If Epic Games hopes to dismantle the fortress surrounding Apple’s iPhone and its app store, the video game maker probably will need to roll out some heavier artillery heading into the second week of a trial threatening Apple’s $2 trillion empire.
So far, at least, Epic has been having trouble proving its allegations that the iPhone maker’s 13-year-old app store has turned into an illegal monopoly.
Epic, the maker of the popular Fortnite game, contends Apple has been gouging app makers by charging commissions ranging from 15% to 30% for in-app transactions because it forbids other options on its iPhone, iPad and iPod. When Epic tried to evade the commissions with an alternative payment system in Fortnite last August, Apple ousted it from the app store to set up a legal showdown that could force it to lower its fees.
Apple contends the commissions are a reasonable toll paid by a minority of the 1.8 million apps in its store to help cover the more than $100 billion it has invested in mobile software, The Cupertino, California, company also maintains its ironclad control over apps allowed on its mobile devices helps protect its customers’ security and privacy.
At times, it seemed like Cary, North Carolina-based Epic was helping make Apple’s case as much as its own during the the first week of the trial being held in an Oakland, California, courtroom.
For instance, at one point during his two days on the witness stand, Epic CEO Tim Sweeney acknowledged he personally used an iPhone instead of smartphones running on Google’s Android software because he thought Apple offered better security and privacy controls.
Sweeney also acknowledged Apple made changes to iPhone’s software to help make it possible for Fortnite players to compete against each other while one was on a phone and the other was on a video game console. The expansion of so-called “cross-platform” play helped propel Fortnite’s growth to more than 400 million users.
Other internal documents showed Epic’s executives profusely thanking Apple for the support Fortnite was getting in the app store.
Other evidence raised questions about whether Epic’s efforts to create a competing app store that imposes a commission of only 12% will pay off. The store is expected to post a profit ranging from $15 million to $36 million by 2024, but it will still have run up cumulative losses $654 million to $854 million, according to Epic’s internal projections presented at the trial.
Apple’s store, by contrast, quickly became highly profitable shortly after it opened with just 500 apps in 2008 — a year after the debut of the first iPhone. Epic has repeatedly pointed to evidence that Apple’s late co-founder Steve Jobs initially didn’t expect the app store to be a profit center, but then apparently changed his mind after it accumulated $2.1 billion in billings during 2010, according to an Apple slide presentation.
The trial hasn’t yet revealed just how profitable Apple’s app store has become. Apple doesn’t disclose the store’s financial results, but it is an important part of the company’s steadily growing services division, which generated $57 billion in revenue last year alone. The success of those services coupled with the iPhone’s ongoing popularity is a key reason why Apple currently boasts a market value of $2.2 trillion — more than any other U.S. company. In contrast, privately held Epic is valued at nearly $30 billion.
More financial details about Apple’s app store are expected to be presented during the trial’s second week. Perhaps the most revealing moments may come when one of Epic’s experts, Ned Barnes of the Berkeley Research Group, takes the stand to discuss his analysis of the app store’s profits.
Apple unsuccessfully tried to convince U.S. District Judge Yvonne Gonzalez Rogers to close the courtroom during Barnes’ testimony because his financial analysis “unduly confuse” investors and cause wild swings in its stock.
But even if the app store’s profits are higher than anyone fathomed, that won’t necessarily help Epic prove its allegations that Apple is running a monopoly that hurts competition.
“Being successful is not an antitrust violation in and of itself,” said Daniel Lyons, a Boston College law professor. “The argument that your prices are much higher than your costs may play well to a lay audience, but it doesn’t hold up legally.”
For all the drama, Lyons and other experts say the decision that will ultimately be made by the judge during this non-jury trial will boil down to market definitions. Epic contends the iPhone has become a market by itself, while Apple argues it should also include other devices, including video game consoles such as Microsoft’s Xbox and Sony’s PlayStation that also charge 30% commissions on gaming transactions.
“If I were a betting man, I would certainly say Apple has the stronger case under existing case law,” said Larry Downes, project director of Georgetown University’s Center for Business and Public Policy. “You have to put yourself in the standpoint of the consumer, and that’s what the judge really has to do. If it’s not harming consumers, then this is just a contract dispute between two companies, with one of them trying to use litigation to renegotiate the terms.”
SAN RAMON, Calif. (AP) — By MICHAEL LIEDTKE AP Technology Writer.
US to seek automated braking requirement for heavy trucks
In a reversal from Trump administration policies, U.S. auto safety regulators say they will move to require or set standards for automatic emergency braking systems on new heavy trucks.
The Department of Transportation, which includes the National Highway Traffic Safety Administration, announced the change Friday when it released its spring regulatory agenda.
It also will require what it said are rigorous testing standards for autonomous vehicles, and set up a national database to document automated-vehicle crashes.
The moves by the administration of President Joe Biden run counter to the agency’s stance under President Donald Trump. NHTSA had resisted regulation of automated-vehicle systems, saying it didn’t want to stand in the way of potential life-saving developments. Instead it relied on voluntary safety plans from manufacturers.
NHTSA had proposed a regulation on automatic emergency braking in 2015 before Trump took office, but it languished in the regulatory process. The agency says it has been studying use of the electronic systems, and it plans to publish a proposed rule in the Federal Register in April of next year. When a regulation is published, it opens the door to public comment.
