Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 1 of 47
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
` Pages 1 - 46
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`BEFORE THE HONORABLE THOMAS S. HIXSON, MAGISTRATE JUDGE
`
`
`IN RE APPLE IPHONE ANTITRUST )
`LITIGATION. ) No. 11-cv-06714-YGR (TSH)
` )
` )
`DONALD R. CAMERON, et al., )
` )
` Plaintiffs, )
` )
` VS. ) No. 19-cv-03074-YGR (TSH)
` )
`APPLE INC.,
`)
` )
` Defendant.
`)
` )
`EPIC GAMES, INC.,
`)
` )
` Plaintiff/ )
` Counter-defendant, )
` )
` VS. ) No. 20-cv-05640-YGR (TSH)
` )
`APPLE INC.,
`)
` )
` Defendant/ )
` Counterclaimant. )
` )
` San Francisco, California
` Wednesday, December 30, 2020
`
`
`
`TRANSCRIPT OF REMOTE ZOOM WEBINAR PROCEEDINGS
`
`
`
`(Appearances on next page)
`
`
`Reported Remotely By: Ana Dub, CSR 7445, RMR RDR CRR CCRR CRG
` Official Reporter - U.S. District Court
`
`
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
` Pages 1 - 46
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`BEFORE THE HONORABLE THOMAS S. HIXSON, MAGISTRATE JUDGE
`
`
`IN RE APPLE IPHONE ANTITRUST )
`LITIGATION. ) No. 11-cv-06714-YGR (TSH)
` )
` )
`DONALD R. CAMERON, et al., )
` )
` Plaintiffs, )
` )
` VS. ) No. 19-cv-03074-YGR (TSH)
` )
`APPLE INC.,
`)
` )
` Defendant.
`)
` )
`EPIC GAMES, INC.,
`)
` )
` Plaintiff/ )
` Counter-defendant, )
` )
` VS. ) No. 20-cv-05640-YGR (TSH)
` )
`APPLE INC.,
`)
` )
` Defendant/ )
` Counterclaimant. )
` )
` San Francisco, California
` Wednesday, December 30, 2020
`
`
`
`TRANSCRIPT OF REMOTE ZOOM WEBINAR PROCEEDINGS
`
`
`
`(Appearances on next page)
`
`
`Reported Remotely By: Ana Dub, CSR 7445, RMR RDR CRR CCRR CRG
` Official Reporter - U.S. District Court
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 2 of 47
`
` 2
`
`APPEARANCES: (via Zoom Webinar)
`
`Interim Class Counsel in In re Apple iPhone Antitrust
`Litigation, Case No. 4:11-06714-YGR:
` WOLF HALDENSTEIN ADLER FREEMAN & HERZ LLP
` 750 B Street, Suite 1820
` San Diego, California 92101
` BY: RACHELE R. BYRD, ATTORNEY AT LAW
`
`Interim Lead Class Counsel in Cameron, et. al v. Apple Inc.,
`Case No. 4:19-cv-03074-YGR:
` HAGENS BERMAN SOBOL SHAPIRO LLP
` 1301 Second Avenue, Suite 2000
` Seattle, Washington 98101
` BY: ROBERT F. LOPEZ, ATTORNEY AT LAW
`
` HAGENS BERMAN SOBOL SHAPIRO LLP
` 715 Hearst Avenue, Suite 202C
` Berkeley, California 94710
` BY: BENJAMIN J. SIEGEL, ATTORNEY AT LAW
`
`For Plaintiff Epic Games, Inc.:
` CRAVATH, SWAINE & MOORE LLP
` 825 Eighth Avenue
` New York, New York 10019
` BY: LAUREN A. MOSKOWITZ, ATTORNEY AT LAW
`
`For Defendant Apple Inc.:
` GIBSON, DUNN & CRUTCHER LLP
` 333 South Grand Avenue
` Los Angeles, California 90071-3197
` BY: JAY P. SRINIVASAN, ATTORNEY AT LAW
`
` GIBSON, DUNN & CRUTCHER LLP
` 555 Mission Street
` San Francisco, California 94105-0921
` BY: ETHAN D. DETTMER, ATTORNEY AT LAW
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 3 of 47
`
` 3
`
`Wednesday - December 30, 2020 10:01 a.m.
