OAKLAND, Calif. (CN) --- The federal judge who will decide whether Apple runs its App Store in a way that abuses its power and stifles competition said Wednesday that she is interested in whether the App Store provides an essential facility for app developers to which Apple is required to provide its competitors unrestricted access.
“I have the ABA’s Antitrust Law book up here. I've heard quite a bit of evidence throughout this trial regarding how big Apple is and how anti-competitive it is,” U.S. District Judge Yvonne Gonzalez Rogers said Wednesday.
Reading from the book, she turned to Apple’s economics expert, MIT professor Richard Schmalensee, who was on the stand. She asked him whether Apple has a duty to deal if its App Store is “is so superior to anything else available that competitors cannot succeed without accessing it.”
“It sounds to me like what Epic is saying is 'we want Apple to allow us to deal on their platform,' and there are only two of these platforms,” she said, referring to Apple iOS and Google’s Android operating system. “And all of these competitors cannot be successful without access to these platforms.”
Schmalensee said the doctrine which arose from railroads that provide essential access across bridges doesn’t quite fit Epic’s case. For it to work, Epic has to be able to argue that it cannot be a viable online storefront unless it has access to Apple’s iOS platform. Epic does have access to iOS, he added, but it doesn’t like the terms.
The judge is considering where this “essential facilities doctrine” fits into the high stakes case where Fortnite game maker Epic claims Apple is abusing its monopoly power over iOS app distribution to foreclose competition.
Epic is targeting Apple’s requirement that developers users its in-app payment (IAP) solution, and the 30% cut it takes from every in-game purchase of Fortnite credits, or “VBucks,” that players can exchange for weapons, character skins and dances (emotes) with which to taunt their opponents.
The dispute started when Epic Games introduced a “hotfix” to the iOS version of Fortnite, allowing users to pay it directly for in-app purchases instead of going through Apple and getting Epic banned from the App Store. Epic answered with a federal antitrust lawsuit that seeks no monetary damages, but aims to get Apple to change the way it runs its store, perhaps eliminating the rule prohibiting apps that act as storefronts.
Apple claims it has not refused to deal with Epic, but expelled it from the store for breaching its developer contract.
As the case drags into its second week, Apple called on Schmalensee to refute the testimony of his longtime colleague and collaborator, economist David Evans, with whom he’s written three books.
Schmalensee challenged Epic’s market definition, which Evans described earlier this week as a market for solutions for accepting and processing payments for digital content purchased in an iOS app.
"That might be the longest market definition I've ever heard,” Schmalensee said. “But it's not a plausible market. A market is something with buyers and sellers. There's nothing bought and sold in that market as far as I can tell.”
“Apple’s iOS business is clearly a platform linking consumers and developers,” he offered instead. "The App Store facilitates transactions between consumers and app developers.”
Apple’s IAP, he added, is just its way of seamlessly collecting its 30% commission.
Schmalensee also disagreed with Evans’ testimony regarding the product at issue in the case, which Evans described as both app distribution on iOS and iOS in-app payment solutions.