Apple v Epic week 1 roundtable

Nilay and Dieter talk with Verge senior reporter Adi Robertson and senior editor Tom Warren about the first week of the Epic Games v Apple trial. Why Epic is burning its own cash to cook Apple Apple antitrust trial kicks off with Tim Sweeney’s metaverse dreams The Epic Games v. Apple trial kicks off with kids screaming ‘free Fortnite’ Here are Apple’s and Epic’s full slideshows arguing why they should win at trial I watched the Epic v. Apple trial on Discord Tim Sweeney emailed Tim Cook personally to call for open app sales after WWDC in 2015 Apple exec suggested cutting App Store commission to 20 percent as early as 2011 Epic v. Apple turns into Windows v. Xbox Why the bad iPhone web app experience keeps coming up in Epic v. Apple Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Nilay Patel?

  This week on the Vergecast, Addie Robertson and Tom Warren join the show to go over everything we learned from the first week of the Epic versus Apple trial. It is a lot. This episode's a ride. It's the Vergecast. Here we go.

• 0:13Speaker 01

  This episode is brought to you by On Investing, an original podcast from Charles Schwab. Each week, hosts Lizanne Saunders, Schwab's chief investment strategist, and Colin Martin, head of fixed income research and strategy for the Schwab Center for Financial Research, bring you fresh insights on what's happening in the markets and why, and what the implications might be for your portfolio. Join Colin and Lizanne as they explore questions like, how do you evaluate corporate bonds that look interesting? And what sectors are on the move right now? Download the latest episode and subscribe at schwab.com/oninvesting or wherever you get your podcasts.

• 0:58Speaker 01

  This episode is brought to you by On Investing, an original podcast from Charles Schwab. Each week, hosts Lizanne Saunders, Schwab's chief investment strategist, and Colin Martin, head of fixed income research and strategy for the Schwab Center for Financial Research, bring you fresh insights on what's happening in the markets and why, and what the implications might be for your portfolio. Join Colin and Lizanne as they explore questions like, how do you evaluate corporate bonds that look interesting? And what sectors are on the move right now? Download the latest episode and subscribe at schwab.com/oninvesting or wherever you get your podcasts.

• 1:47Nilay Patel?

  Hello and welcome to the Vergecast, the flagship podcast of the movie Demolition Man, which is all that I have thought about recently. If you've watched Demolition Man in the context of like current antitrust law, it's very good. Anyway, I'm Neil, I'm your friend. Dieter Bohn is here. I'm the Shells. Ooh. Maybe the best and longest running joke in that movie. That voice you heard was Addie Robertson. Hey, Addie. Hey. Tom Warren is here.

• 2:12Speaker 02

  Hello. I've read too many confidential documents.

• 2:16Nilay Patel?

  So Addy and Tom are here because they are covering the Apple versus Epic trial. I'm going to tell you straight out, this whole episode is Apple versus Epic and what is happening this trial. We are recording on Friday. It's the end of week one. The trial is scheduled for three weeks. I'm going to tell you, it seems likely the next two weeks, the Vergecast are going to be about this trial as well. I want to start at the start with COVID as always, though. Just one update. The website. Website. The vaccine, they actually launched a day early. Yeah. They were supposed to launch it on May 1 and they launched it a day early. It is almost exactly the same as the previous vaccine locator website. They changed the colors and they added a Spanish language option.

• 2:57Nilay Patel?

  That it took them six weeks. The government remains unmatched in developing websites. Yeah. But they did. It's there. You can go get it. If you haven't gotten vaccinated, please look at this website. You can walk in all kinds of places now. Just go get it done. I'm tired of this. All right. That's my COVID update for the week. Get it done. I'm tired of it. Let's start with this trial. This trial is months in the making. Addy, just lay the foundation. Why, why is this trial happening and sort of what does it look like?

• 3:26Speaker 03

  So yeah, approximately the trial is happening because Fortnite, which is one of the most popular games in the world, added a new payment system for its V bucks, its in-game currency, that bypassed the Apple tax or the 30% charge that Apple puts on digital in-app purchases. Apple said, no, this breaks our rules. They kicked Fortnite off the store. They made a big deal out of the facts that it was a sort of underhanded, surreptitious change in a hot fix rather than something Epic went through the formal review process for. And then Epic sued saying that iOS is basically an ecosystem where the app market in it is a monopoly. And it sued Apple over antitrust violation. And so now that's where we are.

• 4:11Nilay Patel?

  One company suing another company for antitrust violations is not, it doesn't happen a lot. That's not how we usually think about it. We usually think about the government bringing up Facebook or something like that. Yeah. What specifically is Epic asking for from the court here?

• 4:25Speaker 03

  Epic's asking for two big things. The first thing is tied to the in-app payment service in Fortnite and in other apps and games, which is that they want to say that that's its own market and you should, if you're selling in-app purchases or subscriptions through the store, you should be able to use your own alternative payment method rather than going through Apple's own payment SDK. So that's the thing that would be a really big financial hit for Apple, but not a massive existential definitional crisis. The second thing, which is that, is that they want you to be able to sideload alternative apps or alternative app stores especially, onto the iPhone. Basically make the iPhone a lot

• 5:07Speaker 03

  more like Android. This matters in part to Epic because Epic has the Epic Game Store and if they want to launch a mobile version of that on iOS, that's something that suddenly would become possible if they prevail in that part of the lawsuit.

• 5:22Nilay Patel?

  So those are the two specific things Epic is saying the court should order. Let us use our own payment system. Let us sideload apps, including other app stores, onto the iPhone.

• 5:31Speaker 03

  Yeah, essentially, yeah.

• 5:32Nilay Patel?

  What do they have to prove to do that? Is it just Apple's bad? Or is it their other specifics?

• 5:38Speaker 03

  So they have to prove at a really oversimplified level that, A, the iPhone ecosystem is a thing that Apple has a monopoly over, as opposed to just like one product that it happens to put apps on, and that it's causing some kind of consumer harm by monopolizing that market in an unfair way.

• 5:59Nilay Patel?

  It seems like a high lift, but we'll get into that, what's happened this first week to that. The trial is also like, pretty strange in that it is not, there's no jury. It's a bench trial.

• 6:11Speaker 03

  Right.

• 6:11Nilay Patel?

  The judge is just sort of listening to everything and deciding.

• 6:15Speaker 03

  Pops in to ask questions sometimes.

• 6:17Nilay Patel?

  Yeah, she's, it's strange. It's not what you would expect. It feels kind of like a, like a very contentious meeting in some respects. Because it's just like the judge is asking questions. It's also being streamed to the press, but then there are pirate streams. Mechanic Kelly wrote an entire piece about just Discord piracy of the trial audio stream. And it seems like that is... Somehow colored the trial itself, right? That it's people in the very beginning, like people are yelling on the stream.

