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“Remarkably,” this rapid growth “has not significantly cannibalized revenues from the PC or console gaming markets,” which suggests that consumers are not necessarily substituting among them. While PC and console gaming has grown more slowly, mobile gaming has experienced double-digit growth driven by “the free-to-play model” with in-app purchases.
One industry report describes mobile gaming as a “$100 billion industry by itself” that accounts for 59% of global gaming revenue. Next Judge Gonzalez Rogers ruled that mobile gaming transactions were a distinct market from digital gaming transactions generally:Īs an initial matter, Apple’s own documents recognize mobile gaming as a submarket.
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Indeed, the Court concluded that there were nine indicia indicating a submarket for gaming apps as opposed to non-gaming apps: (i) the App Store’s business model is fundamentally built upon lucrative gaming transactions (ii) gaming apps constitute a significant majority of the App Store’s revenues (iii) both the gaming, mobile, and software industry as well as the general public recognize a distinction between gaming apps and non-gaming apps (iv) gaming apps and their transactions exhibit peculiar characteristics and users (v) game app developers often employ specialized technology inherent and unique to that industry in the development of their product (vi) game apps further have distinct producers - game developers - that generally specialize in the production of only gaming apps (vii) game apps are subject to distinct pricing structures as compared to other categories of apps (viii) games and gaming transactions are sold by specialized vendors and (ix) game apps are subject to unique and emerging competitive pressures, that differs in both kind and degree from the competition in the market for non-gaming apps. Having considered and reviewed the evidence, the Court concludes based on its earlier findings of facts that the appropriate submarket to consider is digital game transactions as compared to general non-gaming apps. In disagreeing with Apple, Judge Gonzalez Rogers first ruled that digital games are a distinct market from general non-gaming apps the list of reasons are worth noting: 1 In fact, customers are not only aware of Apple’s walled garden policies, but it is in fact a selling point for the iPhone, which means customers know what they are getting into when they choose the iPhone over Android. Epic’s argument was, as expected, dismissed out of hand Supreme Court precedent is extremely skeptical that there are single brand markets, and the primary exception ( Eastman Kodak) is only applicable if customers are unaware of aftermarket limitations at the time of purchase. Judge Gonzalez Rogers disagreed with both, defining the market as ‘mobile game transactions’.
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Apple, on the other hand, argued that all of digital gaming was a market, including not just Android but also consoles and PCs.
Epic argued there is a smartphone market consisting of iOS and Android, and then on iOS there is a distinct “iOS App Distribution” market, and downstream from that a “iOS In-App Payment Solutions” market. The most important part of any antitrust case is market definition. What was surprising, though - and, frankly, a much more interesting question for the Court of Appeals - is that Judge Gonzalez Rogers also issued an injunction banning Apple’s anti-steering provision while I do think Apple’s anti-steering provision is anti-competitive, this injunction is an odd outcome of this specific case, and a source of much confusion about what this decision was actually about. That is indeed what happened: Apple won, and it wasn’t particularly close Epic has already filed an appeal, but I doubt it will succeed.
Apple is both straight-forward and predictable I wrote that the iPhone company would likely win when the lawsuit was filed, and argued that the law was firmly on Apple’s side in App Store Arguments.
The vast majority of Judge Yvonne Gonzalez Rogers decision in Epic v.