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F.T.C. Refiles Fb Antitrust Go well with

F.T.C. Refiles Facebook Antitrust Suit

WASHINGTON – The Federal Trade Commission re-targeted Facebook Thursday, increasing its allegations that the company was a monopoly illegally suppressing competition in an attempt to overcome the skepticism of a federal judge who dismissed the agency’s original case two months ago .

The lawsuit filed on Thursday contains the same overall arguments as the original, namely that Facebook’s Instagram and WhatsApp acquisitions were made to create a “ditch” for its monopoly on social networks, and argues that the social network should be disbanded. But the updated lawsuit is nearly twice as long and has more facts and analysis that the agency says it better supports the government’s allegations.

“Facebook lacked the business acumen and technical talent to make the transition to cell phones,” Holly Vedova, the acting director of the agency’s competition bureau, said in a statement. “After failing to compete with new innovators, Facebook illegally bought them or buried them when their popularity became an existential threat.”

Facebook replied, “There was no valid claim that Facebook was a monopoly – and that has not changed. Our Instagram and WhatsApp acquisitions were reviewed and approved many years ago, and our platform policies were lawful. “

The agency had to re-file the case after the judge in charge said in June that the government had not provided enough evidence that Facebook was a monopoly on social networks. The judge’s decision, and a similar one he made in one of more than 40 states brought against the company, dealt a staggering blow to regulatory efforts to contain big tech.

His decision represented the first major test for Lina Khan, the FTC chairwoman, who had only been in office for a few days at the time. Ms. Khan represents a wave of new thinking in the industry among administrators and many lawmakers, arguing that the government needs to take far more aggressive measures to curb the power of tech giants like Facebook, Google, Amazon and Apple. President Biden has appointed several regulators with similar goals, and lawmakers have proposed updates to antitrust laws to combat the power of tech companies.

Criticism of the first version of the Facebook case by Judge James E. Boasberg of the District Court of the District of Columbia highlighted the major challenges that regulators are facing. Although companies dominate the markets in which they operate – social media, in the case of Facebook – the courts often examine whether prices are rising as a sign of monopoly. The most popular services from Facebook are free.

“Nobody who hears the title of the film ‘The Social Network’ from 2010 wonders which company it is about,” wrote Richter Boasberg. “But whatever it means to the public, ‘monopoly power’ is a federal art term with a precise economic meaning.” He directed the FTC to back up claims that Facebook controlled 60 percent of the market for “personal social networks” and that Competition blocked.

Ms. Khan then faced a choice of how to deal with Judge Boasberg’s decision. One way was to drop the case entirely, while another was to expand it with even broader allegations. Instead, she went more of a middle ground and filed the lawsuit with more detail and a fuller account of the company, and what the agency says is a pattern of anti-competitive behavior since Mark Zuckerberg co-founded it at Harvard in 2004.

The revised lawsuit was approved 3: 2 by the commission, with the commission’s three Democrats voting in favor and the two Republican members opposing.

In the new complaint, the FTC provides more details to support government claims that Facebook has a monopoly on social networks. But in the public version of the lawsuit, many of the statistics have been blacked out because the numbers are proprietary.

The agency said that Facebook – the company’s largest service, known within the company as Facebook Blue – and Instagram are the leading social networks in the US, well ahead of its closest competitor, Snapchat.

The agency refuted Facebook’s claims that it had many competitors in social networking, instant messaging, and entertainment. The agency argued that Facebook’s products are intended for “personal social networks”, which distinguishes them from specialized social networks such as the professional network LinkedIn or the neighborhood site NextDoor. The FTC added that Facebook’s products are also different from messaging services like Signal and iMessage in that users don’t typically use these services to send notes to large groups, nor do they use these services to find contacts.

And the agency said that Facebook was different from Twitter, YouTube, and TikTok in that content on those sites was usually created for the public, rather than targeted at specific people on a social network.

“Today and since 2011, Facebook has a dominant share of the relevant market for US personal social networking services, measured using several metrics: time spent, daily active users and monthly active users,” the agency said in its complaint.

The core argument of the FTC is that Facebook tried to maintain a monopoly over social networks through the acquisitions of Instagram in 2012 and WhatsApp in 2014. Facebook in the new mobile environment, “the agency said in its complaint.

The lawsuit also states that as of 2010, the company stifled competitors like Circle, a social network, and Vine, a short video platform, by pushing new boundaries for external developers whose products are connected to Facebook to work with other social ones Networks added.

“Facebook does not beat competitors by improving its own product, but by imposing anti-competitive restrictions on developers,” the lawsuit said.

Facebook has criticized the arguments as a revisionist story, pointing out that the FTC reviewed the mergers with Instagram and WhatsApp and did not block deals.

“The FTC’s allegations are an attempt to rewrite the antitrust laws and reverse the set expectations for the merger review by telling the business community that no sale is ever final,” Facebook said Thursday.

The company has filed a motion to Ms. Khan to withdraw from the agency’s case, saying her work on a House investigation into platform monopolies shows a bias against the company. The FTC said Thursday it had dismissed that petition, saying that Facebook would receive “adequate constitutional protection from due process” as the case would be heard by a federal judge.

Bill Kovacic, a former FTC chairman, said the agency had done enough to “fight another day”.