`
`P R O C E E D I N G S
`
`---o0o---
`
`THE CLERK: So we're here in Civil Action 11-6714, In
`
`Re Apple iPhone Antitrust Litigation; and in Civil
`
`Action 19-3074, Cameron, et al. versus Apple Inc.; and Civil
`
`Action 20-5640, Epic Games Inc. versus Apple Inc.
`
`Counsel, please state your appearances. The Honorable
`
`Thomas S. Hixson presiding. Let's start with the plaintiffs,
`
`starting with the first case and go on down, and then the
`
`defendants can chime in after.
`
`MS. BYRD: Good morning, Your Honor. This is Rachele
`
`Byrd with Wolf Haldenstein on behalf of the consumer
`
`plaintiffs.
`
`THE COURT: Good morning.
`
`MR. LOPEZ: Good morning, Your Honor. This is
`
`Rob Lopez of Hagens Berman for the developer plaintiffs.
`
`THE COURT: Good morning.
`
`MS. MOSKOWITZ: Good morning, Your Honor. Lauren
`
`Moskowitz from Cravath Swaine & Moore on behalf of Epic Games.
`
`THE COURT: Good morning.
`
`MR. SRINIVASAN: Good morning, Your Honor. Jay
`
`Srinivasan from Gibson Dunn for Apple Inc.
`
`THE COURT: Good morning.
`
`And I see two other individuals. Are they just listening,
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 4 of 47
`
` 4
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`or do they plan to participate?
`
`THE CLERK: They're listening, Judge.
`
`THE COURT: Okay. Great. Then we can go ahead. We
`
`can just take the issues in order.
`
`First, I have a question for Epic. Turning to the
`
`non-U.S. documents, the letter brief attached as Exhibit 1,
`
`Epic's first set of RFPs which had 70 RFPs, so I interpreted
`
`you to be moving as to the non-U.S. documents for the first set
`
`of RFPs, I guess all 70, Apple, in its portion of the letter
`
`brief, says that, in fact, there are 83 letter briefs, which
`
`would mean that there are -- sorry -- 83 RFPs. Not 83 letter
`
`briefs, 83 RFPs -- which would mean that there are 13 others at
`
`issue, but I don't have them in front of me.
`
`So let me ask Epic to clarify which RFPs are at issue for
`
`the non-U.S. documents.
`
`MS. MOSKOWITZ: Your Honor, we do have another set of
`
`RFPs, a set second that were not the subject of this motion,
`
`but I think Your Honor's ruling would likely impact those as
`
`well. But the general objection that Apple lodged to our first
`
`set of RFPs was broadly applicable and would extend beyond just
`
`those RFPs.
`
`THE COURT: I see. Okay.
`
`So let me just give you my tentative ruling, and then I'll
`
`allow Epic to respond to it.
`
`As a legal matter, I've read the cases that Epic cites,
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 5 of 47
`
` 5
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`and you've persuaded me that foreign conduct can sometimes be
`
`relevant to a domestic antitrust lawsuit. It just depends on
`
`the legal theories at issue and the types of documents that are
`
`being sought.
`
`You cited a case, the Aspartame case, that dealt with an
`
`international price-fixing conspiracy; and that's an example of
`
`where you would need to know what happened outside the
`
`United States to really understanding what is happening inside
`
`the United States.
`
`So I get that general principle that sometimes foreign
`
`conduct can be relevant.
`
`At the same time, I don't think it's true that there's a
`
`principle that foreign conduct is always or automatically
`
`relevant. I think it just depends on what the documents being
`
`requested are about and the legal theories in the case.