• 6:47Speaker 03

  Yeah, well, it's also colored the trial in that clearly they're introducing things with the intent of getting them in front of a bunch of people and the judge knows this and the judge is also trying to make decisions based on whether like the public is going to interpret a document correctly.

• 7:02Nilay Patel?

  Yeah, that to me, like that element of it, it's hard to listen to it and not know that that is in the background of the judge's mind, that she knows a lot of people are listening to it, whether or not that they're supposed to. She knows that the documents are getting produced, the internal emails on stuff are getting produced and immediately disseminated. And she's trying to control that part of it while also serving as like the judge and the fact finder in the entire case.

• 7:29Speaker 04

  That seems like a losing proposition, trying to moderate all of the news industrial complex on the internet and also run a trial at the same time. That seems like a lot.

• 7:38Speaker 03

  I think what she wants to sort of do is if she thinks that one side is trying to manipulate like the court of public opinion, she wants to try to limit that, like that there was this whole controversy yesterday. I guess, I don't know, it was an argument, not a, it can't have a controversy with two people. Where Epic's lawyer kept trying to introduce things to establish a kind of state of mind where Apple knew that there were these problems with the App Store because developers kept emailing them complaining it's full of scams. And the judge is like, well, you don't actually have evidence that it's full of scams. You have somebody saying that. And they're like, yes, we're trying to establish the state of mind. And they're just like, no, the public doesn't know that. They have no idea that the App Store isn't actually just full of scams. So they have like introduced some of that in there, but it's a part of the trial.

• 8:21Nilay Patel?

  Yeah, and I say that just to lay the foundation of, I mean, you and Tom have been listening to it. Liz Lapato is actually in the courtroom today. There's rotating pool reporters. I'm very excited to read Liz's descriptions of what is actually inside the courtroom because we haven't been able to see it. There's just pool reports, like Phil Schiller is-

• 8:38Speaker 03

  Fifty binders, every set has 50 binders.

• 8:40Nilay Patel?

  Fifty like binders, like three ring binders.

• 8:42Speaker 04

  Five zero.

• 8:43Speaker 03

  I don't know if they're three ring, I can't see them. I'm just going from what people say.

• 8:48Nilay Patel?

  I'm just so excited Liz is in there to see it. Both companies have designated representatives. Phil Schiller is Apple's representative, so he's just been sitting there in his mask, just like fuming at this testimony the whole time. Like, it's incredible. Okay, so that's, I just want to set the stage for people, give a sense of what this trial is, how it's operating.

• 9:09Nilay Patel?

  Let's start with Sweeney. He was the first witness up on the stand. This is Epic's side. One of the things as we went into trial coverage, as we have learned from other trials we've covered, the broad audience, as they read our coverage, doesn't always realize, like, one side goes and makes its case, and then the other side goes. So Epic is calling all of its witnesses right now and making its case. Their first witness was Tim Sweeney, who's CEO. Sweeney is a character. I don't know that he did great. Addy, how did you think that went?

• 9:38Speaker 03

  It's a little hard for me to tell because Tim Sweeney is, A, a pretty soft-spoken guy, and B, as far as I can tell, like, I don't know, his microphone was covered in 20 layers of spider web. He was, like, almost unintelligible on the stream, on the public and private stream. So that probably didn't help his case outside court. Inside court, he clearly came prepared to make a bunch of really heady arguments about what Fortnite is and why Fortnite is cool. Beyond that, I think that it seemed a little bit less certain that the judge was buying all of those arguments. And he also, like, there are just a whole lot of things that he wasn't going to ever get into, like App Store security, which has been the

• 10:22Speaker 03

  focus of, like, the last day.

• 10:25Nilay Patel?

  Yeah, so Sweeney is there to make the distinction, and we're going to talk about a bunch of these distinctions, between general-purpose computers and game consoles, between web apps and native apps, between games and the metaverse, right? He's trying to create frameworks where the iPhone is one kind of thing, and consoles are another kind of thing, where Fortnite is not a video game, but this broader economic engine that everyone is calling a metaverse right now, which we could talk about for the full episode if you wanted to, where web apps are limited in what they can do, and that means that innovation is limited because Apple controls both platforms on the iPhone, actually. Did he succeed in that? Like, let's start with, like, what is a game?

• 11:09Nilay Patel?

  What is like Sweeney's vision of what a game is? Did he present that well to the judge?

• 11:13Speaker 03

  So Sweeney basically defined what is a game in, so if it's the part of Fortnite where you kill each other, that's a game. If it's the part where you go to concerts, that's not a game. There were some more fine distinctions where, like, a game has challenges, it has scores. It's, uh, he sort of went in, he kind of conflated games with competitive games with the judge actually called out. But he overall just calls this like this phenomenon that transcends gaming and makes a big deal out of the fact that you can watch other media in Fortnite, which is, I think, his way of saying that part's not a game because it's other art.

• 11:47Nilay Patel?

  Right. And so, and this is where I, we're gonna talk about Netflix and Hulu down the line. But the argument is you can sign up for Netflix and just like watch a bunch of stuff in Netflix. No one thinks Netflix is a game, even though Bandersnatch exists in Netflix.

• 12:01Speaker 03

  Oh, somebody in that, in the courtroom definitely thinks Netflix is a game. They mentioned Bandersnatch.

• 12:06Nilay Patel?

  Right. I'm just saying, like, that's what I'm getting at is like, in the end, these things are all actually converging in various ways. And Apple's distinctions for its App Store rules are running up against the fact that there is conversions of media in that way.

• 12:21Speaker 03

  It's also the, one of the things that didn't get that much attention is the fact that Fortnite, they're like trying to turn it into a creation tool. That's where the metaverse comes in, which is, his vision is there's a world where a bunch of the, most of the money that you make in Fortnite is stuff that you transfer to another person who's making a thing. And if that happens, Fortnite's kind of made its own internet and Apple wants 30% of that. And Epic thinks that's super unfair.

• 12:44Nilay Patel?

  Can we just step back just for a half a second and explain why the game distinction matters? Because if Apple takes a 30% cut on all digital stuff that happens, why does it matter if it's a game or a video service or a metaverse or whatever to this specific case?

• 13:01Speaker 03

  I mean, that's kind of one of the weird things is, like, it's always a little bit unclear how much is just for, like, people from Epic trying to talk up Fortnite as being this really amazing thing that people benefit from having.

