More from Epic v. Google: everything we learned in Fortnite court
After a fortnight in Fortnite court, we’re in the home stretch: each side will make its closing arguments. Epic goes first.
Follow along live:
See you soon.
Finally, Epic must establish that its injury is the type of injury that the antitrust laws were intended to prevent. This is sometimes referred to as “antitrust injury.” If Epic’s injuries were caused by a reduction in competition, acts that would lead to a reduction in competition, or acts that would otherwise harm consumers, then Epic’s injuries are antitrust injuries. On the other hand, if Epic’s injuries were caused by heightened competition, the competitive process itself, or by acts that would benefit consumers, then Epic’s injuries are not antitrust injuries and Epic is not entitled to a verdict that Google has violated the antitrust laws.
In summary, if Epic can establish that it was in fact injured by Google’s conduct, that Google’s conduct was a material cause of its injury, and that Epic’s injury was the type that the antitrust laws were intended to prevent, then Epic is entitled to a verdict that Google has violated the antitrust laws.
I don’t remember Epic spending a lot of time on how it’s been injured during this case. Certainly it didn’t have opportunities it might have had... but that may not be enough. The jury instructions talk about “material injury.”
The judge just read page 45 out loud:
You may find that a tying arrangement exists between the Google Play Store and Google Play Billing if Google refuses to distribute Android apps through the Google Play Store unless Android app developers agree to use Google Play Billing to facilitate the sale of digital goods or services in those apps.
I think it’s pretty clear from Epic’s case that it foreclosed competition, too. But was it justified? If so, Google’s in the clear on this particular claim. Pages 48–49:
If you find that the tying arrangement serves a legitimate business purpose of Google, and that there are not substantially less restrictive means reasonably available to achieve that purpose, then you must find for Google and against Epic on the tying claim.
Another jury instruction:
The essential characteristic of an invalid tying arrangement is a seller’s exploitation of its market power over the tying product (app distribution services) to force a buyer to purchase the tied product (in-app billing services) that the buyer might have preferred to purchase elsewhere.
We’re on page 43 now, which lays out what Epic would need to prove to show Google illegally tied the Google Play app store to Google Play Billing.
That’s just a fact — one the court felt was necessary to point out to the jury in no uncertain terms.
“You should not infer or conclude that doing so is unlawful in any way,” reads the judge.
Judge Donato took his time with those last three words “is not unlawful” and looked directly at the jury the whole time as he did so.
We’re going over how the jury will decide whether Epic has proven a relevant antitrust market, and where, and if Google has monopoly power there, and whether it did anticompetitive things if so, and whether it was potentially justified if so, and so on. He’s looking up at the jury every so often, but most of his read is even and bland. Not those three words.
Google has argued since the start that it made normal business decisions to compete with Apple, and its expert witnesses suggested that Epic hasn’t presented a compelling case that it could or should have done otherwise.
Judge Donato just read this bit aloud, with no obvious reaction from the jury:
You have seen evidence that Google Chat communications were deleted with the intent to prevent their use in litigation. You may infer that the deleted Chat messages contained evidence that would have been unfavorable to Google in this case.
The judge did not change the tenor of his voice, though he’s personally pissed about this whole thing:
Every juror has their head down with a copy of the jury instructions. None are looking at the judge as he reads them aloud, save for a quick glance or two.
Arguments and statements by lawyers are not evidence. The lawyers are not witnesses. What they have said in their opening statements, closing arguments, and at other times is intended to help you interpret the evidence, but it is not evidence. If the facts as you remember them differ from the way the lawyers have stated them, your memory of them controls.
On expert witnesses, such as the various economics professors we heard from:
Such opinion testimony should be judged like any other testimony. You may accept it, reject it, or give it as much weight as you think it deserves, considering the witness’s education and experience, the reasons given for the opinion, and all the other evidence in the case.
I just uploaded a copy; you can read along right here if you like.
One of the first notable jury instructions:
Epic did not pay Google $398,931.23 in fees that Google would have received if transactions processed using Epic’s payment solution were instead processed through Google Play Billing. On the basis of these stipulations, you will no longer be asked to address Google’s counterclaim.
That’s just a fact now: Epic owes that money if its contract with Google was valid.
[DocumentCloud]
Judge James Donato has quite a smile on his face today; I don’t think I’ve seen him grin so much since the trial began.
We’re about to read jury instructions; Judge Donato says the jury will be here from 9AM to 5PT until they reach their verdict. Until now, days have typically ended at 3:30PM PT.
Judge Donato had some clarifications for both parties about how he modified the jury instructions and verdict form (for example, having the jury stop right away if they don’t find that Epic has proven the existence of a relevant antitrust market in this case).
But apparently “the jury is still trickling in,” so we’re going to pause before we come back with jury instructions and closing arguments. Judge Donato estimates it’ll take about 45 minutes to read through jury instructions, too, and you can read those all by yourself, so if you wanted to come back in an hour, I wouldn’t be offended!
As I’ve mentioned, the exhibits from this trial won’t be made public until 10 days after the verdict, and we’re now hearing there are as many as five that won’t be available in full at all. Hopefully I copied down anything relevant when it was shown!
I suspect this includes some of the Spotify numbers — though we already got some flabbergasting ones.
I’m here bright and early in federal court to hear the closing arguments for each side. Last week, Google CEO Sundar Pichai and Epic CEO Tim Sweeney decided not to settle, so we’re full steam ahead with the jury. I hear it’s possible we could even get a verdict today.
Need a catch-up? Here are the top 20 things we learned from a fortnight in Fortnite court.
Here we go, starting with logistics:
They met for an hour on Thursday, lead attorneys for both sides told Judge James Donato in a filing (pdf) this evening, following an earlier settlement discussion between Sweeney and Google’s heads of partnerships and product management for Android that was ordered by the court.
