Apple painted Epic as an opportunist looking to cut costs with a court case that could destroy iOS and endanger consumers by forcing allowing harmful and malicious apps onto their phones.
While both sides trade blows, U.S. District Judge Yvonne Gonzalez Rogers, who will decide the case, must analyze whether iOS falls into the strict legal definition of a monopoly, and then whether Apple’s business practices amount to an abuse of monopoly power, as Epic alleges.
“At some level, this is a run of the mill antitrust case, in the sense that the issues are fairly standard,” said Shubha Ghosh, a law professor at Syracuse University who focuses on antitrust issues. “Though the facts are unique, and the potential outcome could be very interesting for tech companies like Apple.”
Apple’s strategy is to steer the case into the narrow confines of the portions of U.S. antitrust case law that benefit its side. But Apple may not be able to sidestep the bigger philosophical question of whether its operating system has grown so large and important that it has become its own market, experts say.
The trial marks the highest profile antitrust trial involving a technology giant since the U.S. Department of Justice brought Microsoft to court over similar allegations more than 20 years ago. In that case, Microsoft was accused of abusing its market dominance over its Windows operating system. It lost, but portions of the case were later overturned on appeal.
The Microsoft case, though, was a watershed moment in the technology industry and experts say it created breathing room for new entrants, such as Google, to thrive where they otherwise would have been crushed by Microsoft.
Epic was scheduled to begin its opening remarks at 8:15 a.m. Pacific time, but the start was marred by technical difficulties. With the courtroom closed to the public and to press because of the pandemic, a conference call line was set up providing an audio feed of the trial. It took a half-hour to get the feed partially up and running, and it was at one point interrupted by video game fans who shouted into the line.
The muffled conference call line made it difficult to hear the first witness, Epic founder and CEO Tim Sweeney.
Epic’s opening remarks were delivered by Katherine Forrest, a partner with Cravath, Swaine & Moore and a former U.S. District Judge with the Southern District of New York. Forrest also served as deputy attorney general in the antitrust division for the U.S. Department of Justice.
Even though there is no jury in the Epic v. Apple trial, and the case is being decided by a federal judge experienced in complex antitrust law, Forrest laid out Epic’s case using easy-to-understand metaphors.
As Forrest described Apple’s “walled garden,” a mobile operating system that Epic alleges is designed to control developers and keep customers from leaving, she used a PowerPoint presentation that showed a brick wall being built in front of the iOS logo. Each slide, which contained internal Apple correspondence discussing ways to “lock in” customers, contained more bricks until an entire wall was formed.
“After Apple succeeded in building its walled garden and luring enough developers and users in, a tipping point occurred,” she said. “Users and developers alike became trapped inside. Apple threw away the key.”
As a judge, Forrest sometimes pushed attorneys to make complex topics simple to understand. In the trial of Fabrice “Fabulous Fab” Tourre, a Goldman Sachs trader accused of defrauding investors in mortgage-backed securities ahead of the 2008 financial crisis, she warned lawyers against the use of technical jargon. “A synthetic CDO is gibberish,” she said. “You need to explain it and then come back to it and explain it again maybe. Have a heart.”
Another reason lawyers often speak more plainly than seems necessary is to create a court record that may be necessary on appeal. The case is also likely being watched by the U.S. Department of Justice, which could bring its own case against Apple, legal experts say, on behalf of consumers. Epic’s lawyers, for instance, asked Sweeney obvious questions, such as whether he had ever heard of Unreal, a game development platform he created and owns.
Customer lock-in is central to Epic’s argument against Apple. If it’s difficult for customers to switch from iOS to the competing operating system, Google-owned Android, Epic can more easily argue that iOS is a market unto itself, and that Apple therefore has a monopoly.
Apple argued that the market should be defined much more broadly, and that iPhones also compete with video game consoles, such as PlayStations, Nintendos and Xboxes.
“The most dangerous thing Epic is going to try to sell this court is the idea that consumers would be better off if Epic has its way. Nothing could be further from the truth,” Apple attorney Karen Dunn, a partner with Paul Weiss, Rifkind, Wharton and Garrison, said in her opening statements. “The result for consumers and developers will be less security, less privacy, less reliability, lower quality, less choice — all of the things that antitrust laws seek to protect.”
Apple’s day of reckoning seems here already in Europe, where the European Commission recently ruled that iOS is, in fact, a market unto itself. Last week, it made a preliminary ruling that Apple has used its power in that market to stymie competition in music streaming, where companies like streaming service Spotify must compete inside of Apple’s so-called walled garden.
Apple is “going to have to focus more on arcane antitrust law” said Valarie Williams, a partner at the law firm Alston and Bird who listened into the case Monday. “I still wouldn’t say Apple has the upper hand on the law, it’s just that it’s Epic’s burden to prove, and the law makes that a hard, hard road.”
Epic’s legal team, made up of heavy hitters, is led by Christine Varney, a partner at Cravath, who represented Netscape in its antitrust suit against Microsoft more than two decades ago and served as assistant attorney general of the antitrust division under the Obama administration.
Rogers barely spoke during the first day of trial, offering little in the way of hints on her thinking in the case. As more witnesses take the stand, the questions Rogers asks will give both sides a better sense of how the case is going. When Epic is done presenting its case, Apple will get a chance to put on its defense. It could also ask for “summary judgment,” essentially a request to end the case early and, Apple would hope, in its favor.
Below are the updates from the first day of the trial.