• 13:18Speaker 03

  And how much of it is like they're arguing that Fortnite is way more than a game. It's way bigger than a game. It shouldn't just be treated like games. Like they're also, Neil, I should probably try to explain this, but they've been trying to say that Apple's trying to say this is just something that should be limited completely to like, this case applies to games. And they're trying to make this argument that whatever remedy happens, it should be applied to like any app on the store because Fortnite is like a bunch of other apps. And it's not just like part of the gaming category.

• 13:52Nilay Patel?

  Yeah, it's like, it's a series of like conditional statements. Right? Like the Larry Lessig way of describing the laws that it's code. And like, in this case, the arguments are just like nested conditional statements. So you've got, if Fortnite is a game, then Apple's rule that games have to pay 30% like stands because they can make that rule elsewhere. Fortnite's not a game, then Apple needs to make a rule that covers all in-app purchases and they control this whole part of the economy. If Netflix is a game, it falls into that same category. So like, they're arguing about these definitions because they want to escape whatever narrow categories it seems fair to, for Apple to impose rules in. So if Apple says, we've just got this, we operate this part of the iPhone like the Xbox

• 14:37Nilay Patel?

  and you are accepting that deal and inside of the games industry. Yeah. The 30% cut is competitive and fair because look at where you pay that same rate. Epic is saying, well, we're not a game. We're the future of all economic activity in the metaverse. What are you going to do at that? And Apple has to like come up with some definition that encompasses that. Or they could say, and this is, I think where the most vergast part of this whole thing is, they're saying, well, the Xbox is a game console and the iPhone is a general purpose computer. And here are the differences between those things. And Apple is like parsing the differences ever more finely between all of those things.

• 15:18Nilay Patel?

  And ultimately, yeah, the judge is going to make some determination, which might be very simple, which is the iPhone has a contract and you broke it. Right, like, at the end of the day, like, that is a thing that Epic did. The iPhone has a bunch of rules, the iPhone Developer Agreement has a Terms of Use Agreement, and Epic just, like, knowingly broke it.

• 15:38Speaker 03

  If you really want mind-bending stuff, they just, earlier today, have been having an argument about whether Roblox is a game, and Apple's position is that Roblox is not a game.

• 15:46Nilay Patel?

  Right, so this is, that one, to me, is really, really interesting. But it actually, like, I think it cuts to the heart of the big philosophical question for me. They're arguing about Roblox, because there are literally developers who make games for Roblox. There are teams, there's Roblox Developer Kits. You can just, like, run around, make stuff in Roblox, and sell it to people.

• 16:07Speaker 03

  Those are also not games.

• 16:09Nilay Patel?

  They might be games.

• 16:11Speaker 03

  No, they're not games. Apple says they're not games.

• 16:13Nilay Patel?

  Apple says they're not games. The reason that they've had to parse Roblox into a different category is because if you say, "Roblox is a platform in which there are other experiences that you can pay for that may or may not be games," how on earth do you distinguish that from XCloud? Right? How on earth do you distinguish that from Minecraft? Like...

• 16:31Speaker 02

  Yeah, I think, like, this fundamentally speaks to, like, I think that Apple's biggest fear about, like, protecting the App Store is that they don't want someone to make a virtual App Store that you can get to within an app, that then gets around their 30% and creates its own, sort of, like, App Store within an App Store. That's, that's, that's kind of their fear, which is not something they will say or admit, but you can see throughout their policies and the way that they enforce them that that is very much it. Because, like, you just mentioned XCloud. I can sign up to a Shadow Cloud gaming service, which is kind of similar, but the distinction between XCloud, which is obviously Microsoft's cloud, Xbox streaming to the browser or to

• 17:12Speaker 02

  the Android device, the distinction between that Shadow service and XCloud is that that Shadow service works because you're remoting into Windows PCs, you're remoting into, like, a PC that you supposedly own somewhere, whether it's in a, you know, a server or at home. That's the distinction. The, the XCloud is different because it presents its UI and everything about it as if it's like a store or an App Store, and that front and that usability... I think Apple is ultimately fearful of someone or a bunch of different apps springing up in the App Store that will take the focus away from the App Store. So someone will come in and create their own App Store within the App Store.

• 17:55Nilay Patel?

  And I don't think you can separate that from the context of Apple has publicly loudly committed to services revenue as its growth engine. And a huge chunk of that is the App Store and a huge further chunk of that is in-app purchases in games. Like, there is just some significant portion of Apple's revenue that is Candy Crush whales. And we will never know unless Epic demands that that document is produced. I hope they do, Tim Sweeney, if you're listening, I think we'd all like to know. But like, one of the, this is like a much broader subject, but one of the weird things about the App Store having a review process and it feeling like a court is at the end

• 18:40Nilay Patel?

  of the day, that court is deeply aware of Apple's revenue. Like, the United States Supreme Court does not issue quarterly earnings. Right? It's not beholden to like an economic model. The Chief Justice of the United States Supreme Court doesn't get fired if the revenue doesn't go up three quarters in a row.

• 18:56Speaker 04

  Although that would be amazing.

• 18:58Nilay Patel?

  It would be amazing. But like, Phil Schiller runs the App Store. And like, at the end of the day, he's an Apple executive who, whose job is tied up into Apple's economic performance. And there's like, something really deeply troubling about that. I don't want to like, fall too deeply down that rabbit hole.

• 19:17Speaker 04

  Yeah.

• 19:17Nilay Patel?

  But this is a lot of what we're talking about. The Apple makes the rules for the store. Those rules are, and we'll talk about this in a bit, those rules are clearly like, directed towards protecting Apple's revenue, or in some cases, increasing Apple's revenue. And the game streaming apps are like, at the heart of this debate.

• 19:33Speaker 04

  Actually, can we take, just take a small pause? I do want to get into whether or not we should be having governments with profit motives. That sounds like the next three hours of my life that I would love to spend. Instead, I just want to point out, since we're talking about Phil Schiller and Apple executives and profit motive, like, actually seeing these emails in the documents, it's like, oh yeah, they're, they're, they're business people. Like, the veneer of like, perfect Apple keynote, you know, world that you usually get out of them is just like, completely shattered by a lot of the stuff if you really start looking at the documents. And it's a lot like, oh wow, he's terrible, but it's actually like, oh no, he's a, he's a business person. They, they're just making business decisions.

• 20:10Nilay Patel?

  They are, Apple's executives are not bad at business. Right. No. Right. They run the most valuable company and it is growing. They have more cash in the bank than most countries, right? Like, they are very, very good at operating that business. Yeah.

• 20:24Speaker 02

  Yeah. And there's a particular scenario, like you, you said about those emails and sort of the veneer. There's an email, I think it's like, I don't know exactly when it is. It's around about 10 years ago, or maybe not even that long ago, but it's, it's Shiller. He's basically arguing with Microsoft's team. A bunch of Apple people are arguing about having Office on iOS, essentially. And they've been having meetings with Microsoft. And ultimately, his email, the last like line is like, it's our store, it's our revenue.