`
`So what I got from Epic was a four-paragraph argument that
`
`established that, that foreign conduct can sometimes be
`
`relevant; and then the argument ended and you said: Look, over
`
`there is a big pile of RFPs.
`
`So I went through the RFPs and I started reading them.
`
`And for some of them, I couldn't figure out why foreign conduct
`
`would be relevant. For example, RFP 59 asks about customer
`
`awareness or familiarity or lack of awareness with the fact
`
`that Apple does not permit a software store other than the iOS
`
`App Store and certain other practices, and I'm not sure I
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 6 of 47
`
` 6
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`understand why this is relevant even for domestic conduct.
`
`Maybe this is the Kodak lock-in theory. But then I wasn't able
`
`to understand why we care about what people in Hungary or
`
`Bolivia are aware of or not aware of and why that would be
`
`relevant to the case.
`
`And then, like, RFP 28 asks for a bunch of things, but one
`
`thing that it asks for is the number of people or the
`
`percentage of phone users who use the Find My feature within
`
`certain periods of time. And I was struggling to figure out
`
`why we need to know how many people tried to find their
`
`iPhone last month in Mongolia. I just can't figure out why we
`
`would need to know that.
`
`And then, for some of your other RFPs, on my own -- I'm a
`
`very imaginative person, and I was able to create theories of
`
`relevance that seemed logical to me. But then I was worried,
`
`as I was doing that, because I don't know if Epic would even
`
`agree with those theories of relevance. And what I'm supposed
`
`to be doing as a neutral is to be ruling on the litigants'
`
`arguments. I'm not supposed to think them up for myself.
`
`So I felt like if I was coming up with relevance theories,
`
`then I was writing the motion to compel that you should have
`
`filed. And also, I was worried about unfairness to Apple
`
`because they only had the opportunity to respond to arguments
`
`that Epic made. They didn't have the opportunity to respond to
`
`things that I think of on my own.
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 7 of 47
`
` 7
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`So where I'm left with is that my tentative ruling is to
`
`deny Epic's motion as to the non-U.S. documents on the grounds
`
`that you really just haven't explained anything. You made an
`
`abstract point, which is a good one, that foreign conduct can
`
`sometimes be relevant, and then you gestured at 70 RFPs. And I
`
`was left thinking, well, I don't know that I really should
`
`compel anything here.
`
`But, Ms. Moskowitz, I've talked for a while now. So why
`
`don't I get your thoughts on this issue.
`
`MS. MOSKOWITZ: Your Honor, thank you.
`
`And apologies that we didn't do enough of a tethering to
`
`the RFPs. I think it is because we have alleged a worldwide
`
`market, and we have alleged that Apple -- both markets are
`
`worldwide, both the app distribution and the in-app payment
`
`processing market are worldwide markets. And we are asking for
`
`information about consumer behavior, competitive behavior, the
`
`competitive landscape across the entire world.
`
`Now, that is not to say that we have ever -- we have not
`
`asked Apple for an Algerian custodian or a Mongolian custodian
`
`and searching specific Mongolian -- to use Your Honor's
`
`example, Mongolian custodial documents or repositories.
`
`What we've asked for is, in order for us to test our
`
`worldwide market theory and in order to test that things that
`
`are happening in the U.S. are extrapolated to the global market
`
`that we believe -- and we believe we will prove -- exists, that
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 8 of 47
`
` 8
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`we're asking Apple not to withhold where they're already going,
`
`to not to withhold non-U.S. documents.
`
`For example, in Mr. Federighi's documents, for example, an
`
`existing custodian, as they're going through those documents,
`
`if he is told of a security breach involving an in-app purchase
`
`in Algeria, which is Apple's example, don't withhold that.
`
`Don't mark that non-responsive. Give it to us, because we do
`
`think it's relevant to Apple's arguments that it provides a
`
`worldwide platform, a global, secure, the best out there,
`
`according to Apple, in-app purchase processing method.