“The judge said ‘show your work’ and it appears you have done enough to accommodate that request,” he said.

But he warned that the case would face a long and steep challenge. The FTC has won fewer than 20 of its monopoly cases in the appeals court since it was founded more than 100 years ago, he said.

“Facebook will fight this bitterly,” added Kovacic.

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Politics

Biden’s Antitrust Group Indicators a Massive Swing at Company Titans

Biden’s Antitrust Team Signals a Big Swing at Corporate Titans

WASHINGTON – President Biden has assembled the most aggressive cartel team in decades, equipping his administration with three legal crusaders preparing to take on corporate consolidation and market power with efforts that could include blocking mergers and liquidating large corporations.

Mr Biden’s decision last week to appoint Jonathan Kanter to head the Justice Department’s antitrust division is the latest sign of his willingness to join forces with American businesses to foster more competition in the tech industry and across the economy. Mr. Kanter has spent years as a lawyer fighting giants like Facebook and Google on behalf of rival companies.

If the Senate confirms this, he will join Lina Khan, who reorganized the academic debate on antitrust law and now heads the Federal Trade Commission, and Tim Wu, a longtime advocate of the breakup of Facebook and other big companies, who is now the Special assistant from. is the President for Technology and Competition Policy.

The appointments show both renewed antitrust activism by the Democratic Party and the Biden government’s growing concern that the concentration of power in technology, as well as other industries such as pharmaceuticals, agriculture, healthcare, and finance, has harmed consumers and workers and slowed economic growth.

They also underscore that Mr Biden is ready to use the power of his office and not wait for tougher action from Congress, an approach that is both quicker and potentially riskier. That month it issued an order of 72 initiatives designed to increase competition in a variety of industries, strengthen control over mergers, and curb the widespread practice of forcing workers to sign non-compete agreements.

External groups and government ideological allies warn that if Mr Biden really hopes to follow in the footsteps of his antitrust idols, Presidents Theodore Roosevelt and Franklin D. Roosevelt, he must push for sweeping laws to give federal regulators new powers grant, especially in the technology area. The core federal antitrust laws, written more than a century ago, did not provide for the kind of trade that exists today, where large corporations may offer their customers low prices, but at the expense of competition.

The government has tacitly backed the legislation working its way through the House of Representatives, but it has not yet attempted an antitrust push by Congress in the way that Mr Biden did on infrastructure, childcare and other components of his $ 4 trillion economic agenda to advance.

This could prove problematic if judges continue to oppose action by the Department of Justice, the FTC, or other agencies.

Last month, a federal judge threw an FTC lawsuit against Facebook saying the agency had failed to make a convincing argument that the company was a monopoly and instructed it to better justify its claims. Ms. Khan faces her first major review when she re-files that lawsuit, and on Friday the agency asked the court for more time.

Mr Biden’s antitrust experts argue that Facebook, Google, and Amazon have monopoly power and have used their dominant positions in social media, search, and online retail to crush competitors, leaving consumers with fewer options, even if they haven’t leads to higher costs.

Businesses and some economists disagree. Facebook cites TikTok, Snap, and Twitter as examples of competitors, and Amazon argues that it makes only 5 percent of all retail sales in the United States, despite an eMarketer study showing 40 percent of all online retail sales are made on its platform.

The President and his staff have seen his adoption of a “trustbuster” mentality as a critical step in realigning the economy to not only lower prices, but also to encourage more competition and create high-paying jobs.

“I always thought the free market system wasn’t just competition between companies, but guess what: companies should have to compete for workers,” Biden told a CNN audience in Ohio on Wednesday, promoting his executive order. “Guess what – maybe they’ll pay more money.”

White House officials argue that putting stubborn regulators in positions of power can enable them to thrive in antitrust efforts in a way that President Donald J. Trump did, who also made an executive order on competition and talked about technology – and not to dissolve hospital mergers.

“We’re confident,” said Diana Moss, president of the American Antitrust Institute and advocate of stronger competition enforcement. “But when the rubber hits the streets, they have to juggle an aggressive agenda with the reality of the courts, Congress and outside pressure.”

Updated

July 23, 2021 at 5:42 p.m. ET

Some economists are warning that the staff Mr Biden appointed could go beyond efforts to break the focus that is really stifling competition and hurting consumers and getting into industries like restaurants or grocery stores. The entry of national players into local markets has in many cases opened up more opportunities for customers and created more jobs.

“I’m most concerned about rhetoric,” said Chang-Tai Hsieh, an economist at the University of Chicago whose research has shown that some corporate concentration in recent years has led to innovation that drives the economy. “You look at what you see in tech – and tech is different. And they extrapolate from the tech industry to all other industries. “

Corporate America is already fighting Mr. Biden’s efforts. Google, Facebook and Amazon have filled their legal teams with antitrust experts and have hired seasoned government antitrust officials in recent years. Facebook and Amazon have filed for Ms. Khan’s dismissal on antitrust matters related to their businesses. They say Ms. Khan, who worked on a House of Representatives antitrust investigation into digital platforms, comes with prejudice about her companies. Critics of Mr. Kanter, a private antitrust attorney, cite his previous representation for Microsoft and News Corp as a conflict of interest while the Justice Department leads its legal battle against Google.