• 20:51Nilay Patel?

  Yeah.

• 20:52Speaker 02

  Like, and that's kind of, that kind of really underlines like the way that Apple sees its App Store. And I think even though that's quite some time ago, when they were arguing with getting Office on there with the 30% stuff, I think that still stands today. Like, that's the way that they're always trying to defend it. It's, you know, it's our store, so we should be making money off of it. And you, you guys should be happy. You should be happy that we made this store. Like, and you're gonna pay for it. Like,

• 21:16Nilay Patel?

  This came up. I don't think there's gonna be an executive from the Match Group called by Epic soon. This is all happening in a context of congressional action. Senator Amy Klobuchar was just on Decoder. She said she was watching this trial very closely, but at the same time, she just had a hearing with executives from Match Group and Epic and other companies. And the executives from Match Group recounted a phone conversation, which Apple said, you owe us everything. And then said, we are all afraid of Apple. Right? So like, all these things are happening in parallel. I think Epic in particular is very aware that even if they lose this trial, all this other stuff is happening. Right? And really, they're just producing this mountain of evidence of how Apple behaves that can feed into all this other stuff. Right.

• 22:02Speaker 02

  Yeah, I think that's, I think Epic, like, I don't know whether they're going into this thinking, we're gonna lose or whatever, but they've got like a giant task to prove the points that they need to prove. And just listening to it this, this week, I don't think they're doing that particularly well, but what I do think they're doing is that they're, they're trying to get these documents out there. They're, they're trying to get evidence out there that other regulators, whether it be international ones or even at home in the US, will look at and go, okay, we haven't seen this evidence before. And just trying to get some of those arguments out there into the public. Like, you can, you can very much tell that, because some of the, some of the arguments they've been having even just, you know, between the attorneys about which documents should be redacted

• 22:43Speaker 02

  and which shouldn't, you can just tell that this is a document finding exercise that they're spending a lot of money on. And, and, and it just feels like that. So.

• 22:53Nilay Patel?

  What you're talking about there is the testimony of Lori Wright, who's an Xbox Vice President. Before we get to that, I want to just come back to game streaming for a minute. There were X-Cloud executives and Nvidia executives called to the stand to talk about how their game streaming services work. How did that go? And what were the, what were the main sort of points of contention there?

• 23:14Speaker 02

  Yeah. So the first one was from Nvidia and they basically, they quizzed him primarily, it was a lot about latency. That was Epic, the Epic game side. Like, I think they were trying to prove, basically, Apple has forced them down this route to go to the web browser. Why does that, like, why does that matter for a start? And if it matters, like, why, why can't they make it into a native app? So it's kind of trying to speak to those policies of like, why, why is Apple blocking cloud gaming? Or not, not even blocking it, but just making it more difficult for these companies to do it in a way. And it speaks, it speaks again back to that point I made earlier, is that these companies obviously want to present it in a sort of store-like interface for cloud

• 23:55Speaker 02

  games. You just click and go. Apple wants them to package these games up individually. That's like staying to Netflix, you know, put all your TV shows, all your movies separately onto the store, and then you can have another app that kind of lets you link out to them. It's like, it's such a task and there's so much licensing involved that no- Companies probably even able to do that. So they they brought in this Nvidia engineer. And one of the the points that I think he made that I don't know if the judge will really pick up on closely. But like, I thought it was interesting is that the argument between this native and web app is that they're obviously forced to use Safari or Webkit, the web rendering engine for Safari. They're forced to use that. And maybe that's not the best that's out there, like Chromium might be better.

• 24:39Speaker 02

  Or there could be better decoders that are used to like pull that video stream in from the game. That but more optimal, create less lag. So they focused a lot on that. So that was kind of like the Nvidia thing. Obviously Nvidia has a relationship with Epic Games. They brought, they eventually brought, you know, Fortnite to the iPhone through the web browser. So there was a bit of back and forth about that. And then obviously they brought in Microsoft as well. And Microsoft's obviously, they, so in this case, they they've talked about Xcloud and said that they spent three to four months of going back and forth with Apple. And how Apple was initially like, oh, yeah, we might, you know, let you go through the Audible or Netflix sort of style route into the store. And then they were like, no, we're not going to. And then they brought up Lori Wright from Xbox.

• 25:24Speaker 02

  He's like their Xbox VP of Business. And she was talking about Xcloud as well and how they'd spent, you know, three to four months to try and get Xcloud on the store. And ultimately, there was a back and forth with Apple and it didn't happen. One thing that did happen, though, is that Microsoft sent an email to Apple to say, hey, why is Netflix allowed to do Bandersnatch? And why is this Shadow Gaming company allowed to do, you know, streaming games from a Windows PC? But we're not allowed to do Xcloud. And and Apple was like, uh, let's get rid of Shadow. So they like pressed the button and Shadow just went.

• 25:56Nilay Patel?

  Yeah.

• 25:57Speaker 02

  That's inappropriate.

• 25:59Nilay Patel?

  We also learned it, by the way, in this trial that Apple refers to that as UTB, which stands for under the bus. And that one developer has thrown another developer under the bus.

• 26:08Speaker 04

  Amazing.

• 26:08Speaker 03

  Or press or a user. Anytime somebody pointed out a problem with an app and they deleted it. It was up until, I think, 2016, there was UTB.

• 26:17Nilay Patel?

  Nice.

• 26:17Speaker 02

  UTB.

• 26:17Nilay Patel?

  Under the bus. When you, when we say these companies are just run by people, like, that is like the ultimate example.

• 26:23Speaker 04

  Yeah.

• 26:24Nilay Patel?

  Like, they just came up with a phrase. They're like, under the bus. That's what we call it. It's the official App Store review lingo.

• 26:30Speaker 04

  I've been very good. I've been very quiet.

• 26:32Nilay Patel?

  Dieter, this is your moment.

• 26:33Speaker 04

  We just talked about about web apps a little bit. So here's the thing. Apple does not ban you doing whatever you want in the browser. And so you could, you could do a game streaming service, but they effectively banned game streaming services up until very, very recently because mobile Safari just didn't have the capability that you really needed in order to pull off a game streaming service over the browser. And so all the stuff that's come up about latency and like what, you know, they didn't mention progressive web apps, but that's effectively what they're talking about and what Safari is.

• 27:05Speaker 03

  They touched on it at one point very briefly.

• 27:07Speaker 04

  Very briefly.

• 27:07Nilay Patel?

  Yeah.

• 27:08Speaker 04

  That's just like the rest of the internet that is perfect. It came up very briefly and then everyone forgot about it.