`
`So we want to be able to test that. Are there
`
`differences? Why are there differences? Are those differences
`
`having effects in the U.S.?
`
`So our requests are cabined in the sense of we're only
`
`asking them to go beyond the U.S. as to where they're already
`
`going. And we've asked for documents sufficient to show yearly
`
`aggregate types of data, and we're asking for that on a global,
`
`worldwide scale, not just for the U.S., which is how they've
`
`already been reporting it as well.
`
`So we're not asking for them to go find that Mongolian
`
`example Your Honor gave. Or I didn't write down the country
`
`for the first one. But I think -- what I'm trying to say is,
`
`we are asking, within the confines of the search protocol
`
`they've already agreed to, to just, instead of marking
`
`non-responsive, mark responsive along the way. We're not even
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 9 of 47
`
` 9
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`asking them to go back to what they've already done. We're
`
`just saying, going forward for the new custodians, include that
`
`so that our experts, who are trying to establish a worldwide
`
`market -- and that is what we intend to establish at trial --
`
`that they have information about security, about consumer
`
`preferences, about their behaviors and whether they're locked
`
`in. Are there competitors in Poland that are -- that are not
`
`present in the U.S.? Why? How is Apple reacting to that?
`
`Again, only to the extent they're coming up.
`
`And the P&L data and the non-custodial type of data that
`
`we're asking for really is important so that we understand the
`
`global nature of the business, the App Store business, the IAP
`
`business. There's no burden associated with anything that
`
`we're asking. We're just asking for not an arbitrary line to
`
`be drawn.
`
`I hope that's helpful clarification. Happy to answer
`
`further questions.
`
`THE COURT: Since there's no such thing as a global
`
`antitrust statute, why should accusations about global
`
`market -- why should that matter and guide discovery rather
`
`than the laws you've sued under, which are the federal Sherman
`
`Act and the California state laws?
`
`MS. MOSKOWITZ: Your Honor, the Sherman Act is not
`
`limited to conduct in the U.S. if that conduct has effects on
`
`the U.S. And Apple is operating on a global scale. It is
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 10 of 47
`
` 10
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`operating across the world in what we believe to be the same
`
`way, with the same policies. They tout the global application
`
`of IAP. They try to compete on the basis that it is a global
`
`solution. And we need to understand how that conduct
`
`throughout both the U.S. and abroad are impacting the
`
`U.S. market.
`
`They've never agreed to stipulate, for example, that the
`
`exact same behaviors are across the global, but we are alleging
`
`a global market. There is a single agreement. There's single
`
`agreements across the world. Apple operates at a global level
`
`in the App Store and IAP. And so that is the market that we
`
`believe exists. It's not an artifice. It's what we believe
`
`actually exists and has impacts on us. We're trying to compete
`
`on a global scale as well, as are others. So that is why.
`
`THE COURT: Okay. Let me hear from Apple.
`
`MR. SRINIVASAN: Sure, Your Honor. There was a lot
`
`there, but I'll try to unpack that.
`
`I think we start with where Your Honor starts, which is
`
`that ultimately, discovery has to be tied to a relevant claim
`
`or defense.
`
`They have alleged that this is a global market, and there
`
`is one allegation in the complaint -- I think it's repeated a
`
`second time -- that they're alleging a global market because
`
`Apple sells iPhones everywhere.
`
`Well, that's not what they're seeking discovery on. I
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 11 of 47
`
` 11
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`mean, I think we would stipulate that we sell iPhones and iOSes
`
`everywhere. But that's not tethered -- that's not tethered to
`
`any of the discovery they seek.
`
`But more fundamentally, as you note, the allegations in
`
`the complaint relate to conduct in the United States; they
`
`relate to U.S. consumers. To the extent that they relate --
`
`conduct relates solely to foreign consumers -- so
`
`Ms. Moskowitz's example of an Algerian and only Algerian
`
`breach -- would not be relevant to this case in any way.
