Epic v. Google: everything we learned in Fortnite court
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Skinner and Google are giving us a theoretical example of the “A1 Camera Company.” Skinner bids us assume its P&L shows $1 million in revenue and $600K in costs for a $400K operating profit — an operating margin of 40 percent.
But “R&D costs are now tracked in a separate cost center,” Skinner explains.
You could track $200K worth of R&D costs on the original P&L, or you could split out a new P&L for an “R&D cost center.” If you did, it would look like the camera company only had $400K in costs and, thus, had a 600K operating profit for a 60 percent operating margin, while another part of the company had costs of $200K and made no profit at all.
(But is this what Google actually did? We haven’t gotten there yet — Google’s just educating the jury. In fact, Google is literally asking Skinner to tell the jury what this means.)
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