Apple is both straight-forward and predictable I wrote that the iPhone company would likely win when the lawsuit was filed, and argued that the law was firmly on Apple’s side in App Store Arguments. We would like to thank all the BIAS customers and friends for the opportunity to have served the audio community for over 16 amazing years.The vast majority of Judge Yvonne Gonzalez Rogers decision in Epic v. BIAS’ site now redirects to a short message: BIAS, Inc. To that group, you can add perhaps the most famous and long-lasting Mac audio editor of them all: BIAS’ Peak.Epic’s argument was, as expected, dismissed out of hand Supreme Court precedent is extremely skeptical that there are single brand markets, and the primary exception ( Eastman Kodak) is only applicable if customers are unaware of aftermarket limitations at the time of purchase. Apple, on the other hand, argued that all of digital gaming was a market, including not just Android but also consoles and PCs.Judge Gonzalez Rogers disagreed with both, defining the market as ‘mobile game transactions’. Epic argued there is a smartphone market consisting of iOS and Android, and then on iOS there is a distinct “iOS App Distribution” market, and downstream from that a “iOS In-App Payment Solutions” market. Market DefinitionThe most important part of any antitrust case is market definition. Peak, by Bias, has been the best stereo audio editor.What was surprising, though — and, frankly, a much more interesting question for the Court of Appeals — is that Judge Gonzalez Rogers also issued an injunction banning Apple’s anti-steering provision while I do think Apple’s anti-steering provision is anti-competitive, this injunction is an odd outcome of this specific case, and a source of much confusion about what this decision was actually about.
Bias Peak Pro Audio Editing Software Software Industry AsAnother industry report describes distinct user bases for mobile gaming: young children, teenage girls, and older adults are disproportionally likely to be mobile gamers only. “Remarkably,” this rapid growth “has not significantly cannibalized revenues from the PC or console gaming markets,” which suggests that consumers are not necessarily substituting among them. While PC and console gaming has grown more slowly, mobile gaming has experienced double-digit growth driven by “the free-to-play model” with in-app purchases. One industry report describes mobile gaming as a “$100 billion industry by itself” that accounts for 59% of global gaming revenue. Indeed, the Court concluded that there were nine indicia indicating a submarket for gaming apps as opposed to non-gaming apps: (i) the App Store’s business model is fundamentally built upon lucrative gaming transactions (ii) gaming apps constitute a significant majority of the App Store’s revenues (iii) both the gaming, mobile, and software industry as well as the general public recognize a distinction between gaming apps and non-gaming apps (iv) gaming apps and their transactions exhibit peculiar characteristics and users (v) game app developers often employ specialized technology inherent and unique to that industry in the development of their product (vi) game apps further have distinct producers — game developers — that generally specialize in the production of only gaming apps (vii) game apps are subject to distinct pricing structures as compared to other categories of apps (viii) games and gaming transactions are sold by specialized vendors and (ix) game apps are subject to unique and emerging competitive pressures, that differs in both kind and degree from the competition in the market for non-gaming apps.Next Judge Gonzalez Rogers ruled that mobile gaming transactions were a distinct market from digital gaming transactions generally:As an initial matter, Apple’s own documents recognize mobile gaming as a submarket.Market PowerWith that definition established Judge Gonzalez Rogers ruled that Apple did not have monopoly power in ‘mobile gaming transactions’: Second, this ruling does suggest that Apple ought to — and now has the judicial imprimatur to — treat games differently than other apps.This is perhaps the most important takeaway from this decision so much of the company’s App Store troubles have come from applying rules and regulations that are appropriate for games to other areas of the App Store that are totally different, and now the company has license to come up with two sets of rules for what, Judge Gonzalez Rogers ruled, are two different markets. That is good news for app developers who have their own antitrust complaints about Apple’s policies, and also a reason for Apple to not take this ruling as a complete endorsement of their policies. First, given this market definition, this case was only about mobile games. What is more notable, though, is the strong distinction Judge Gonzalez Rogers draws between games and non-gaming apps: That said, the evidence does suggest that Apple is near the precipice of substantial market power, or monopoly power, with its considerable market share. While iOS and Android have substantial advantages, there is some evidence of increased competition in the mobile gaming space in the form of the Nintendo Switch and cloud gaming services.Given the totality of the record, and its underdeveloped state, while the Court can conclude that Apple exercises market power in the mobile gaming market, the Court cannot conclude that Apple’s market power reaches the status of monopoly power in the mobile gaming market. The mobile gaming transaction market continues to grow, despite the fact there is evidence that Apple’s 30% commission rate is artificially high. There is no evidence of a restriction in output, i.e. Android’s presence in the market means that Apple can act anticompetitively with its App Store policies (which Google is happy to ape). In the case of Apple and Google: Google:This gets at a larger problem in many tech markets: the tendency towards duopoly, which often lets one company cover for the other acting anti-competitively. Dj program for mac free downloadThe IAP SystemMost of the rest of Judge Gonzalez Rogers’ decision balances Apple’s alleged anticompetitive conduct, including its ability to maintain outsized profit margins on the App Store because of the lack of competition for iOS App Stores and In-App Payment alternatives, with its procompetitive justifications, including enhanced security, intrabrand competition with Android-based phones, and its right to protect its investment in intellectual property. And, while all of these companies compete, those competitive forces have set nearly all of these duopolies into fairly stable positions that justify cooperation of the sort documented between Apple and Google, even as any one company alone is able to use its rival as justification for avoiding antitrust scrutiny.Judge Gonzalez Rogers does note that it is unclear whether Google “could increase output in the short run in order to erode Apple’s market share”, but the real problem is that Google is content to simply share the market with Apple and earn their own supracompetitive commission rate. Apple earns billions of dollars giving its customers the best default search experience, even as that ensures that Google will remain the best search engine (and raises questions about the sincerity of Apple’s privacy rhetoric).This isn’t the only duopoly: Google and Facebook jointly dominate digital advertising, Microsoft and Google jointly dominate productivity applications, Microsoft and Amazon jointly dominate the public cloud, and Amazon and Google jointly dominate shopping searches.
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