Sean Hollister

Google has said fewer than 25 percent of phones go that way, and that OnePlus strategically decided not to. While those things might be true, it’s interesting to see how many new phones from the big Chinese manufacturers are coming up Google.

(Realme and OnePlus are shown as having roughly 40 percent of new phones activated on the premier tier; of 830 unnamed OEMs, only around 10 percent of new phones are activated on RSA 3.0. The chart excluded Samsung entirely.)

We’re headed to lunch: see you back here in about 30.

Google Play, 100 percent (2.88 billion phones)

Galaxy Store, 39.5 percent

Xiaomi, 10.6 percent

Huawei App Gallery, 6.3 percent (Huawei hit US government blocks)

Vivo App Store, 4.9 percent

Oppo App Market, 2.1 percent

LG SmartWorld, 1.8 percent (LG quit phones in 2021)

ONE Store, 1.6 percent

SHAREit, 0.6 percent

Epic Launcher, 0.6 percent

Amazon Appstore, 0.1 percent

APKPure, 0.002 percent

F-Droid, 0.002 percent

Tencent, 0.0005 percent (0.01 million phones)

APKMirror, 0 percent

“What is correct is when Google enters these licenses, it doesn’t receive a cash payment from the OEMs... the OEMs are receiving something, and they’re doing something for Google,” says Bernheim.

“They agree to put the suite of GMS apps on their smartphones, and that generates billions of dollars of revenue for Google.”

“Is there anything wrong with saying... that’s one big market that competes with Apple?” asks Epic’s lead attorney.

“There would be quite a bit wrong with that,” says Bernheim.

“We’re looking to see whether there are pockets of transactions where sellers can take advantage of buyers,” he says, saying it’s part of a framework antitrust economists use to do competition analysis — and there’s a general consensus you do it that way.

I expect Google’s economist will say there’s no such consensus.

“I’ve concluded that Google has monopoly power in the market of app distribution on Android smartphones,” says Epic’s economics expert Doug Bernheim, adding that Google “engages in anticompetitive conduct” to maintain its monopoly there.

He says he was assigned to:

Now, he’s explaining what concepts as simple as “competition” and “monopoly power” mean. I’ll let you know when we move further — he says he’ll get specific.

But Google gets a chance to ask one last series of questions before Skinner leaves the stand, one that takes us back to the A1 Camera Company. Yes, Google Play is the largest source of revenue, but Android is the largest source of costs, Skinner testifies, and he believes it makes sense to keep those on separate P&Ls.

Skinner is done, and we’re being introduced to Stanford economics professor and former economics chair Doug Bernheim, Epic’s economics expert, who says he has antitrust experience as well.

“Yes, I think some of them should be,” Skinner finally replies. But then Epic’s attorney shows he replied differently in an old deposition: “I’m not necessarily opining that these Android costs should be allocated.”

Epic gets him to admit that he has not determined which costs should be allocated. “Well, I think I’ve made clear that at least the portion of the costs of these for the ecosystem,” he begins, before getting cut off.

Both point out that the other’s expert basically has a business giving testimony in court. “About 15-20 times, yes?” asks Epic of Google’s witness. Skinner says that sounds about right.

And, like Google, Epic is attacking what the expert was hired to calculate and what they did not. This time, Epic is pointing out that Google’s expert didn’t bother trying to actually calculate Google Play’s app store profit margins — only that of Google’s larger platforms and ecosystems group, which includes Android.

“The other reason is these costs benefit the whole ecosystem... we call this a joint cost instead of a shared cost because it benefits all the different products simultaneously,” says Skinner.

He says it’s not unusual for companies to allocate their costs this way. He believes the operating margin of Google’s platforms and ecosystems group in 2020 would be 19 percent if you account for this — not the 66 percent that Epic’s expert calculated for Google Play specifically.