Mr Biden’s moves reflect the growing influence of a movement to curb corporate power that has spread from progressive scholars and liberal leaders like Massachusetts Senator Elizabeth Warren to some of the most conservative Republicans in Congress.

Thomas Philippon, an economist at New York University, concluded in 2019 that increasing market concentration had damaged the US economy and cost the typical US $ 5,000 a year. Administrative officials repeatedly cite these statistics in support of Mr Biden’s recent order.

Tackling market concentration and promoting competition “can change the lives of millions of people in this country tremendously,” Bharat Ramamurti, associate director of Mr. Biden’s National Economic Council and former employee of Ms. Warren, said in an interview.

Mr. Ramamurti cited potential benefits not only from company dissolution, but also from giving consumers more and cheaper checking account options, selling hearing aids without a prescription, and limiting the company’s restrictions on whether employees can work for a competitor.

The approach is in stark contrast to the views of regulators during the Obama administration when Mr. Biden was vice president.

The number of hospitals that have merged has quadrupled during President Barack Obama’s first term, leaving millions of patients with fewer choices and higher health care prices.

In 2011, regulators cleared Comcast’s merger with NBCUniversal – the merger of a powerful cable and internet company with a media giant – on terms that the company’s own executive vice president, David Cohen, dismissed as not “particularly restrictive.”

Only one in three Democrats at the Federal Communications Commission turned down the deal, and Christine Varney, director of the Justice Department’s antitrust division, said the deal would “bring new and innovative products to market and give consumers more program choice.”

In 2016, Tom Vilsack, Mr Obama’s Secretary of Agriculture who has taken that role back for Mr Biden, downplayed the harms of agricultural mergers.

“I don’t think that just because some of the key players may merge or are considering some other type of arrangement, I don’t think farmers absolutely guarantee that farmers will have less choice in the long run,” Vilsack said in an interview with USA Today.

Mr Biden has directed federal regulators to consider a tougher line against corporate consolidation in hospitals, health insurance, meat processing and technology, which could include reviewing previous mergers that have been approved.

And its antitrust authorities are trying to reverse mergers that were approved during the Obama years. The Federal Trade Commission’s recent lawsuit to liquidate Facebook focuses on the company’s 2012 purchases from Instagram and WhatsApp in 2014. The agency did not block the mergers because it did not see enough evidence of harm to consumers and competition.

These decisions have come back to keep the FTC prosecuted. The federal judge, who dropped his Facebook complaint in June, questioned the U-turn and why the commission had waited so long to try to resolve these deals.

The courts have become more and more conservative in cartel cases and are more firmly convinced that higher prices are the strongest sign of competition violations.

Administration officials acknowledge this challenge and say they are reviewing the antitrust views of potential justice candidates in hopes of moving the courts to a more benevolent view of the government’s efforts to block mergers and dissolve monopolies.

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World News

Antitrust regulator orders Tencent Music to surrender music label rights

Antitrust regulator orders Tencent Music to give up music label rights

Photo illustration of the logo of Tencent Music Entertainment (TME), a Chinese company that develops music streaming services.

Pavlo Gonchar | SOPA pictures | LightRocket via Getty Images

The Chinese antitrust authorities have ordered Tencent to give up its exclusive music licensing rights with international record labels and fined the company as Beijing continues to crack down on its internet giants at home.

The State Administration for Market Regulation (SAMR) on Saturday fined the company 500,000 yuan ($ 77,141) for violating the regulations when it acquired China Music in 2016.

In response, Tencent said it would abide by the regulator’s decision and “meet all regulatory requirements, meet our social responsibilities and contribute to healthy competition in the market.”

It comes as Beijing continues to crack down on its domestic tech companies that have grown into some of the most valuable companies in the world. The crackdown in recent months has ranged from the Ant Group’s $ 34.5 billion initial public offering suspension last year to Alibaba’s $ 2.8 billion antitrust fine.

In April, the SAMR called 34 companies, including Tencent and ByteDance, and ordered them to conduct self-inspections to comply with antimonopoly rules.

This is the latest news. Please check again for updates.

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Biden to Identify a Critic of Huge Tech because the Prime Antitrust Cop

Biden to Name a Critic of Big Tech as the Top Antitrust Cop

The White House said on Tuesday that it would nominate Jonathan Kanter to be the top antitrust official at the Justice Department, a move that would add another longtime critic of Big Tech and corporate concentration to a powerful regulatory position.

President Biden’s plan to appoint Mr. Kanter, an antitrust lawyer who has made a career out of representing rivals of American tech giants like Google and Facebook, signals how strongly the administration is siding with the growing field of lawmakers, researchers and regulators who say Silicon Valley has obtained outsize power over the way Americans speak with one another, buy products online and consume news.

Mr. Biden has named other critics of Big Tech to prominent roles, such as Lina Khan, a critic of Amazon, to lead the Federal Trade Commission. Tim Wu, another legal scholar who says regulators need to crack down on the tech giants, serves in an economic policy role at the White House. And this month, Mr. Biden signed a sweeping executive order aimed at increasing competition across the economy and limiting corporate dominance.