“We are glad to see NHTSA finally take the next step in making large trucks safer by mandating AEB,” said Jason Levine, director of the Center for Auto Safety, which was among the groups that petitioned for the requirement in 2015. “Unfortunately, at this rate, it will still be years until the technology that could help stop the 5,000 truck crash deaths on our roads is required,” he said in an email.
A trade group representing independent big rig drivers says the technology isn’t ready for heavy vehicles and can unexpectedly activate without reason.
“Our members have also reported difficulties operating vehicles in inclement weather when the system is engaged, which has created safety concerns,” the Owner-Operator Independent Drivers Association said in a statement.
The association says that while the technology is still being perfected, legislators and regulators shouldn’t set time frames for requiring it on all trucks.
However, the Insurance Institute for Highway Safety, a research group supported by auto insurers, found in a study last year that automatic emergency braking and forward collision warnings could prevent more than 40% of crashes in which semis rear-end other vehicles. A study by the group found that when rear crashes happened, the systems cut speeds by more than half, reducing damage and injuries.
Cathy Chase, president of Advocates for Highway and Auto Safety, another group that sought the regulation from NHTSA in 2015, said the agency is moving too slowly by not publishing the regulation until next year.
“I don’t understand the delay,” she said. “I know that might sound impatient, but when people are dying on the roads, 5,000 people are dying on the roads each year, and we have proven solutions, we would like to see more immediate action,” she said.
In 2016, NHTSA brokered a deal with 20 automakers representing 99% of U.S. new passenger vehicle sales to voluntarily make automatic emergency braking standard on all models by Sept. 1, 2022. But that deal did not apply to big rigs.
The announcement of the requirements comes two days after four people were killed when a milk tanker going too fast collided with seven passenger vehicles on a Phoenix freeway. At least nine people were injured.
The U.S. National Transportation Safety Board, which investigates crashes and makes recommendations to stop them from happening, said Thursday it would send a nine-person team to investigate the Phoenix crash. The agency said it would look at whether automatic emergency braking in the truck would have mitigated or prevented the crash.
Since at least 2015 the NTSB has recommended automatic emergency braking or collision alerts be standard on vehicles.
At present, there are no federal requirements that semis have forward collision warning or automatic emergency braking, even though the systems are becoming common on smaller passenger vehicles.
The systems use cameras and sometimes radar to see objects in front of a vehicle, and they either warn the driver or slow and even stop the vehicle if it’s about to hit something.
DETROIT (AP) — By TOM KRISHER AP Auto Writer
Google pledges to resolve ad privacy probe with UK watchdog
Google has promised to give U.K. regulators a role overseeing its plan to phase out existing ad-tracking technology from its Chrome browser as part of a competition investigation into the tech giant.
The U.K. competition watchdog has been investigating Google’s proposals to remove so-called third-party cookies over concerns they would undermine digital ad competition and entrench the company’s market power.
To address the concerns, Google on Friday offered a set of commitments including giving the Competition and Markets Authority an oversight role as the company designs and develops a replacement technology.
“The emergence of tech giants such as Google has presented competition authorities around the world with new challenges that require a new approach,” Andrea Coscelli, the watchdog’s chief executive, said.
The Competition and Markets Authority will work with tech companies to “shape their behaviour and protect competition to the benefit of consumers,” he said.
The promises also include “substantial limits” on how Google will use and combine individual user data for digital ad purposes and a pledge not to discriminate against rivals in favor of its own ad businesses with the new technology.
If Google’s commitments are accepted, they will be applied globally, the company said in a blog post.
Third-party cookies – snippets of code that log user info – are used to help businesses more effectively target advertising and fund free online content such as newspapers. However, they’ve also been a longstanding source of privacy concerns because they can be used to track users across the internet.
Google shook up the digital ad industry with its plan to do away with third-party cookies, which raised fears newer technology would leave even less room for online ad rivals.
Amazon now says remote work OK 2 days a week
Corporate and tech employees at Amazon won’t have to work in offices full time after coronavirus restrictions are lifted.
The Seattle Times reports the online retail giant said in a company blog post Thursday that those workers can work remotely two days a week. In addition, the employees can work remotely from a domestic location for four full weeks each year.
Amazon’s work policy update follows backlash from some employees to what they interpreted as the expectation they would have to return to the office full time once states reopen.
Some tech companies had launched recruiting campaigns that seemed targeted in part at Amazon workers’ dismay over an end to remote work.
Most Amazon employees will start heading back to offices as soon as local jurisdictions fully reopen — July 1 in Washington state — with the majority of workers in offices by autumn, the company said previously.
Amazon has about 75,000 employees in the greater Seattle area. The company’s new remote-work plan is similar to other large tech companies.
Google said last month that it expected roughly 60% of its workforce to come into the office a few days a week, and for 20% to work from home full time. Google also gave all employees the option to work remotely full time four weeks per year. Facebook and Microsoft have both said most workers can choose to stay remote.
Amazon’s new policy could add to the challenges faced by Seattle’s traditional business core. In pre-pandemic times, tens of thousands of Amazon workers commuted into the South Lake Union neighborhood north of downtown every day. Most haven’t returned.
More than 450 downtown retailers, restaurants and other street-level business locations have closed permanently in the 16 months since the pandemic sent office workers home, according to a Downtown Seattle Association survey.
Of the roughly 175,000 people who worked in downtown offices before the pandemic, 80% continue to work remotely, according to association data.
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