Sean Hollister

On the first point, foreclosure: “When Google doesn’t have to compete with other payment solution providers, they lack the incentive to offer the innovations that are needed,” says Tadelis.

On the second, high prices: “If the tie were severed, could they charge 15–30 percent for a payment solution? And the answer to that is no,” he says.

“Anyone who is profit maximizing would not choose to pay a 30 percent fee when they could pay a 9 or 10 or 6 percent fee,” he adds.

We’re looking at a slide showing Google’s average in-app purchase fee (29.4 percent as calculated by Tadelis) versus the 5.5 to 10 percent charged by PayPal, Stripe, Square, and Paddle.

He explains coercive ties simply: if you want product A that I’m selling, you have to buy product B as well. But for it to be impactful, it also requires there to be no viable alternatives, he says. If Nike makes you buy a pair of socks with its sneakers, and you don’t like those socks, you could simply buy sneakers from Adidas instead.

We’re looking at an amusingly simple visual aid: a thick clip art of a physical rope with a prominent knot between Google Play and Google Play Billing.

So, Epic has two economists, including Doug Bernheim, whom we heard from yesterday; expect Google to have two as well.

We’re covering the trial live here:

He’s Epic’s witness again now, though, and Epic’s lead attorney prompted Bernheim to say that adding those X’s was wrong since Samsung’s Project Hug deal constrains it in other ways — and we’ve seen the Samsung Galaxy Store accounts for so little share of Android downloads (around 1 percent?) that preloading it hasn’t made a huge difference for competition.

I’m SO curious whether the jury thinks Samsung’s Galaxy Store is a good counterexample to some of Epic’s arguments. It’s been a facet of Google’s defense from the beginning.

Bernheim said yes — but suggested that in a properly competitive market, Google’s profits wouldn’t simply grow unchecked. “In a competitive market, that would be competed away.”

If these really popular apps wanted to be in the Samsung app store, they could do that, right?” asked Google.

Bernheim says yes, they could.

Google also clarified that developers don’t literally pay 79 cents for every app download, in case that confused anyone. “No, that takes the form of the fees,” says Bernheim.

In fact, after I’d already written half this post, Bernheim called out Google’s attorney, live: “Wait, you just changed what you were asking about. You were asking about commission rates, and now we’re talking about price.”

Google’s been trying to argue that because billions of people have smartphones, even a small percentage switching every, say, 2.7 years is a lot of switching (and perhaps evidence of substitution?)

“Is it fair to say you’ve been paid north of a million dollars for this case?”

He says his compensation is “much more complicated” because the money doesn’t flow to him directly.

“It’s more complicated because you’re a partner at a consulting firm and you get paid a share of the profits,” says Google’s attorney. Bernheim says yes.

We’ve seen this gambit before, but it cuts both ways. (Not relevant to the case but: I wonder what the lawyers in this courtroom are paid!)