• 27:13Speaker 03

  They said it's a web app that pretends to be more like an app.

• 27:16Speaker 04

  Yeah, that's, that's basically right. That's right. Pretend web app. Yeah. That's what it stands for. Actually, I love that. That's amazing.

• 27:26Speaker 04

  But there are other things that a web app could do. And so Tom and I wrote this piece. It's like, look, web apps will never be as good as native apps. I've got many, many people yelling at me about that, that it's possible for web app to be as good as a native app if everybody would just implement this one standard, which is probably true. And it's a thing that I've heard for the last 10 years. So let's set that sidebar.

• 27:49Speaker 04

  Safari just can't do a bunch of stuff that would like really, really make web apps much more powerful. And it's at like a, like web standards level, but also just at like a platform level, the install flow for getting a web app off of Safari onto your home screen is bad. And they, they perform weirdly in some ways. And so the, the question is, do you be mad at Apple for nerfing web apps in WebKit? And the answer is like, yeah, a little bit, but at the end of the day, Apple has engineering priorities, just like everybody else. And they're going to, they're going to put their cycles on improving privacy more than they are on adding, you know, WebGL improvements or whatever. So I'm not as angry

• 28:34Speaker 04

  about that as, as I think I could be.

• 28:36Nilay Patel?

  Ooh.

• 28:37Speaker 04

  It's, it's more, it's more, why don't they just allow a competing browser on the platform, like competing web rendering engine? Because like then Chrome just roll in and be like, you want to run a game streaming service on the iPhone? Just use, use the Chrome rendering engine. Bing bang boom.

• 28:53Nilay Patel?

  But we know why. This is what this is what I'm getting at. This is why I'm less charitable than you. I know why Safari has nerfed support for web apps. Because Apple, Apple's business priority is to make the App Store go.

• 29:06Speaker 04

  Yeah.

• 29:07Nilay Patel?

  Right. And Apple, and I understand there's privacy and security and Apple really cares about that. No doubt that that is idealistically part of Apple's DNA.

• 29:16Speaker 04

  Yep.

• 29:17Nilay Patel?

  I know it is.

• 29:17Speaker 04

  Yep.

• 29:18Nilay Patel?

  I'm not doubtful of that at all.

• 29:20Speaker 03

  A lot of the questioning is also focused on really specific things that they could have allowed, but don't, like access to ARKit and push notifications.

• 29:27Nilay Patel?

  Yep. Yeah. This is what I mean. That's a, that's a false limitation. No, but like the privacy and security thing, what does Apple not want you to do? Apple does not want arbitrary code to run on the iPhone.

• 29:37Speaker 04

  Correct.

• 29:37Nilay Patel?

  For like a million reasons.

• 29:39Speaker 04

  Yeah.

• 29:40Nilay Patel?

  I think actually chiefly among them is security of a billion installed iOS devices that are a rich target. Right? The, I'm certain the current president in the United States has an iPhone. The last one definitely did. Right? Like, these are rich targets that Apple is motivated to protect. And one great way to do it is App Store review. So they are consistently saying, we don't want this other way to run arbitrary code on the, on the iPhone, which is a web browser.

• 30:12Speaker 04

  Yep.

• 30:12Nilay Patel?

  If you let the Chrome team put the Chrome, the Chromium engine on the iPhone, now you've inherited all of Chrome's security problems and you cannot possibly review and change them the way that you can with Safari. That's a legitimate reason.

• 30:26Speaker 04

  Yeah. Although you, you could, you could build a better sandbox. I'm also, I want to insert one tiny sidebar here that I'm pretty sure the App Store rules don't let you just put a wrapper around a web app and stick it in the App Store. So not only are they making web apps bad on the iPhone, they are, it's the, the distribution problem. When you think, when you think app, you go to the App Store. And so if you want to make a web app, you actually have to do a bit more to include like Apple specific SDKs and codes and app stuff to make it more native in order to be allowed in the App Store. So they're, on like every level, it's just like pushback against web apps that is either like legitimate about privacy, or it's about they're protecting their business model, or it's both.

• 31:05Nilay Patel?

  Right. It's, it's some hybrid of both. And the thing I just keep coming back to is because they don't allow third-party browsers, and I do think there's a good reason to, but whatever, they do it on the Mac, and the Mac is mostly fine. Because they don't allow third-party browsers, effectively, they control both platforms on the iPhone. Right. Right. They set the ceiling on the limit of web apps and they absolutely set the ceiling on the business model in the App Store. Yep. So if you want to escape the business model limitations, the App Store and go to the web, you now have to accept performance and capability limitations of Safari. That is a lot of control for Apple to hold. And I, it's just obvious that they are playing one against the other.

• 31:45Nilay Patel?

  And in this case, it seems on the subject of game streaming, they are trying to use the web as the escape hatch from the control of the business model. And running into what are just the obvious and well-known limitations of mobile Safari. Right.

• 31:57Speaker 02

  And it's also, it's also consumer behavior, which is, which is something that Lori Wright, the Xbox VP like touched on is that. You can have these web apps and you can force people down that route, but like, Apple has taught people for years to go to the App Store to get an app. Like, people don't go to the web to play games is what Lori Wright said. So it's like, and then they had a big back and forth. Like, Apple's attorney was like showing all these glowing reviews of Xcloud, which is still in beta and.

• 32:24Speaker 03

  Which you did with GeForce Now also.

• 32:26Speaker 02

  Yeah. And it's like, yeah, but that's beside the point. It's like, if, if, if this wasn't about a business model thing. List those PWAs in the App Store then. Let people discover them from there.

• 32:38Nilay Patel?

  Yeah.

• 32:38Speaker 02

  You know, but you can't, you have to go into the web, go to a URL, tap the share button, add it to your home screen. And then sometimes it doesn't even really work. Like some weird cookie issues happen and all these, you know, like it's just, it's not, it's not the same.

• 32:52Nilay Patel?

  And one day, Apple might just decide that cookies are not allowed on Safari at all, right? Like.

• 32:56Speaker 02

  Yeah.

• 32:56Nilay Patel?

  They just did that.

• 32:58Speaker 02

  Yeah.

• 32:58Nilay Patel?

  There is a lot of dynamic between the web apps as an escape hatch that rests with the fact that Apple controls Safari and. For some very obvious legitimate reasons and then some very. Deep, dark business reasons limits its performance. This, however, all runs into the next big definitional debate of the trial, which is a general purpose computer and a game console. Lori Wright is like at the heart of this in some ways. Apple actually just asked for her testimony to be stricken. Tom, what's going on there?