Mr. Kanter, 47, is the founder of Kanter Law Group, which bills itself online as an “antitrust advocacy boutique.” He previously worked at the law firm Paul, Weiss, Rifkind, Wharton & Garrison. His services have attracted some of the most prominent critics of Big Tech in corporate America, including Rupert Murdoch’s News Corp and Microsoft as well as upstarts like Spotify and Yelp.

If he is confirmed by the Senate, Mr. Kanter will lead a division of the Justice Department that last year filed a lawsuit arguing Google had illegally protected a monopoly over online search services. The antitrust division of the agency has also been asking questions about Apple’s business practices.

The White House took more than six months from Mr. Biden’s swearing-in to land on Mr. Kanter. The administration has had to juggle progressive and moderate factions within its own party, as well as the likelihood of Republican support in a divided Senate.

The decision won immediate approval from policymakers and advocacy groups helping to lead the charge for more stringent antitrust enforcement.

Senator Amy Klobuchar, the Minnesota Democrat who leads the antitrust subcommittee of the Judiciary Committee, called Mr. Kanter “an excellent choice,” citing his “deep legal experience and history of advocating for aggressive action.”

Sarah Miller, the executive director of the American Economic Liberties Project, a progressive advocacy group, said in a statement that “President Biden has made an excellent choice to lead the D.O.J.’s antitrust division,” noting that Mr. Kanter had “devoted his career to reinvigorating antitrust enforcement.”

Makan Delrahim, a lawyer who led the Justice Department’s antitrust efforts under President Donald J. Trump, said in a text message that Mr. Kanter would be a “great leader” of the division and called him a “serious lawyer” with private sector and government experience.

Daily Business Briefing

Updated 

July 20, 2021, 6:55 p.m. ET

The announcement may be less warmly embraced by deal-makers on Wall Street who have helped drive mergers and acquisitions volumes to record levels, propelled in part by an exuberant stock market.

Scrutiny in Washington on acquisitions has expanded beyond headline-grabbing Big Tech deals to industries like consumer goods, agriculture, insurance and health care.

The Justice Department has sued to block the proposed merger of Aon and Willis Towers Watson, its first major antitrust action since Mr. Biden took office. The F.T.C. announced in March that it was forming a group to “update” its approach to evaluating the impact of pharmaceutical deals, an industry that generally falls under its purview. That followed a report led by Representative Katie Porter, a Democrat from California, scrutinizing deals in the industry.

In recent years, Mr. Kanter built an unusual practice out of criticizing the tech giants from inside Washington’s corporate law firms. The tech giants have become lucrative clients for major law firms, often making it difficult for those firms to work for their opponents.

But last year, he left Paul, Weiss — an elite corporate litigation firm — because his portfolio representing critics of the tech giants conflicted with other work the firm was doing.

“Jonathan made this decision due to a complicated legal conflict that would have required him to discontinue important and longstanding client representations and relationships,” the firm said at the time.

Mr. Kanter’s critics are likely to question whether his previous work is a conflict of interest that should keep him out of investigations into the tech giants. Both Facebook and Amazon have asked that Ms. Khan recuse herself from matters involving the companies at the F.T.C., even though her background is as a legal scholar and not a paid representative for their rivals.

Asked whether Mr. Kanter would recuse himself from cases involving Google and Apple, a White House official simply said the administration was confident that it could move forward with his nomination given his expertise and record.

Even if Mr. Kanter has the votes to be confirmed it is likely to be months before he takes over at the Justice Department. Congress takes a long break during August — which could push his confirmation past Labor Day.

Cecilia Kang contributed reporting.

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World News

Home committee passes broad tech antitrust reforms

House committee passes broad tech antitrust reforms

A House Committee passed a series of comprehensive cartel reforms on Thursday after around 23 hours of debate.

While the advancement of the six technology-oriented bills that will be debated by the House Judiciary Committee starting Wednesday is a victory for the bipartisan members who brought them in, the impact opened rifts within the parties that could ultimately affect the chances of the bills To become law.

Several lawmakers made it clear that they believed the rollout-to-markup process arrived prematurely in less than two weeks despite a lengthy investigation before the bills. Some said they were hoping for more changes before the legislation reaches parliament.

Nonetheless, the final stage of the debate offered some signs of optimism to those hoping to move the bills forward. Fresh from a break after the Fifth Act was passed after 5 a.m. on Thursday, lawmakers returned to the committee room at around 11:30 a.m. to discuss the Ending Platform Monopoles Act

The bill – sponsored by Antitrust Subcommittee Vice Chair Pramila Jayapal, D-Wash., And co-sponsored by Rep. Lance Gooden, R-Texas – would prevent dominant platforms from owning businesses that present conflicts of interest, such as through incentives preferring their own products to their service-dependent competitors.

The bill was one of the most aggressive in the package, including updates to merger filing fees for dominant platforms, a shift in the burden of proof for acquisitions, and a provision for attorneys general to have a say in the jurisdiction of their antitrust proceedings. It could essentially force the dissolution of companies like Amazon and Apple, both of which sell products or services on their own marketplaces that also serve third parties. Both stocks closed slightly lower for the day.

Despite the huge impact of the bill, it wasn’t the most controversial. The legislature has argued about the mandate for data portability under the Access Act for much longer than when it assessed potential security problems, for example.

