Log in
Show password
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 
  1. Homepage
  2. Equities
  3. United States
  4. Nasdaq
  5. Apple Inc.
  6. News
  7. Summary
    AAPL   US0378331005


SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

In Apple Antitrust Trial, Judge Signals Interest in Railroad, Credit-Card Monopoly Cases

05/25/2021 | 05:14am EDT

By Tim Higgins and Sarah E. Needleman

The future of digital commerce on your iPhone could be influenced by how courts resolved questions about market control following technological innovations that disrupted previous generations: credit cards and railroads.

With the courtroom battle between Epic Games Inc. and Apple Inc. concluded Monday, U.S. District Judge Yvonne Gonzalez Rogers must now decide if the iPhone maker has improperly prohibited third-party app stores and forced developers to use its in-app payment system that collects a commission as high as 30%.

As she decides if Apple has operated an illegal monopoly, she's already made it clear during the trial in Oakland, Calif., that she's thinking about how previous precedent-setting cases involving American Express Co. and a St. Louis railroad apply to the new digital economy in the 21st century. Her decision in the trial that lasted three weeks and a day is expected in the coming months, and it could sway a new generation of commerce.

"It's safe to say she's not just convinced that there's an easy win for Apple," said David Olson, an associate professor at Boston College Law School who has been following the case. "She's thinking hard about this and seems to be bothered by the lack of in-app or in-game...payment systems."

The question of how to define a market in the case is a central issue. Is the market confined to distributing apps on the iPhone as "Fortnite" videogame creator Epic argues? Or, as Apple contends, is the market just devices on which videogames can be played?

A comment by Judge Gonzalez Rogers on Friday suggests she may be looking at it as an app-distribution market. "The gaming industry seems to be generating a disproportionate amount of money relative to the [intellectual property] that you're giving them and everybody else," she said when questioning Apple Chief Executive Tim Cook. "In a sense, it's almost as if they're subsidizing everybody else."

On Monday, however, she raised the notion that the market might be the mobile videogame market -- an option that neither party raised.

Judge Gonzalez Rogers has also suggested on multiple occasions that she doesn't believe Apple is setting its commission of as much as 30% based on competition, but rather has made its decision arbitrarily.

If she's signaling a willingness to consider some of Epic's claims, she also seems unwilling to blow up Apple's business. During her comments Monday, she expressed concern that Epic's proposals for addressing its claims against Apple went too far. "Give me some example that has survived appellate review where the court has engaged in such a way to either prohibit something or to fundamentally change the economic model of a monopolistic company," Judge Gonzalez Rogers said.

Throughout the trial, she has indicated an interest in a longtime doctrine of antitrust law called essential facilities, which prohibits a dominant firm from using a bottleneck to block out competition. It comes from a 1912 case involving a group of railroads that blocked rivals with the control of bridges and rail yards in and out of St. Louis.

Several times, Judge Gonzalez Rogers has chided Epic's lawyers for not providing evidence backing up a claim that Apple has an essential facility. Apple quickly filed a motion seeking to throw out the claim involving the doctrine. On Sunday, Epic argued in a filing that it had made its case.

"What Epic is saying is that we want Apple to allow us to deal on their platform, their iOS, and there are only two of these platforms, and, therefore, because there are only two competitors, all of these competitors can't succeed without access to these platforms -- this one and Google," the judge told a witness during the second week of the trial. She said the case seemed to revolve around an essential facilities claim.

Richard Schmalensee, the dean emeritus of the business school at Massachusetts Institute of Technology, and a witness called by Apple, disagreed: Apple's operating system isn't a public utility, like a lone rail track into a town.

Rather, he said, the disagreement between Epic and Apple is over Epic's desire to set up its own competing store. "It could be that Apple nominally gives them access, but the terms are so unfavorable that as a business matter, they can't function," he said. "But they've made a lot of money going through that store, so I think [Epic has] trouble making the argument."

Judge Gonzalez Rogers also probed Prof. Schmalensee on another area of legal precedent that suggested she was looking for a potential compromise.