• 33:31Speaker 02

  Yeah, I didn't realize we'd move on from like Mac versus PC to Windows versus Windows versus Xbox, which is basically what's happened. This is another big part of it. So obviously, Apple wants to position the fact that they they've taken this 30% cut, particularly on games, especially because this is industry standard. You know, like Sony, Nintendo, Microsoft, they all take a 30% cut on digital game sales. And then on top of that, whatever you spend within those games. So all the in-app purchases was really where the revenue comes from. And it's essential to the business model, particularly of Microsoft and Sony for the hardware side, because those guys subsidize that hardware to then get the money back from the software sales. So that's that's the central thing.

• 34:15Speaker 02

  So basically, the argument is between whether you can consider a PC that you put on your desk, like a Windows PC or a Mac, the same thing as a phone and the same thing as an Xbox or PlayStation console. Now, this got really interesting in the trial because there was questions like, what is an Xbox and like, does it, you know, do you have to plug it into a wall? Can you access your internet banking when you're adopters with your Xbox? Those are like crazy questions.

• 34:41Speaker 03

  It makes me want to do all of these ridiculous things. I want to just haul one over into the doctor's office.

• 34:47Speaker 02

  Yeah, like when I go for my COVID shot, I'm totally going to bring my Xbox with me and.

• 34:51Nilay Patel?

  You turn on your Xbox.

• 34:53Speaker 02

  Yeah.

• 34:53Nilay Patel?

  A huge power supply, the lights in the doctor's office go whom.

• 34:59Speaker 02

  But yeah, that's the fundamental thing that they were really arguing about. And obviously, from Epic's side, they want to position and Microsoft as well. Let's be honest, like Microsoft is the quiet like partner in this as well. But they want to position the iPhone as the same as PC. So therefore, it should be open. It should have multiple app stores. Why should Apple be taking a 30% cut? Everything. It's a general purpose computer. This is the thing they keep saying it's a general purpose computer because it has access to all these apps. And the Xbox, no, no, we can't call that a general purpose computer because, you know, we have a business model that supports it and we need to take that cut. It's basically the, the, the sort of difference. But where it kind of falls down, where it gets complicated to make those arguments of one side or the other is that the Xbox also has access to Netflix,

• 35:44Speaker 02

  to various apps. And where do you draw the line between, you know, what is something that's stationary in your home and then what's something that's always in your pocket and a general purpose computer? And like, what's supposed to be specialist?

• 35:57Nilay Patel?

  Addy, what are the arguments? Right? I mean, they've been kind of funny, but they've been trying to make a bunch of arguments to distinguish these things.

• 36:03Speaker 03

  So yeah, there's the distinction. There's like general purpose versus special purpose computing device. One of the arguments is there are billions of Windows devices. They are, it's like a more important market. It's a market where there's a bunch of, they don't use the word emergent, but the idea is that there's like emergent uses, that it's important that you should be able to have this kind of open store because it's a device that you can discover new ways to use it, that like the Xbox, everybody kind of knows what the Xbox is for, is the claim that they have this whole business model built around, well, it's for games, except for the time that they wanted to be like a whole media thing, but they don't mention that.

• 36:42Speaker 03

  And for a PC or for a phone, you're always supposed to be finding new ways that it could be part of your life.

• 36:51Nilay Patel?

  I mean, that's very spiritual.

• 36:53Speaker 03

  Okay. I, yes. I mean, there, we're also like weirdly not touching then. I, Apple has introduced this whole other distinction, which is whether or not something has a bunch of personal info on it. That their argument for why the iPhone shouldn't work like Mac OS is that everybody carries their iPhone with them all the time and keeps their life on it. Their claim is nobody leaves an I, a MacBook at, on the train or something like that, which is not my experience of MacBooks. But I'm not sure. I'm paraphrasing all of this a little bit, but yeah.

• 37:26Speaker 04

  Can I admit something? There is a tiny part of me that's like, yep, Apple's right. A tiny little part of me that's like, you know, the difference between one thing with a chip and another thing with a chip is just like what the company that makes it decides it's allowed to do. Right? When the iPhone first came out, I got in a big argument with my very good friend and co-founder of PhoneDifferent.com, Mike Overbow. And I argued that the very first iPhone was not a smartphone because you could not install a program on it. Later, we call them apps. And he called, he yelled at me for engaging in the no true Scotsman fallacy. And we had a whole long debate about it.

• 38:02Nilay Patel?

  This is very good.

• 38:03Speaker 04

  Yeah. I eventually gave up and like, yeah, no, okay. The iPhone is a smartphone. But there's still a tiny part of me that's like, if Apple decides you can't do something on it, if Apple decides it's not a computer, okay. I don't actually think that. I think that the iPhone should be considered a general purpose computer and we should be allowed to do more stuff with it because we paid a lot of money for it. It can do all the things. They just should be allowed to do it. But there is a tiny part of me that's like, you know what? Okay. They're right. Tiny.

• 38:27Nilay Patel?

  Yeah. So I want to talk about that in the next section because I, we've learned a lot about how Apple perceives the iPhone from its emails. And like, I want to spend a lot of time on that. I just want to end this section by, by talking about Microsoft for one second here because Lori Wright was asked, do you make a profit when you sell an Xbox console? And she's like, no. And that has kicked off just a firestorm of nonsense. Eddie, can you just walk us through that?

• 38:54Speaker 03

  Yeah. So there, this is again, relevant because part of Epic's claim is that consoles are different from smartphones because Apple sells at a profit and Microsoft and Sony and Nintendo, maybe it doesn't really specify this, don't. And therefore they're nicer to developers. And so when Lori Wright was asked, well, do you ever, have you ever made a profit on selling an Xbox? She said, no. They then followed up on this later and were like, well, what about later on when manufacturing costs drop? Do you start selling them at a profit then later in the generation? She's like, no. And then Microsoft started making public statements, which Tom can explain.

• 39:34Speaker 02

  Yeah. So they, they basically wanted to remind everyone, yeah, we, you know, we do make money on Xbox.

• 39:41Speaker 03

  Which is weird because they made a huge point of that in court. Their entire argument is, yes, we don't make money on the hardware, but then we sell all of these things and we have to take our 30% cut because without that, we wouldn't make any money because again, we don't sell these things at a profit.

• 39:56Speaker 02

  And Laurie Wright did touch on it briefly because they said, well, if you're not making money on these things, like, why are you selling them sort of thing? And, and she was like, you know, it's an end to end experience, but, and, and, and they rely on software and games and stuff, but like, it, it is like, like I was saying, like, they, they sell these for a loss. They make it up in, in software and in-app purchases particularly. So games like Minecraft and Fortnite are huge for, for, for that revenue stream. And it's with a-

• 40:23Nilay Patel?

  And this is all part of Epic's argument, right? Is we know the deal going in with Microsoft and Sony. That that's how their business works.

