Judge’s tough questions of Tim Cook could mean good news for Epic in antitrust suit

CARY – The grilling of Tim Cook on the witness stand Friday could mean good news for Epic Games in its anitrust lawsuit against Apple, says a Raleigh attorney who has been following the case in a federal court.

Jim Verdonik, of the tech-focused firm Innovate Capital Law and a veteran of many court cases, sees a possible compromise to settle the dispute over App’s closely held operations of its globally popular App Store and the 30% fees it charges for sales made to larger clients such as Epic.

Jim Verdonik

“When the judge asked Epic’s Tim Sweeny tough questions, I cautioned against reading too much into the questions and predicted the judge would do the same later when Apple’s CEO Tim Cook was on the stand,” Verdonik says, referring to the appearance by Cary-based Epic’s CEO when the trial opened three weeks ago. “The judge did not disappoint.”

U.S. District Judge Yvonne Gonzalez Rogers is hearing the suit and will decide the case. The trial is expected to close today but a decision from the judge could be weeks if not months away.

Verdonik spelled out what he considers the crucial “tough” questions and statements:

Pointing out that the computer game industry accounts for a disproportionate share of Apple’s AppStore income.
That computer games companies usually invest more in developing their products than simple apps developers, which means Apple is piggybacking off of computer games companies IP investment.
Indicating that while Apple faces competition on other areas, it has no competition when it comes to in app purchases by consumers because Apple refuses to sell the games of companies like EPIC that offer consumers the ability to purchase in app products outside of Apple’s App Store. Apple’s primary defense is that Apple is not a monopoly because Apple faces competition from other device manufacturers. If the judge buys EPICs argument that the relevant market is in game purchases that could undermine Apple’s primary defense.
The judge cited surveys that almost 40% of game developers are dissatisfied with Apple’s App Store and the judge seemed to dismiss Cook’s boast that Apple had curt commissions for small developers by pointing out that this may have been because Apple is worried about antitrust law suits.

Tim Cook faces tough questions on competition from judge in Epic-Apple trial

“The judge’s questions indicate that the judge is at least considering a compromise,” Verdonik says. “Not order Apple to change its 30% commission that Apple charges EPIC for game purchases, but creating an exception for in game purchases.”

Big victory?

Adds Verdonik: “If this is the direction the judge is heading in, it would be a big victory for EPIC for a number of reasons:

Most antitrust experts believe current antitrust laws favor Apple. So, even a partial victory by PIC would be like 64th seed in the March Madness Basketball tournament making it to the Final Four
EPIC has unusually high revenue from in-game purchases – approximately $____
This would be the first crack in Apple’s wall around iPhone users. It may encourage Apple to make other concessions to avoid the courts creating other exceptions.

Epic wouldn’t be alone in celebrating, he predicts.

Cook defends Apple’s app store control in showdown with Epic Games

“If the judge goes down this road of creating different rules for in games sales, EPIC and other computer games developers will be dancing in the streets,” he says.

“But, I caution that good judges ask tough questions. Then they decide how to rule. So, the questions do not necessarily predict the outcome.”