`
`Now, that said, just to be clear so the Court
`
`understands -- and I hope we made this clear -- to the extent
`
`conduct is agnostic as to geography or it includes U.S. plus
`
`areas that are affected outside the U.S., they're receiving
`
`everything there. Those documents are being produced. And, in
`
`fact, they have quite a bit of information regarding the global
`
`market, to the extent that they're interested in testing their
`
`theories, because we're producing it as part of what we've
`
`already been searching for.
`
`We're also producing any reference to Epic, even if it
`
`relates exclusively to some foreign place. We think that is
`
`the test and the most expansive way of producing everything
`
`that could possibly be relevant to their claims or our
`
`defenses, and we've cabined it that way.
`
`Further, they have not given us, as you noted, any basis
`
`for why any of the discovery they seek from these foreign
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 12 of 47
`
` 12
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`places -- exclusively foreign places are related to any of
`
`their claims. And we would point back to the FTAIA, to say
`
`that if something relates to conduct that affects consumers
`
`outside the United States and only the United States, that
`
`would not be relevant to their claims here, and those are the
`
`only types of documents that we're not producing.
`
`THE COURT: All right. Thank you.
`
`Epic, any reply comments from you?
`
`MS. MOSKOWITZ: Yes, just briefly, Your Honor.
`
`Again, we are not asking them to go get those documents
`
`from anywhere other than where they're already getting them.
`
`But to the extent that they are showing -- when they go through
`
`their custodial documents, to the extent they are seeing the
`
`things like I just said, which is the Algerian security breach,
`
`for example, that even if it doesn't mention the U.S., that's a
`
`breach of the iOS or the IAP, the same systems that they're
`
`saying are the most secure in the world and that that's why
`
`they have to keep it closed to competition.
`
`So all of those are relevant because they're keeping
`
`competition constrained on a worldwide scale that is impacting.
`
`If there was competition across the globe, but not in the
`
`U.S., we might have a very different situation than what we
`
`think we do. And so that is why we are looking for that
`
`information, and it's no heavier a lift than just going through
`
`the documents they're already going through.
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 13 of 47
`
` 13
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`But on the separate side, the data, which I didn't hear
`
`Apple's counsel address, we are asking for data at a very high
`
`level, aggregate data. We're not asking for the transactional
`
`data worldwide that Your Honor was dealing with at a separate
`
`hearing with the class plaintiffs. We're asking for aggregate
`
`yearly, sort of worldwide but aggregate-level P&L and costs and
`
`expense data that is crucial to understand, not just for the
`
`U.S., but globally.
`
`THE COURT: All right. Okay. Why don't we turn to
`
`the next issue, which is RFP 3, and that's the one asking about
`
`documents sufficient to show actual and projected revenue,
`
`costs, expenses, profits, and so on, for five different
`
`products,: iPhone, iPad, iPod Touch, Apple Watch, and
`
`Apple AirPods.
`
`First let me ask Apple. I didn't see in your letter brief
`
`that you were opposing RFP 3 as to iPhone, iPad, and iPod
`
`Touch. I understood you to be opposing that only as to Apple
`
`Watch and AirPods. Is that correct?
`
`MR. SRINIVASAN: That is correct, Your Honor.
`
`And, in fact, I think there is a line in Epic's portion of
`
`the joint brief that says, quote, Apple refuses to search for
`
`any data in response to RFP Number 3. And that is not true.
`
`We are, in fact, and have produced the responsive material
`
`for -- as you said, for the devices: the iPod, the iPhone,
`
`and the iPad. It is only about the Watch and AirPods.
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 14 of 47
`
` 14
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`THE COURT: All right. Then let me ask Epic Games.
`
`I went through the complaint and read through it in
`
`detail, and there are -- when I looked at how the markets were
`
`defined, there are constant references to smartphones and
`
`tablets, and then there's a term "mobile devices" that's used
`
`in their complaint.