• 40:31Speaker 02

  Yeah.

• 40:31Nilay Patel?

  They can play Microsoft and Sony against each other. There are emails to that effect. There's Tim Sweeney telling Sony, you have to enable cross-play. Otherwise you will tear families apart.

• 40:40Speaker 02

  Yes.

• 40:41Nilay Patel?

  Right? And then like, they, they negotiate on the, on the margins of those deals. And they know like, okay, this is ecosystem we're playing in. And this is the business model, but there's all these competitors and we can kind of like, play them against each other. They cannot do that with Apple, right? It's like, Apple's where the highway, basically. And that is a big part of it.

• 41:01Speaker 03

  I'm interested in, I hadn't personally known like the intricacies of the Sony deal that Epic has where like, if you play Fortnite a bunch on the PlayStation, but you spend more money on like Android or something, then Epic has to send Sony money?

• 41:16Speaker 02

  Yeah. And that one, I mean, that's, that's a whole can of worms to open. But like that, that one is essentially like, and Tim Sweeney has admitted that no other platform holder does that. So I think that's literally like Sony knowing that like 50, 60% of the Fortnite revenue that Epic makes comes from the PlayStation. And that's then being like, this also a big revenue driver for us and we want to protect that. So like, if, if our fans are using the PlayStation predominantly, and then they're going to play some time on iPhone, but then they start spending more money on the iPhone, then you need to protect our revenue stream, you know? Like if we're going to enable this cross-play, that's basically that, what they've done

• 42:00Speaker 02

  there, but no other platform holders impose that as far as we can tell.

• 42:04Nilay Patel?

  We really could spend.

• 42:07Speaker 02

  That's like a whole nother thing.

• 42:09Speaker 04

  Before we, before we break, I just want to say that if the rule for is it a computer is that the company make money selling it, then Google has never made a computer.

• 42:22Nilay Patel?

  Or they committed to it for more than two years.

• 42:26Nilay Patel?

  No, I just want to end on this because one, we could fall down the rabbit hole of the metaverse is actually a totally dystopian surveillance state where everything, single thing you do is monetized through a set of opaque deals between giant multinational corporations that you can't see, which is true. But Lori Wright saying that on the stand, Microsoft coming back and saying, no, Xbox is profitable led to this moment today where before the trial kickoff today, Apple filed a motion and said, we need to strike all of Lori Wright's testimony is not credible because she has not produced Microsoft's P and L for Xbox, proving that they sell the consoles at a loss. We don't know it. She just said it. We don't know it. We don't have any documentation. None of this is credible.

• 43:04Speaker 02

  Yeah.

• 43:05Nilay Patel?

  This adding to me is part of like this, the larger chaos around document production that has plagued this entire trial so far, where like, it seems like every couple of minutes, they just yell at each other about what documents will be produced. And then we're watching the public box folder and like literally watching PDFs just appear and disappear.

• 43:25Speaker 03

  Yeah. You know, we designated people to just start downloading them to our own folder so that we.

• 43:32Speaker 03

  I don't know if I'm supposed to admit that.

• 43:35Nilay Patel?

  I'm just saying like Apple and Epic did not hire cheap law firms.

• 43:39Speaker 02

  Yeah.

• 43:39Nilay Patel?

  Like these are the biggest and best law firms around. Like Epic's law firm in particular just won a gigantic antitrust case that they were supposed to lose for American Express at the Supreme Court. Like they're, they're spending a lot of money on lawyers and I, I can't figure out how to make sense of these seemingly rookie mistakes about document production.

• 43:58Speaker 03

  There's also all of the third-party stuff where Samsung had wanted some stuff to be sealed. Anybody who's basically dealing with Apple and Epic and has some kind of deal, like at one point, like Paradox Interactive, the studio, wanted to keep details of their Epic Game Store deal, I believe, secret. So there's that whole, whole can of worms, too.

• 44:18Speaker 02

  And the Sony documents that we were just talking about, the cross-play stuff, Sony wanted to keep those secret. And as far as I know, they've not been republished. So we have documents that are like partially redacted, but aren't in, in the public domain anymore, effectively. Although they are.

• 44:34Nilay Patel?

  No, they are in the public domain. They were produced.

• 44:36Speaker 03

  No, the judge has said that she's not going to reseal them. She has the genie's out of the bottle.

• 44:40Nilay Patel?

  Yeah, I just don't want to, if we publish them again, I don't want the lawsuit where like they're like quoting you, Tom. Like, no, they're public now. We have them. They're just not part of the record anymore.

• 44:50Speaker 02

  Yeah. But I haven't seen them appear again.

• 44:54Nilay Patel?

  So I was just like, I just want to end on this like color, like, we're arguing with all these definitions and these executives are saying things. And we're at the point where, just think about this, Apple is saying the testimony of Microsoft's Xbox Vice President of Business Development is not credible. Right? That's their official motion. Like, you should not believe this woman. She runs Xbox. Like, that is a crazy place this trial has landed at because the stakes of the fight are so enormous. This is a good place to take a break. When we come back, I want to talk about what we have learned about Apple.

• 45:31Speaker 05

  Growing teams need a corporate card built for more, something that doesn't sacrifice speed for control. Introducing the American Express Corporate Cash Back Card. Get 1.5% cash back on eligible business purchases, advanced spending controls, and real-time visibility, plus intelligent expense management. Get started at go.amex slash amexcorporate. Terms and cap apply.

• 46:00Speaker 01

  Ask yourself, what are your best people spending their time on right now? Expense reports, receipt chasing, month-end close that takes weeks. You've become what you spend on, and that's not what you're building toward. Brex is the intelligent finance platform that eliminates that work before it starts. AI agents that handle the manual stuff automatically, so your team can spend their time on what actually compounds. It's time to get Brex AF. Learn more at Brex.com/AF.

• 46:37Speaker 06

  Your heart can tell you a lot about your health. Apple Watch Series 12 measures your heart rate every five seconds with the most accurate heart rate sensing in wearable. So your vitals app, now with heart rate variability, can tell you when something is off. And your readiness score can let you know when to rest and when to push. Hear the story in every heartbeat with Apple Watch Series 12. The features described are for wellness purposes only and not for medical use. iPhone 11 or later required. Based on Apple Conducted Study of Heart Rate Accuracy, August 2026. Visit apple.com/AppleWatchSeries12.

• 47:07Speaker 05

  If you're looking to hire, you need Indeed. With Indeed Sponsored Jobs, you can spend less time searching and more time actually interviewing candidates who check all your boxes. Less stress, less time, more results. And listeners of this show will get a $75 sponsored job credit to help your job get the premium status it deserves at Indeed.com/podcast. Just go to Indeed.com/podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com/podcast. Terms and conditions apply. Need to hire? This is a job for Indeed-sponsored jobs.