Part of Apple's terms to developers include a so-called anti-steering provision that prohibits them from sending users in the app outside of Apple's payment system to save money using a cheaper method. Epic's lawsuit was preceded by a plot to sneak its own in-app payment system into "Fortnite" aimed at circumventing Apple's, a violation of the rules that got it kicked out of the store. In response, Epic filed its lawsuit in August claiming Apple was a monopoly.

Apple contends that its anti-steering provision is allowed by judicial precedent in a case involving American Express. In that case, the Supreme Court upheld AmEx's policy that prohibited merchants that accept its cards from steering consumers to use rival cards, such as Visa, so they could avoid fees. AmEx fees charged merchants are often higher.

Prof. Schmalensee noted that AmEx wasn't part of a duopoly like Apple and Google, to which the judge responded: "When you go into a store, you can see the sign that says, Visa, Mastercard, Discover, AmEx," she said. "So there were visual indications of options. Those visual indications of options don't exist in this circumstance."

Apple is against the idea of allowing notice or a link to another payment system. Apple equates it to requiring Nordstrom Inc. to hang a sign in its store that Macy's Inc. has cheaper prices. Meanwhile, Epic argued it should be more like a mall being unable to prohibit a store from telling customers that another location might have less-expensive offerings.

On Friday, Judge Gonzalez Rogers asked Mr. Cook: "What is the problem with Apple giving them that option?"

Write to Tim Higgins at Tim.Higgins@WSJ.com and Sarah E. Needleman at sarah.needleman@wsj.com

(END) Dow Jones Newswires

05-25-21 0714ET

Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. -0.52% 2879.64 Delayed Quote.64.81%
AMERICAN EXPRESS COMPANY 1.04% 163.38 Delayed Quote.33.44%
APPLE INC. -0.16% 148.84 Delayed Quote.12.31%
DJ INDUSTRIAL -0.04% 34845.44 Delayed Quote.12.97%
MASTERCARD 0.66% 347.19 Delayed Quote.-3.12%
NORDSTROM, INC. 4.67% 28.245 Delayed Quote.-14.80%
All news about APPLE INC.
03:23pWall Street dips as strong retail data boosts Treasury yields
02:35pREFILE-US STOCKS-Wall Street dips as strong retail data boosts Treasury yield..
01:32pFed's Powell Said to Launch Ethics Review After Regional Presidents Disclose ..
11:46aRussia ramps up pressure on foreign tech firms on eve of election
09:12aAPPLE : offers more ways to shop for the iPhone 13 lineup, iPad, and iPad mini
07:01aSOCIAL BUZZ : Wallstreetbets Stocks Largely in Negative Territory on Pre-Bell Th..
05:02aTaiwanese electric scooter maker Gogoro to go public via $2.35 billion SPAC d..
04:18aCourt win for EU regulators over crackdown on $825 mln Belgium tax scheme
04:12aChipmaker TSMC aims for net zero emissions by 2050
02:13aEPIC V APPLE : Apple Must Allow Other Forms Of In-App Purchase
More news
Analyst Recommendations on APPLE INC.
More recommendations
Financials (USD)
Sales 2021 366 B - -
Net income 2021 93 849 M - -
Net cash 2021 78 438 M - -
P/E ratio 2021 26,7x
Yield 2021 0,58%
Capitalization 2 463 B 2 463 B -
EV / Sales 2021 6,51x
EV / Sales 2022 6,30x
Nbr of Employees 147 000
Free-Float 99,0%
Duration : Period :
Apple Inc. Technical Analysis Chart | AAPL | US0378331005 | MarketScreener
Technical analysis trends APPLE INC.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus BUY
Number of Analysts 44
Last Close Price 149,03 $
Average target price 165,36 $
Spread / Average Target 11,0%
EPS Revisions
Managers and Directors
Timothy Donald Cook Chief Executive Officer & Director
Luca Maestri Chief Financial Officer & Senior Vice President
Arthur D. Levinson Independent Chairman
Kevin M. Lynch Vice President-Technology
Jeffrey E. Williams Chief Operating Officer
Sector and Competitors
1st jan.Capi. (M$)
APPLE INC.12.31%2 463 491