Sean Hollister
Epic CEO Tim Sweeney is being sworn in.
He was careful not to step on my backpack on his way out of the row; thank you, Tim.
Sean Hollister
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Sean Hollister
Epic may have carved out a special new product deal with Google that the judge is letting them keep secret.
The judge keeps asking Epic why it’s suddenly agreeing to settle with Google — and we’re now hearing a potentially controversial reason why. The courtroom has revealed that Epic and Google are in the middle of a deal that involves “joint product development, joint marketing commitment, joint partnerships,” and the judge is tentatively concerned that Epic is willing to ditch its biggest asks in exchange.
Bernheim is being quizzed on whether this is quid pro quo, and he keeps saying he doesn’t think so, but Judge Donato is letting him avoid discussing specifics because journalists are in the room.
Sean Hollister
Epic says it A/B tested with and without Google’s sideloading friction.
Apparently Epic conducted an experiment with Digital Turbine as a partner, where users could click just once to install the Epic Games Store on their Android phone instead of going through the lengthy “unknown sources” flow. Bernheim claimed half of users failed to get through unknown sources, but 90 percent made it through one-click. Not surprising, but Epic is using it to suggest that a settlement where Google offers one-click to registered app stores would be better.
Sean Hollister
Epic judge *really* doesn’t seem inclined to change his Google injunction.
Some choice Donato quotes towards Epic’s lead attorney:
- “We have no idea what the world’s going to look like in June of this year, much less three years from now.”
- “They’ve gotten rid of the two things they hated most, and now you’re trying to sell me on the idea this is good for competition and developers?” (“they” referring to Google)
- “I’m not throwing anything out right now. You want something more than that, come and tell me. Why aren’t you building on the edifice rather than tearing it down?”
Sean Hollister
“Why have you jettisoned the very heart of the injunction that you argued so forcefully for?”
Judge Donato says he just doesn’t get it.
Here’s Epic’s lead attorney Gary Bornstein to answer:
“We love those remedies, period, full stop. We like them, we asked for them, we like them the way we asked for them. Now we have another option that’s on the table that’s the result of a negotiation with Google. We got something through this negotiation that was not on the table before.”
“The only reason Epic is here is because Epic believes this set of remedies in totality will provide longer-term sustainable competition,” says Bornstein. He says holding out for something like this is “the reason Epic didn’t take payoffs back in the day” from Google’s Project Hug and similar.
Sean Hollister
Epic witness suggests three years isn’t long enough because Google will immediately kill competitors after.
Judge Donato says that with three years to set up competing app stores on Android, Amazon, Meta, Microsoft and more will surely pile on. “The problem we have now is the box has already been rigged terribly with anticompetitive conduct so that Google is way ahead.”
The overarching question: “Three years and a day, what’s going to happen?”
Bernheim says even if they build those stores, Google will cut off Amazon and co. “Google at that point in time is going to say you can’t have an app that downloads things.” Or erect more friction to sideloading apps.
I don’t quite understand how that changes if were six years rather than three, or why Google wouldn’t shut down its proposed Registered App Store program the same way if that got approved.
Sean Hollister
Epic economist stops short of blaming the judge.
“By taking away one part of what I’ve proposed, the effectiveness of the other part declines,” says Bernheim, answering the judge’s question about why he didn’t bring all these proposals before.
“The choice was presented to me that if you want these provisions, which of these do you want? Do you want the ones that are going to provide the better opportunities for competitions to survive, that were in my proposals, or the ones that allow competition to get jumpstarted, which were also in my proposals, which do you pick?”
He seems to be saying that Judge Donato didn’t pick enough of them to make a real dent when he issued his permanent injunction, and didn’t make it last long enough or apply around the world, and so what he truly wanted for competition isn’t happening anyways. So the new settlement is overall better, he’s arguing.
Sean Hollister
Epic judge continues grilling economist.
“Why did you press so hard for catalog access if you’re willing to throw it out the window today?” asks Judge Donato.
Bernheim replies: “I don’t want to throw it out [...] I would love to keep it.”
Bernheim says there’s a tradeoff, though. “If you want to get competition going and as a compliment to that you have a remedy that will ensure the competition, once it develops, will continue, that it has a path for continuing, then those remedies that we’ve described will be extremely effective.”
Sean Hollister
“What has changed in your view that makes sense for me to pick up my pen and change this injunction that we spent so much time crafting two years ago?”
That’s Judge James Donato, continuing to be skeptical, addressing Doug Bernheim, the Epic economist.
Bernheim agrees with the judge that Google still monopolizes the Android app market and payments market; that the facts haven’t materially changed on the ground.
Sean Hollister
Epic’s economist says time is the problem.
Bernheim says he “would love to have all” of the anti-Google monopoly recommendations he originally argued for, but that he’s just analyzing what’s in front of him, and that Judge Donato’s existing injunction simply doesn’t last long enough at just three years rather than six.
“When that ends, developers are going to be very dependent on off-Google Play distribution,” he says. “To the extent those frictions are still in place, that will be a problem at that point in time [...] they’ll be reliant on a process that has already been shown not to work well.”
He brings up the example of how Amazon’s Appstore never got traction because users had to click through too many Google barriers.
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