`
`I'm pretty sure mobile devices was meant to mean only
`
`smartphones and tablets. I didn't think it referred to Apple
`
`Watch and certainly not AirPods.
`
`Do you think I was misreading the complaint?
`
`MS. MOSKOWITZ: No, Your Honor, I don't.
`
`I think what we're trying to establish is market power
`
`within those markets, as Your Honor correctly read our
`
`complaint to be defining. And one way to do that is to show
`
`supracompetitive profits.
`
`And one way to show supracompetitive profits in this
`
`specific world of iOS is to show not only profits on the
`
`specific devices that constitute that market, but also the
`
`ancillary products that are so tethered and so dependent on
`
`those devices, like an Apple Watch, that can help establish
`
`that supracompetitive profits from iOS. Because Apple Watch,
`
`I think as most laypeople know, are better for you if you have
`
`an iPhone. And so if they're able to charge supracompetitive
`
`profits on Apple Watches, it just shows more of the lock-in,
`
`more of the fact of switching. People are not going to be able
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 15 of 47
`
` 15
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`to switch out of the iOS Ecosystem because of all these other
`
`products that really rely on you having an iOS device.
`
`And so that is what our experts are seeking to try to
`
`understand the full scope of how Apple can operate and
`
`monopolize the markets that we have defined. And that does
`
`make reference to these ancillary products. So they're not in
`
`the market, as Your Honor said, but they're relevant for our
`
`experts to understand the market.
`
`THE COURT: One concern I have about introducing Apple
`
`Watch is that that also seems to introduce other competitors
`
`such as Fitbit and Garmin. And I don't know that you can just
`
`look at the profits from Apple Watch and say: Oh, it's all
`
`because of iOS. There are just new competitors that are now
`
`introduced.
`
`And I worry that that starts to make that whole inquiry
`
`kind of sprawling. For example, if we didn't have discovery
`
`into those new competitors introduced by Apple Watch, then that
`
`would present a misleading picture of trying to attribute all
`
`the profit to the relevant markets as alleged here. But then,
`
`if we did get into that in discovery, then this case just sort
`
`of broadens in ways that seem unjustified.
`
`So can you speak to that concern.
`
`MS. MOSKOWITZ: Yes, Your Honor.
`
`We're not trying to establish an Apple Watch market. What
`
`we're really just trying to establish is that, unlike the other
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 16 of 47
`
` 16
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`devices Your Honor just mentioned, the Apple Watch really is
`
`tethered to the -- to being in the iOS Ecosystem already. And
`
`so it is relevant to switching costs that people are -- that
`
`Apple is generating that much money through the Apple Watch.
`
`And, Your Honor, we're not looking for full-blown
`
`discovery on Apple Watch or its market share or any of that.
`
`We're really just trying to understand the costs, the revenue,
`
`and the expenses on a yearly basis by country.
`
`So it's not that we're trying to open a whole can of worms
`
`and try to establish a whole other market with its competitors
`
`and market sensitivities or anything along those lines. We're
`
`really just trying to get the aggregate data that we know Apple
`
`tracks because our experts view it as relevant to try to
`
`understand the full universe of the iOS Ecosystem, which does
`
`include, in their view, iOS-dependent ancillary products.
`
`We're actually not asking for every -- I'm sorry,
`
`Your Honor.
`
`THE COURT: No. My question, though, is: How can
`
`you -- say you get all this information about Apple Watch and
`
`AirPods. How can you know if Apple is charging
`
`supracompetitive prices without knowing what Garmin and Fitbit
`
`charge, what other headphone manufacturers charge? You could
`
`know they make a lot of profit, but you couldn't know it's
`
`supracompetitive, could you?
`
`MS. MOSKOWITZ: No, Your Honor. We're not
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 17 of 47
`
` 17
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`necessarily -- and I don't think we need to. I think the point
`
`is just to understand the full scope of how Apple is generating
`
`profits as a whole.
