Sean Hollister

Bernheim says Google’s economist Tucker didn’t appropriately consider switching costs between Android and iPhone — and not necessarily because it’s hard to switch.

Rather, because a 50 cent increase in prices to the end user (“that’s about 50 cents for the average smartphone user over the life of their phone,” he says) wouldn’t be enough to overcome the switching costs that do exist, given people only switch phones every 2.7 years on average.

Bernheim shows us the chart Google used to downplay RSA 3.0 was showing active Android devices — including devices that had already been sold.

He also says that graphs that show no change after RSA 3.0 are flawed: “Of course you don’t see any change, the competitors are pretty insignificant; it might become significant, Google starts its conduct, and then nothing happens, you stay at this very low level.”

As far as the Macy’s example, he says Macy’s isn’t dominant in its market, and we treat dominant companies differently.

On rev-share: “If you are sharing profits with a competitor you are disincentivizing competition and that’s what the antitrust laws are designed to prevent.”

And he claims that Professor Tucker’s proposed market definition is far beyond what makes sense. “You can’t put transactions that satisfy different needs for different buyers in the same market,” he tells Judge Donato, additionally saying he’s not sure what to make of Tucker’s idea that a licensing arrangement between Google and an OEM is not a transaction.

Epic’s expert Bernheim argues that Google’s expert Gentzkow “ignores four critical aspects of Google’s conduct,” including:

1. Google impairs competition without preventing it entirely

2. Google’s conduct targets comeptition as it emerges

3. Google is dominant

4. Google shares its Play profits with its competitors

“When push came to shove, he talked about whether competition is prevented” rather than impaired, says Bernheim.

The upshot of that: Bernheim believes Epic doesn’t need to prove Google actually blocked competition entirely. In his opinion (for Epic), Epic only needs to show there were no good alternatives to Google Play and Google Play Billing. It doesn’t need to show there were no alternatives at all.

For example, says Bernheim, Gentzkow presented a chart titled “Was Fortnite Blocked?” showing that revenue tanked on Google Play after the app was kicked off the store, but didn’t tank for Android phones that got Fortnite a different way.

But “If off-Google Play was a good substitute for Google Play, you’d see when one drops, the other goes up commensurably.” That didn’t happen: demand stayed stable outside of Play, according to the bar graph we just saw. “There’s no indication that any of the people here are substituting to off-Google Play.”

“Google’s objectives in taking the actions that affect the way the ecosystem operates have the objective of maximizing Google’s value. They do not have the purpose of maximizing the total value of the platform to all parties,” he tells Epic lead attorney Gary Bornstein.

“Because there’s competition, Google can’t extract as much because there’s a smaller share,” he says, showing us a pair of pie charts: one where Google has a $35 slice of a $50 pie and one where Google has a $10 slice of a $100 one.

(The $100 pie is supposed to represent competition in Android; the small pie “impaired” competition.)

He also says Google’s comparison of Android to the old Symbian OS is flawed because phones from rival manufacturers used different versions. “Each had their own versions of Symbian and each was incompatible with the other.”

We’re almost done with evidence in Epic v. Google. Google’s last witness has departed, and Google lead attorney Glenn Pomerantz says that “Google rests.” But Epic is calling Dr. Douglas Bernheim back to the stand once more — for a rebuttal to the other expert witnesses, one of whom kept calling him out.

He says he will point out basic errors in their analyses.

That’s Google Play boss Sameer Samat, in an old video that Epic presented to the jury. I didn’t catch the date, but a fellow reporter says the accompanying slide was dated 2020.

“Google could not achieve its financial goals without Play,” he added. “The work you do in this one room alone was really mission critical.”

And we’re breaking for lunch. See you in 30 or so.

This doesn’t entirely land for Epic because it’s also trying to argue that Google’s “User Choice Billing” is not a real choice, but...

Epic just showed us a document from 2022 titled “GPB as Platform of Choice.”

It asks one key question: once developers and users have more choices for billing systems, “what are we doing to make GPB the platform they *want* to choose?”

It suggests that “for developers, we must show demonstrable & indisputable ROI” and “we must also connect directly with users and give them a compelling case to check out with Play Billing based on trust, convenience & value.”

“In other words, we’ll need to compete,” asks Epic’s attorney.

Correct, says Loew.

The document mentions two Google codenames that have something to do with alternative check-out options: “Halla” and “Everest.” I suspect “Everest” is Google’s “User Choice Billing” based on the context of the document, but I can’t be sure.

We are back to CHATS! At one point, Loew’s boss said the above to her in a Google Chat, after she mentioned she was “managing a ton of India specific stuff for Payments / Subs.”

We’ll never know what she would have said, I guess!

Today, in court, she seemed amused by her boss’s language.

“If I want Candy Crush, I go to Google Play, I type it in, and I download the app... the Google Play store did not help me discover the app, did it?” asks Epic.

“But in that case Google still takes 30 percent of Candy Crush’s revenue even though it didn’t help me discover the app, correct?”

Loew says both things are correct. She also agrees with Epic’s attorney that a theoretical competing Android app store could charge lower service fees, offer better discovery, etc., etc.

Apple only allows certain categories of app, like “reader” apps, to go consumption-only (meaning the developer can let people download it from the app store and let the user access content they paid for elsewhere, like Netflix videos or V-Bucks).

She points out that Google allows games to be consumption-only apps.

She also says developers can communicate any way they want with their customers outside of the app.

Inside the app, she confirms, Google does not allow developers like Down Dog to communicate other ways to pay — but Google argues that has a benefit for developers and users:

“If users have a purchase intent... we believe we convert quicker if they can do it in the moment without friction.”