Jayapal’s bill also sparked a lively debate. In the end, the vote was similar to the others (it was passed at 21:20, supported by Democrats and MPs Ken Buck, R-Colo. And Matt Gaetz, R-Fla., And against the Republicans supported by Rep. Greg. Stanton, D-Ariz., And the California Democrats Lou Correa, Zoe Lofgren and Eric Swalwell). Throughout the discussion, however, it was clear that many in the group broadly agreed with the principles of the bill, even though they felt it could use some fine-tuning.

“I’m telling you, I’m not 100% there to destroy big tech, but I’m close,” said Rep. Dan Bishop, RN.C. “And this is the calculation that, if done right, would be the vehicle to put that on the table.”

Although an amendment he proposed failed, Antitrust Subcommittee Chairman David Cicilline, DR.I. and Jayapal expressed a willingness to work with Bishop to possibly include a reference to his idea in the bill. Bishop was essentially trying to bring antitrust cases to court by removing a regulatory move. Cicilline had called it “the most interesting change in markup,” although he didn’t endorse it, and Justice Committee chairman Jim Jordan, R-Ohio called it “the change.”

In a post-markup interview Thursday, Buck, the senior member of the antitrust subcommittee that supported the legislation, told CNBC he expected more work to be done before the bills move forward.

“I don’t think the bills will be down for a couple of months because of the August break, so I think the opportunity to work together is certainly there,” he said.

It is clear that even after such a long debate, there is still a lot of work to be done on the drafters of the bill. After the service was adjourned, bipartisan members of the California delegation issued a joint statement in committee urging further revision of the bill despite its approval by the committee. They also said committee members did not have enough time to properly review the bills before serving.

“The legislative text as debated is far from ready for Floor,” wrote Correa, Swalwell, Lofgren and Reps. Darrell Issa, R-Calif., And Tom McClintock, R-Calif. “We urge sponsors of the bills to take the time necessary to commit to a comprehensive approach and to work with their bipartisan counterparts on this committee to address the concerns raised during the markup in order to further develop these bills.”

Responding to criticism from his colleagues who felt they did not have enough time to review the bills, Buck said that “it is a common objection” but that “the ideas in the bill have been summarized in reports written last October “.

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WATCH: How US Antitrust Law Works and What It Means for Big Tech

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Business

Apple’s Fortnite Antitrust Trial Ends With Pointed Questions

Apple's Fortnite Antitrust Trial Ends With Pointed Questions

Tim Cook took the position as CEO of Apple for the first time. The billionaire of one of the world’s most popular video games led a federal judge through what is known as the Metaverse. And lawyers in masks discussed whether an anthropomorphic banana without pants should be shown in a federal court.

For the past three weeks, Apple has defended itself in a federal courtroom in Oakland, California against allegations of abusing its power over the iPhone App Store in one of the largest antitrust proceedings in Silicon Valley history. Epic Games, the maker of the popular game Fortnite, sued Apple last year for allowing apps to avoid the 30 percent commission the iPhone maker takes on many app sales.

On Monday, the trial, which included esoteric definitions of markets as well as strange video game characters, ended with Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California urging companies to see what, if anything, should change in Apple’s business. The decision on the case as well as the future of the $ 100 billion market for iPhone apps is now in their hands. Judge Gonzalez Rogers said she hoped to reach a verdict by mid-August.

Yet even at a time of antitrust control over the world’s largest tech companies, the trial showed the difficulty of acquiring a corporate titan like Apple worth $ 2.1 trillion.

Epic spared little expense to sue Apple. The Cary, NC-based game maker sacrificed a valuable product when Apple ripped the Fortnite iPhone app from the App Store, which had sales of more than $ 1 billion. Epic also spent millions of dollars on lawyers, economists, and subject matter experts. Still, the trial started at a downside, as antitrust laws tended to favor defendants, according to legal experts prosecuting the case.

While Judge Gonzalez Rogers signaled openness to Epic’s arguments during the trial, a decision in favor of the video game maker could not lead to significant changes in the mobile app market. Any judgment is likely to be involved in appeal proceedings for years. At this point in time, rapid change in the technology industry could invalidate its impact.

“To start a credible antitrust campaign, you have to have a significant war chest,” said David Kesselman, a Los Angeles antitrust attorney who has prosecuted the case. “And the problem for a lot of smaller businesses and smaller businesses is that they don’t have the resources to fight that kind of battle.”

The case centered on how Apple exercises control over the iPhone App Store to calculate its commission on app sales. Businesses big and small have argued that the fee shows Apple is abusing its dominance, while Apple responded that the cut in sales is helping to fund efforts to keep iPhones safe. Regulators and lawmakers have looked into the issue and made it the center of antitrust complaints against the company.

Epic’s lawsuit was the biggest test of those claims yet – and the best shot for app developers looking to weaken Apple’s influence on the iPhone app market. Tim Sweeney, CEO of Epic and a longtime opponent of large technology companies, said he is fighting “for open platforms and policy changes that benefit all developers equally”.

Throughout the process, lawyers, investors, and journalists analyzed Judge Gonzalez Rogers’ comments and questions for clues as to their thinking. When Epic brought its witnesses to the booth, they appeared to agree with Apple’s arguments in some places. But the perspective of their questions changed when Apple presented its witnesses, including Mr. Cook, last week.