`
`And so understanding revenue and costs and expense data
`
`for the Apple Watch, that won't say that Apple Watch is
`
`supracompetitive vis-a-vis a Fitbit, which is not what we're
`
`trying to establish. But we're trying to establish that the
`
`profits that Apple is generating as a whole from its suite that
`
`are all dependent on this iOS that people can't switch away
`
`from and all of the other aspects of what we're trying to
`
`prove, that Apple Watch profit and the AirPod profit are part
`
`of that whole analysis.
`
`THE COURT: So would this line of reasoning also
`
`justify discovery into the profits from the wristbands on the
`
`Watch?
`
`MS. MOSKOWITZ: Your Honor, we -- I think,
`
`technically, yes; but we've narrowed our request to not do the
`
`chargers and the cables and all of that stuff.
`
`So we have narrowed it. Because I do think, logically, we
`
`probably could bring in every single thing that depends on
`
`Apple products; but we did try to narrow it and be targeted,
`
`both at the types of ancillary products as well as the type of
`
`data we're requesting.
`
`THE COURT: All right. Thank you.
`
`Apple, let's hear from you.
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 18 of 47
`
` 18
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`MR. SRINIVASAN: Yeah. Your Honor, I mean, we
`
`generally agree with your comments.
`
`Ms. Moskowitz just said: We're not interested in
`
`establishing supracompetitive products from the Apple Watch,
`
`when that is exactly what they're saying they wanted it for in
`
`their papers.
`
`And as you note, they couldn't make that determination
`
`without sweeping in a lot of other third-party discovery on
`
`competing watches and also on competing headphone
`
`manufacturers, and leave alone the fact that AirPods can be
`
`used with other devices. It gets incredibly complicated. This
`
`is a very attenuated issue, to begin with, not much different
`
`than cases and chargers and wristbands.
`
`They have Apple's overall profits. If they want to show
`
`it's a profitable company, they can. To go to the Apple Watch
`
`or the AirPod really has, again, almost no bearing on any issue
`
`in this case.
`
`The case -- Epic doesn't design games for the Watch. As
`
`we pointed out in our brief, Judge Gonzales Rogers noted that
`
`she's looking at this as the relevant market as the game
`
`market. And, in fact, in that same page in the transcript,
`
`Epic's counsel responded and said (reading):
`
`"Well, I think it's not necessarily a games
`
`market, but the app distribution market on the
`
`iPhone."
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 19 of 47
`
` 19
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`Well, they're getting everything about the App Store.
`
`They're getting everything about the iPhone. That's the
`
`market in which we are, you know, involved in this case.
`
`And for them to -- you know, on this idea that there's
`
`sort of stickiness, this theory that I just heard from
`
`Ms. Moskowitz, it's not in their papers, doesn't really apply
`
`to the developer -- a developer like Epic in any event.
`
`Lock-in is typically something that you see with respect
`
`to a consumer case, but not -- and even that's a disfavored
`
`theory, but that's a theory where you can potentially see it.
`
`But Epic doesn't face any of those issues. Epic
`
`distributes for a variety of platforms. And the question is:
`
`Does Apple have power in the distribution of apps for games?
`
`And the Watch and the AirPod really have nothing to do with
`
`that.
`
`THE COURT: All right. Any reply comments from Epic?
`
`MS. MOSKOWITZ: Your Honor, just briefly, because
`
`Apple said a couple of times that they're giving us everything
`
`that we've asked for, including in response to Your Honor's
`
`question.
`
`My understanding is Apple is standing on the U.S.-only
`
`objection as to this request as well. So there's that issue.
`
`We do need -- we do still seek this on a global basis, as the
`
`request calls for.
`
`I don't know if Apple intended to indicate that they're
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 20 of 47
`
` 20
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`going to give that to us on a worldwide basis. But I don't
`
`have anything else to say on the specific question on Watch and
`
`AirPods other than what I've already said.
