, but what he says is that the facts here are different, so the same conclusion is not appropriate,” said Jeff Mann, president and founder of the International Center for the Center for Law and Economic Research. “Personally, I’m not sure how he got there and stuck to it.”
As part of Apple’s strategy in positioning Schmalanzi, his testimony shows that the differences between Evans’ previous works and his current view of the epic case are unreliable, observers said.
Steven Salop, a professor of economics and law at Georgetown University and a self-described adviser on Epic, said: “Everyone knows that what they say in the past must be in line with what they say now.
Schmeinzi declined to comment, and Evans did not immediately send requests for comment.
(Report by Stephen Nellis in San Francisco and Paresh Dave in Oakland, California; edited by Jonathan Weber and Leslie Adler)