In a sharp back-and-forth with the Apple CEO on Friday, Judge Gonzalez Rogers told Mr. Cook that it was clear that his company had made changes to the App Store fees due to public pressure. She then asked him why Apple didn’t want to give iPhone users more choices about where to buy apps. In response, Mr. Cook effectively admitted that Apple wanted to maximize its profits.

On Monday, Judge Gonzalez Rogers’ comments indicated that she believed Apple deserved to benefit from its innovations. But she also questioned some possibilities.

“The 30 percent figure has been around since it was founded. And if there was real competition, that number would move. And it didn’t, ”she said of Apple’s commission for the sale of apps. She also said it was anti-competitive for Apple to prohibit companies from telling customers that they could buy items outside of iPhone apps.

At other times on Monday, she seemed reluctant to force Apple to change its business. “Courts don’t do business,” she said.

Judge Gonzalez Rogers also suggested that the outcome requested by Epic in the case would require a substantial change in Apple’s business, questioning whether there is a precedent for that. “Can you give me an example that survived the appeals test when the court so restricted or fundamentally changed the economic model of a monopoly company?” she asked Epic’s lawyers.

The judge has announced that she expects her decision to be appealed to the U.S. Court of Appeals for the Ninth Circuit. If so, a three-person jury in this court could review their decision. Apple or Epic could then try to appeal this ruling to the US Supreme Court.

If Judge Gonzalez Rogers stands up for Epic, Apple will most likely try to prevent her decision from taking effect until the appeals court weighs it up, and she would likely be open to that request, antitrust attorney Kesselman said. Courts are generally reluctant to force changes to companies that could then be overturned on appeal, so changes to the App Store could take years.

A win for Epic would still be a boost to the broader cartel war against Apple. The Justice Department is investigating Apple’s control of its app store, and some federal lawmakers have stated that app stores are monopoly and ripe for law enforcement. Apple is also facing two other federal lawsuits over its app fees – one from consumers and one from developers – both of which are seeking class action lawsuit status. Judge Gonzalez Rogers will also hear these cases.

Likewise, a win for Apple could undo these challenges. Regulators could be cautious about pursuing a case against Apple that has already been dismissed by a federal judge.

Judge Gonzalez Rogers can also make a decision that doesn’t make any company happy. While Epic wants to be able to host its own app store on iPhones, and Apple wants to continue to work as it has for years, they could order minor changes.

Former President Barack Obama appointed Judge Gonzalez Rogers, 56, to the federal court in 2011. Given her base in Oakland, her cases have often been tech-related, and she has overseen at least two cases in the past with Apple. In both cases, Apple won.

She closed the process on Monday with thanks to the lawyers and court officials who mainly used masks and face shields during the trial. Months ago, in the midst of the coronavirus pandemic, it was unclear whether the trial could be held in person, but Judge Gonzalez Rogers ruled that it was a sufficiently important case and ordered special rules to minimize health risks, including limiting it the number of people in court.

Epic chose to involve its managing director through an additional attorney, and Mr. Sweeney spent the trial in the courtroom, watching him from his attorneys’ table. Mr Sweeney, who is usually productive on Twitter, has not made any public comments in the past three weeks. On Monday, he broke his silence by thanking the Popeyes fried chicken restaurant next to the courthouse.

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Business

In Antitrust Trial, Tim Cook dinner Argues Apple Doesn’t Harm App Makers

In Antitrust Trial, Tim Cook Argues Apple Doesn’t Hurt App Makers

Tim Cook, who testified on Friday in a lawsuit that could undermine Apple’s efforts to stave off growing control of its power, defended his company on allegations that it harmed app makers looking to increase their profits.

Mr. Cook, who took the stand for the first time as CEO of Apple, answered friendly questions from an Apple attorney and faced targeted questions from both an opposing attorney and the federal judge who will rule the case.

The results of the study could maintain or improve Apple’s dominance in the $ 100 billion app market. Epic Games, creator of the popular game Fortnite, is suing Apple, claiming the iPhone maker created a monopoly on its App Store and is using that power to take an unfair cut from other companies that rely on the App Store to Reach customers.

An epic win would enliven a growing cartel war against Apple. Federal and state regulators are scrutinizing Apple’s control over the App Store, and the European Union recently accused Apple of violating antitrust laws over its app rules and fees. Apple is facing two more federal lawsuits over its App Store fees – one from developers and one from iPhone owners – that are seeking class action lawsuit status.

Mr. Cook’s testimony came towards the end of a three-week lawsuit in federal court in Oakland, Calif., Dealing with the performance Apple gets from its App Store and 30 percent commission on the sale of most digital goods and subscriptions.

He entered the courthouse on Friday morning from an underground parking garage rather than the main entrance, which enabled him to avoid photographers gathering in front of the building. At around 7:30 am, journalists noticed he was going through security checks and shouted questions. Mr. Cook, wearing a dark gray suit, white shirt, and gray tie, held up his hand in a peace sign.

For over an hour, an Apple attorney led Mr. Cook through complaints against Apple, allowing him to explain why Apple did business in certain ways – and why it did no harm to app developers.

Mr Cook testified that Apple faced stiff competition and said commissions Apple collected from app developers helped fund better security in the App Store. “There’s a conflict between what the developer wants and what the consumer wants,” he said. He added that Apple has cut app store fees for many developers who are much smaller than Epic.