`
`THE COURT: Okay. All right. Thanks.
`
`And then RFP 5, Epic cited a specific Apple document by
`
`Bates number that, on its face, indicates that Apple is at
`
`least able to estimate revenue from in-app purchases
`
`specifically, and not just revenue from the App Store as a
`
`whole. And yet Apple's portion of the letter brief kind of
`
`flat-out states that that information doesn't exist.
`
`And I was just -- Mr. Srinivasan, if you could speak to
`
`that, because I'm looking at a document that seems to say that
`
`at least this information can be estimated and that executives
`
`at least sometimes do that and then your letter brief, which
`
`sort of defiantly says that this document doesn't exist.
`
`And so I'm having a little bit of the same reaction I had
`
`last time when Apple told me some information didn't exist and
`
`I said, well, there's this P&L sheet that seems to have it.
`
`So can you talk to that.
`
`MR. SRINIVASAN: Sure, Your Honor.
`
`There's two pieces to this issue, and I think I can clear
`
`that up a little bit.
`
`RFP Number 3 specifically asks for revenue, cost, and
`
`expense, and things like that, related to what they -- a
`
`defined phrase of theirs, "IAP."
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 21 of 47
`
` 21
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`If you look at their definition in the RFPs, they define
`
`IAP based on the developer agreement, a section which
`
`essentially is the IAP API. In other words, it's the
`
`functionality in the App Store that processes in-app payments.
`
`It's software code.
`
`And so what we've said to them throughout -- and this is
`
`an issue in this case, as you know, wherein they are claiming
`
`that this IAP API is a separate product -- we've said it's not
`
`a separate product. It's just a piece of the App Store.
`
`And so when they asked us in this RFP Number 5, in terms
`
`of revenue, expense, and profitability related to this IAP
`
`code, this API, we said this is sort of a nonsensical RFP
`
`because it's like saying the cash -- what is the revenue
`
`associated with the cash register in a retail store? Well,
`
`there's revenue for the store. There's no revenue associated
`
`with the cash register.
`
`And that was the primary basis for our objection to
`
`Number 5 and Number 30. There is no conceptual revenue, cost,
`
`expense associated with the IAP code.
`
`That said, there is another RFP Number 8 where they ask
`
`for revenue, costs, same type of information for the iOS
`
`App Store. And, of course, for the iOS App Store, we are
`
`producing every possible iteration of revenue either coming
`
`from an app purchase or an in-app purchase, the commissions
`
`associated with each in terms of percentage and absolute
`
`
`
`Case 4:20-cv-05640-YGR Document 818 Filed 12/31/20 Page 22 of 47
`
` 22
`
` 1
`
` 2
`
` 3
`
` 4
`
` 5
`
` 6
`
` 7
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`number, as part of the transactional data production. So
`
`that's n
Accessing this document will incur an additional charge of $.
After purchase, you can access this document again without charge.
Accept $ Charge
Still Working On It
This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.
Give it another minute or two to complete, and then try the refresh button.
A few More Minutes ... Still Working
It can take up to 5 minutes for us to download a document if the court servers are running slowly.
Thank you for your continued patience.
This document could not be displayed.
We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.
Your account does not support viewing this document.
You need a Paid Account to view this document. Click here to change your account type.
Your account does not support viewing this document.
Set your membership
status to view this document.
With a Docket Alarm membership, you'll
get a whole lot more, including:
- Up-to-date information for this case.
- Email alerts whenever there is an update.
- Full text search for other cases.
- Get email alerts whenever a new case matches your search.
One Moment Please
The filing “” is large (MB) and is being downloaded.
Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.
Your document is on its way!
If you do not receive the document in five minutes, contact support at support@docketalarm.com.
Sealed Document
We are unable to display this document, it may be under a court ordered seal.
If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.
Access Government Site
