Sean Hollister

He hasn’t quite admitted it yet, but it definitely looks like he didn’t based on his replies and dodges so far.

(After several “real-world” probes from Google, Judge Donato got a laugh across the courtroom by shutting that specific phrase down. “We’re only talking about the real world here,” he said. Reader, I LOL’d.)

Google’s attorney is beginning with apps:

“It’s true isn’t it that the quality and variety of apps is an important factor for the device people buy, isn’t it?”

Bornheim won’t go quite that far, but he seems to be admitting that some apps do launch on the iPhone first.

78 cents per app download in 2021, he says — compared to 61 cents in 2020, 46 cents in 2019, 35 cents in 2018, 26 cents in 2017, 19 cents in 2016, and 15 cents in 2015.

Nor did they just start playing on other platforms like PlayStation, he says. “There’s no indication of substitution of usage to other platforms.” He’s been arguing that the lack of substitutes shows where a company has monopoly power.

(When Google and Apple booted the game off their store, it did keep working, but those players got left behind. I would also point out that Fortnite on mobile didn’t have much retention to begin with, though.)

We’re now looking at a slide dramatically presenting a clip art pair of imbalanced scales, with a “small increase in price of Android app distribution” getting significantly tipped by the “absence of low-end iPhones,” “infrequency of phone purchases,” “learning costs” and other conclusions about the costs of switching to an iPhone.

Now, we’ve moved onto smartphone pricing: he’s suggesting that Apple and Android have targeted different markets with their phones — and that they’ve continued to diverge, with the price of the average Android phone generally getting lower while the average iPhone price gets higher.

Bernheim says market definition is about whether good substitutes exist, ones that can keep a monopolist from charging whatever it wants for a product. Picture a Samsung television: “You could have bought an LG television, you could have bought a Panasonic, those would be good substitutes.”

Are movie theaters a good substitute, though, if your goal is to watch movies? “We have to ask ourselves, is that a close enough substitute that manufacturers are providing enough discipline for the product manufacturers? And in that example it’s a little far fetched.”

He claims that neither consumers nor developers have good substitutes for Google Play when it comes to getting apps. App distribution on iPhones, non-smartphones, or web apps don’t compete, he says.

“The economic principles that speak to this issue concern what happens when you have corporations that do many things and have may points of contact with each other — they have an interdependent relationship,” says Bernheim, pointing out how Samsung has manufactured the Pixel’s processor among other things.

“What we know is in those types of settings, companies tend to mutually forebear to some degree... even if they don’t agree not to compete, they find it in their best interests,” he says.

I expect Google will combat that during cross-examination.

Then, he shows us another slide titled “Samsung Galaxy Store Only Has Five of the Top 20 Apps Worldwide (2020),” which is exactly what it sounds like.

The missing top 20 apps, as of 2020: WhatsApp, Zoom, Facebook, Snapchat, Messenger, Facebook Lite, Telegram, Garena Free Fire, Subway Surfers, Among Us, SnackVideo, Hunter Assassin, Ludo King, Netflix, and My Talking Tom Friends.

(Samsung did have TikTok, Instagram, Likee, Gardenscapes, and Shareit, according to the slide.)

He says it gets worse: “If Google ends up reducing its commission rate in response to your competitive entry, you end up reducing your commission on everything else you sell.”

The “20 cents” part isn’t theoretical. Bernheim says he found Xiaomi, Oppo, Vivo, and OnePlus each get 20 percent from Google. HMD (Nokia) and TCL signed 10 percent revshare deals.

We previously saw Google had planned to offer 16 percent to key Chinese OEMs, but I guess it grew to 20 percent.