In a cross-examination, an epic attorney targeted Mr Cook’s credibility and asked why Mr Cook said he was unaware of some of the details of Apple’s business, including the App Store profit margins, which an outside expert testified on behalf of Epic said , could be up to 80 percent.

Mr. Cook said that was wrong. He said the App Store was profitable, but Apple hadn’t tried to pinpoint exactly how profitable it was, partly because it would be difficult to structure Apple’s costs.

Epic’s attorney denied this claim, showing internal Apple documents from Mr. Cook showing that the company could calculate the profitability of the App Store. Mr. Cook countered that the documents showed incomplete figures.

Epic’s attorney then moved on to an issue affecting the lawsuit, but it seemed to illustrate Apple’s hypocrisy: The way the company operates in China undermines Apple’s public enthusiasm for consumer privacy. The New York Times reported this week that Apple had compromised its Chinese users’ data and supported the Chinese government’s censorship by proactively removing apps.

While Mr Cook said Apple must obey laws in China, Epic’s attorney noted that other companies dissatisfied with Chinese policies had left the country. “I don’t know anyone in the smartphone business who doesn’t sell to China,” replied Cook.

The most worrying moment for Mr. Cook and Apple was the end of his testimony when Judge Yvonne Gonzalez Rogers of the US District Court for the Northern District of California participated in Mr. Cook’s questioning.

Throughout the trial, Judge Gonzalez Rogers posed specific questions to Apple and Epic witnesses, and her back and forth with Mr. Cook on Friday resulted in a particularly intense scrutiny of Apple’s arguments. Why couldn’t Apple allow iPhone owners to have more options to buy apps, she asked, especially if that meant lower prices for consumers?

“If you let people leak like this, we would essentially be giving up our total return on our intellectual property,” replied Mr. Cook.

The judge asked if Apple’s decision last year to reduce commission on app sales for developers making less than $ 1 million a year was aimed at distracting the review of Apple’s App Store policies. Mr Cook admitted that testing was a factor, but added that Apple primarily wanted to help small developers who were hit by a weak economy during the coronavirus pandemic.

Judge Gonzalez Rogers then launched a poll that found 39 percent of app developers were dissatisfied with Apple’s management of the App Store. “It doesn’t seem to me that you are again feeling any real pressure or competition to actually change the way you act to address developer concerns,” she said.

The judge’s biggest challenge in ruling the case may be to define the market that Epic and Apple are contending over.

Epic lawyers have argued that these are iPhone apps and that a game maker needs to walk through Apple’s “walled garden” to reach the more than one billion people who use the devices. This stifles innovation, Epic claims, and allows Apple to enforce strict rules and harm app developers by charging excessive fees. The company wants to host its own digital storefront within Apple.

Mr Cook said on Friday that “I am not a gamer,” but he argued that Epic distributes its games in a number of ways, including web browsers, game consoles and personal computers. Many of these platforms charge a commission similar to that of the App Store. If gaming is the market, Apple has argued, then there are a lot of competitors – like Microsoft, Sony, and Nintendo – and Apple cannot have a monopoly.

Judge Gonzalez Rogers expressed frustration with the market semantics. “One side will say it’s black, the other say it’s white – usually it’s somewhere in the gray,” she said last week.

At the beginning of the study, Trystan Kosmynka, Apple’s senior director, testified that the company rejected 40 percent of all app submissions in 2020. Apple cannot effectively monitor which apps get onto iPhones when Epic has its own app store. Said Kosmynka.

Epic responded with a flurry of internal Apple emails showing times when malicious apps got past Mr. Kosmynka’s team. An app released during the summer protests against Black Lives Matter was a game that allowed users to shoot cannons at protesters.

Apple tried to show why allowing an app store on an app store can be problematic. Lawyers criticized Epic’s digital business for not keeping controls tight enough, saying companies managed to use it to sell games they described as “offensive and sexualized.”

In an attempt to tie Epic to inappropriate content, Richard Doren, an Apple attorney, brought up Peely, a comic banana in Fortnite who is sometimes wearing a tuxedo and sometimes naked. Mr Doren implied that it would have been inappropriate to show Peely in federal court without a tuxedo. Matthew Weissinger, Vice President Marketing at Epic, made it clear that Peely, naked or suitable, wasn’t scandalous.

“It’s just a banana man,” he said.

The battle between the companies began in August when Epic broke Apple’s rules by bypassing Apple’s payment system in the Fortnite app. Apple removed Fortnite from the App Store, and Epic immediately sued the company and launched an advertising campaign around the suit.

On the first day of the trial, Epic’s chief executive Tim Sweeney testified that his company filed a lawsuit because he wanted to show the world the consequences of Apple’s policies. Judge Gonzalez Rogers cut him off and asked if Mr. Sweeney knew of another developer lawsuit against Apple.

Mr. Sweeney said he did.

“And you just ignored that and went alone,” replied the judge.

The trial will complete on Monday, but Judge Gonzalez Rogers said a decision would likely take months. “Hopefully before August 13th,” she said. She also said her decision would likely be challenged, meaning the process could only be the first chapter of a lengthy battle.