“These meetings did not result in a settlement.”
Also new: This is the final verdict form (pdf) the jury will use to decide Epic v. Google.
A fortnight in Fortnite court
Final jury instructions are here, as is the judge’s own near-final verdict form. Notably, he will say:
You have seen evidence that Google Chat communications were deleted with the intent to prevent their use in litigation. You may infer that the deleted Chat messages contained evidence that would have been unfavorable to Google in this case.
More notably: he intends to let jurors decide where they believe Google has monopoly power, if any. There’s a big white write-in box waiting for them.
He will also personally decide if Epic’s contract with Google was legal — if so, Epic will pay $398,931.23 for sneaking its own payment system into Fortnite regardless of the jury’s verdict.
It’s not technically off for everyone: the judge ordered Epic and Google to discuss a settlement this week while court is out of session. But the judge, jury, and journalists won’t be back until Monday, December 11th — that’s when we’re coming back for closing arguments (unless, of course, they settle).
Meanwhile, I’m working on an epic recap of everything we’ve learned. Stay tuned for that!
Oh, in case you missed it on Friday:
I thought we were done — but we came back to decide a few last things.
First, Google tried to argue Epic didn’t have enough evidence for a jury to win. Judge Donato dismissed that, saying he saw “more than enough evidence for the jury to find for plaintiff on each of their claims.”
Second, Judge Donato says the whole jury verdict will follow the rule of reason standard — no per se, not even for the Activision Blizzard Project Hug deal.
Third and perhaps most intriguingly, Judge Donato says he has has been “forced” to investigate Google, on his own, outside of this trial, for conducting “a frontal assault on the fair administration of justice” by intentionally deciding not to preserve chats. But he also says he will let the jury decide to infer whether Google destroyed evidence in this case — he will not issue a mandatory inference instruction in this trial, he says.
He has decided “the best course of action is for the jury itself to decide whether it will make an inference. I am not going to constrain the jury’s discretion by making that inference for them,” he says.
We’re still hearing more argument over jury instructions — I’ll update this post if there’s more that feels notable.
After the ends of Epic v. Google day 13 and day 14, where it became painfully obvious I am not a legal expert, I figured I should probably talk to one!
My biggest question was how the heck we’re going to get from a bunch of competing theories about what market definition should be to the actual questions in front of the jury. Does the judge pick market definition, like one did in Epic v. Apple? Do we have to go with the ones Epic named? Does the jury get to make it up?
Here’s Dan McCuaig, a partner at Cohen Milstein, who spent over a decade in the DOJ’s antitrust division. Not only did he answer my question, he also gave us an elegant summary of the how the process works.
Market definition is a question of fact rather than law. So, in a jury trial, the jury decides what the relevant market is. (The judge instructs the jury how to make that determination.) The jury then determines whether the challenged restraint/activity generated anticompetitive harm in that market. (If not, the defendant wins.) If so, the jury determines whether that same restraint/activity also generated procompetitive benefits in that same relevant market. (If not, the plaintiff wins.) If so, the jury then determines whether there was some less restrictive alternative that could have achieved the same (or virtually the same) procompetitive benefits with no (or substantially less) anticompetitive harm, and, ultimately, the jury balances the anticompetitive effects against the procompetitive benefits to determine, on balance, whether the challenged restraint/activity harmed or benefited the competitive process.
The jury need not find the same relevant market as the plaintiff has proposed in order for the plaintiff to win but, as a practical matter, the jury will always or almost always come out for the defendant if it rejects the plaintiff’s proposed relevant market.
He adds:
Epic v. Apple was a bench trial, so the judge served as finder of fact — and thus made the call on relevant market.
If you take a look at the near-final jury instructions (pdf) for this case, you’ll see the flow sounds like what McCuaig is describing. You’ll also see that a jury seems inclined to consider Epic’s original proposed markets: “Android app distribution” and “in-app billing services on Android devices.”
Bernheim’s penultimate word was to point out there’s a well-known concept that explains that competition naturally happens, even in monopolies:
The cellophane fallacy says that even a monopolist will raise its price to the point people will switch to something else, and then business people say we’re competing, but you’re competing at a very high price, way above a competitive level and the antitrust laws are supposed to stop that.
Epic lead attorney Gary Bornstein announced that Epic rests its case. The jury has been dismissed for a week. We’ll be back on December 11th with closing arguments and jury instructions.
I’m working on one more post for you before I leave for the day, though — refresh our StoryStream in a couple minutes for that.
Epic v. Google won’t be over for a bit yet, as we’ll come back December 11th for closing arguments and jury instructions before the verdict. But the evidence is all in. Both Epic and Google have rested their cases. See you the week after next!
Epic has made some hay out of the idea that Google took 18 months to match Apple’s subscription price cut, but Google’s lawyer just called out Bernheim for that — because while the Epic Games Store launched with a 12 percent service fee in December 2018, Microsoft didn’t match that with its PC games store until mid 2021.
(Epic has since come back to point out that the Epic Games Store launched with no traction, and would have taken a while to gain some — and that Microsoft did move from 70/30 to 85/15 in 2019. So maybe it influenced Microsoft right away?)
Google hasn’t gotten a lot of points on Bernheim IMO, but it did just seem to nail him for comparing what he calculated as Google Play’s average service fee (26 percent) to ranges of fees (such as 13 percent to 23 percent for the Galaxy Store) in his slide.
Google suggested he should have pointed out that Google’s range was 4 percent to 30 percent, which I have to admit seems right! Bernheim wore it well, saying the comparison was appropriate because Play’s average fee was higher than the top of the other ranges, but he seemed to know he got got on that one.