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Business

Apple’s App Retailer Attracts E.U. Antitrust Cost

Apple’s App Store Draws E.U. Antitrust Charge

Ms. Vestager said the commission has opened further investigations into Apple, including whether the company is killing rivals to Apple Pay, and has spoken to colleagues in the US, Australia and the Netherlands about the investigation.

“It is an area of ​​concern to a number of colleagues around the world,” Ms. Vestager said.

Spotify welcomed the European Commission’s decision. As of 2016, the Swedish company no longer allowed its customers to purchase a subscription through its iPhone and iPad apps to avoid paying Apple fees, but rather to drive visitors to the Spotify website.

“Ensuring the fair operation of the iOS platform is an urgent task with far-reaching implications,” said Horacio Gutierrez, head of global affairs and chief legal officer of Spotify, in a statement. The Commission’s announcement was “a crucial step in bringing Apple to account for its anti-competitive behavior and ensuring sensible choice for all consumers and a level playing field for app developers.”

Apple said its App Store policies didn’t hurt competition, but rather gave companies a platform to reach customers. The company said developers could find payment alternatives, noting that Spotify pays Apple low commissions because customers have to sign up through a website. Apple said Spotify has become the world’s largest music streaming service in part because of the App Store.

“They want all the benefits of the App Store but don’t think they have to pay anything for them,” Apple said in a statement. “The Commission’s argument on behalf of Spotify is the opposite of fair competition.”

The app store criticism is part of a wider debate about the power of the tech industry, where a small number of companies like Amazon, Apple, Facebook, and Alphabet, which own Google, have government-like powers to set guidelines for key parts of the digital economy. This agency determines how people find, communicate and shop for information and entertainment.

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Business

Apple’s App Retailer Attracts E.U. Antitrust Cost

Apple’s App Store Draws E.U. Antitrust Charge

“They want all the benefits of the App Store but don’t think they have to pay anything for them,” Apple said in a statement. “The Commission’s argument on behalf of Spotify is the opposite of fair competition.”

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Updated

April 29, 2021, 6:16 p.m. ET

The app store criticism is part of a broader debate about the power of the tech industry, where a small number of companies like Apple, Facebook, Google, and Amazon have government powers to set guidelines for key parts of the digital economy. It determines how people find, communicate and shop for information and entertainment.

This week, Apple improved its performance by rolling out a software update that gives customers more options to block apps from tracking data. This change has sparked a rivalry with Facebook, which has criticized the move as anti-competitive as it will affect its online sellability through advertising.

Businesses are increasingly pushing regulators and courts to intervene. At a congressional hearing in Washington last week, companies like Spotify, Tile and Match Group told senators how guidelines from Apple and Google, whose Play Store is another sticking point for app developers, hurt competition and lead to higher app prices for Customers led. And next week, a lawsuit between Apple and Epic Games, the maker of Fortnite, which has filed an antitrust lawsuit against Apple over its fees, is set to begin in California.

The UK is conducting another antitrust investigation into Apple through the App Store after receiving complaints from developers.

The case, announced on Friday, is part of a wider effort by the European Union to contain so-called gatekeeper companies like Apple, Amazon, Facebook and Google. Policy makers are creating laws to prevent the tech giants from abusing their market power to harm smaller businesses, including the way they manage app stores.

Efforts to force changes to the App Store pose a threat to a rapidly growing Apple business. As the sales of iPhones, iPads, and other hardware devices mature, the company is turning to digital services as a new source of growth. Investor optimism about this deal has helped Apple stock skyrocket, reaching more than $ 2.2 trillion in market value, the largest in the world.

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Business

Alibaba Will Decrease Service provider Charges After Antitrust Wonderful

Alibaba Will Lower Merchant Fees After Antitrust Fine

Two days after Chinese regulators fined e-commerce giant Alibaba $ 2.8 billion for illegally restricting sellers on its shopping sites, the company announced the fees for these merchants and invest in new services for them.

“We will incur additional costs,” said Alibaba’s managing director Daniel Zhang on Monday during a conference call with analysts. “We don’t see this as a one-off cost. We see this as a necessary investment so that our dealers can work better on our platform. “

The company’s chief financial officer, Maggie Wu, said Alibaba has allocated “billion” renminbi in additional annual spending to support this initiative, but has not provided details. One US dollar is 6.6 renminbi.

China’s antitrust fine against Alibaba far exceeds previous fines for anti-competitive business practices. This reflects the government’s growing concern about the ability of internet giants to improve the playing field against their rivals and take advantage of their consumers.

In Alibaba’s case, authorities focused on the company’s practice of preventing vendors from selling their goods on competing websites. Mr. Zhang said Monday that such exclusivity agreements previously only covered a few digital storefronts operated by major brands on Tmall, Alibaba’s high-end platform.

Mr. Zhang said Alibaba did not expect the end of such agreements to have “material negative effects” on the company’s business. And Alibaba Executive Vice Chairman Joseph C. Tsai was optimistic about what Beijing’s increasing scrutiny of large digital platforms will mean for China’s internet industry.

“The communication from regulators to the public is very clear that they reinforce our business model,” said Tsai. “We feel very comfortable that there is nothing wrong with the basic business model of a platform company. These regulatory measures are taken to ensure fair competition for the benefit of the public. “

“We are happy that we can put this matter behind us,” he said.