• 47:52Nilay Patel?

  Okay, we're back. Dieter, just before we took a break, you were talking about Apple controlling the phone, being at peace with the fact that the companies that make the devices can call them computers.

• 48:03Speaker 04

  I'm not actually at peace with it. I'm just saying it part of me wants to be so I don't have to worry about it anymore.

• 48:08Nilay Patel?

  Yeah, can I just accept this so that I can move on? And the answer is no, we can't. One decade of the show has proven that we cannot do that. But we have learned a lot about how Apple perceives the iPhone. We've learned a lot about how much it controls the iPhone. And I don't know, we've like, adding to some extent, one of the big questions of this entire case is like, is the App Store any good? Right? There's like, do the things that Apple says it does?

• 48:34Speaker 03

  Yeah, which Apple has, again, because they have characterized this whole trial as an assault on the iPhone and the App Store. And a lot of antitrust standard involves, is this hurting consumers? It's a big deal.

• 48:46Nilay Patel?

  So let's start with the, I think, the first bombshell that we learned about as the emails came out. So Netflix is obviously a very popular app on the store. For a long time, Netflix would use sign up in the app. So you could subscribe to Netflix in the iOS app. Apple would take its 30% cut.

• 49:05Nilay Patel?

  Netflix decides to A/B test how badly it's hurt by not allowing signups in the app. That's it. They just, they're going to A/B test it. They haven't even done it. Apple like freaks out, basically, and circulates an email and a, I guess it's a deck. It's like a list of things they can do to keep Netflix on the store. This list is...

• 49:27Speaker 04

  The list is nuts, but it's also, to be clear, like ultra clear. We don't know, I think, that Apple actually pitched any of this to Netflix. We know that they were like in a deck internally saying, here are some pie in the sky ideas of things that we might consider doing to keep Netflix using in-app purchases. And it's like wild stuff.

• 49:47Nilay Patel?

  Okay, so here's the list. And this is labeled what we could do. We could continue coordinated featuring across iOS and Apple TV. We could provide performance data that they don't provide other people. Impressions, conversion rates, installs. Give them the power to determine what shows we feature. We could bundle it on Apple TV. We could offer more benefits in the video partner program. We could co-fund a marketing to drive customer acquisition. We could pay for their ads. We could give them a percent of the App Store's commission. Committed to buying ads for Netflix. So Apple will take a 30% cut of Netflix's money. Yep. From subscriptions and then just reallocate that money to buying ads for Netflix in the App Store. Which you will note is effectively lowering the commission.

• 50:29Nilay Patel?

  But just keeping all the money inside the Apple ecosystem. Dedicated emails promoting only the Netflix app. They could bundle Netflix into Apple service. They could hold events at the store. They could do today in Apple US in-store events promoting Netflix's IP. Like, anything to keep Netflix from doing an A/B test of turning off iOS signups. Which eventually Netflix did and does not appear to have hurt Netflix. I look at this and I say, this is nuts. This is where Apple's monkeying around with the business model of another company is totally a reflection of its control of the App Store. And they know that every time you push a button in an app, they should get a cut.

• 51:13Nilay Patel?

  And now here's a list where Netflix is saying, we don't know if this 30% cut is valuable. And Apple is coming up with a laundry list of things it can do to make that 30% cut more valuable. If you abstract it away, just one step back, what does that look like? That looks like a negotiation. Right? And that's what you would want. We want to take some money every time somebody does a transaction with you. Here's all the stuff we could do to make it worth your while. What do you think? And Netflix didn't say yes or no, and eventually apparently they said no. No other app developer gets to have that negotiation unless they're Amazon, which said yes and took a lower rate. But like, to me, this is, do you want your operating system vendor to exercise

• 51:57Nilay Patel?

  control of the applications such that it can start messing around with the business models of the company, companies that run on the operating system? I, this is where it gets really shaky for me. I don't know if the judge saw it this way, but I looked at this set of emails and I was like, oh, I'm like really uncomfortable with this.

• 52:14Speaker 02

  I think I'm also uncomfortable that whilst, whilst these decisions are being made like this, and you know, this is business dealings that happen all across the world with various, various happenings. Apple's public front is that we treat developers fairly, all the same. We treat them the same. What are you on about? We, we don't do deals. We don't do white listing of private APIs or anything like that. Everyone's treated the same, but it's not the case.

• 52:39Speaker 03

  I really wish that had come up. Yes. So yesterday that almost came up when they were asking about, do you give special deals with, I think it was, it was either Matt Fisher or one of the other people who's a like App Store review executive. It was like, no, we do not do, our review policies treat everyone the same. We don't give special dispensations. It was worded like carefully enough that I think it did not cover the kind of things that this was talking about. It was like, we won't kick people off for different reasons, but I really wish they had followed up and they kind of left it hanging.

• 53:12Nilay Patel?

  And so this brings us to the Hulu emails. Hulu was whitelisted to use a special set of APIs for the store where you could subscribe to Hulu in the app. And then the Hulu app could unsubscribe you, which for most other apps, you have to go into Apple's settings app or wherever they manage that. But the Hulu app could actually unsubscribe you. So Hulu, when they launched their live TV service, needed to unsubscribe people from Apple billing so they could bring you over to Hulu. And they basically built a button on their website and their app that like let you do it. This was tweeted out by a developer named David Bernard in September of 2018. This generates an email inside of Apple.

• 53:55Nilay Patel?

  I don't know this person's last name, but this email says, Phil saw this and wants to know what's going on.

• 54:02Nilay Patel?

  I don't know. I don't know Phil's last name. Phil saw this and wants to know what's going on. This sets off an email chain inside of Apple between people that basically ends with, did anybody go through Hulu's flows, like payment flows before they rolled this out? Which is just wild, right? Like, you're an app developer, you've got access to APIs, you're gonna build stuff. At what point dare you like, wait, I need to go ask the OS vendor if this application flow is okay. I need to go ask the operating system vendor if they're gonna stop us. I will tell you that I just signed up for Hulu with Live TV like two days ago at my parents' house, trying to get them off of their horrible 18th service.

• 54:42Nilay Patel?

  And we had it billed through Apple and to get that billing canceled and moved over to Hulu billing, so I had to call Hulu.

• 54:50Speaker 04

  Whoa.

• 54:51Nilay Patel?

  And we had to go through all the steps. So all this was removed. That to me is like even more of control. Like, this is Hulu has the APIs and they're using it to support their services. They're whitelisted. They've been given permission. And Apple's saying, wait, hold on. We're not gonna let them turn off our billing so they can charge more elsewhere. And Phil wants to know what's going on. I'm just uncomfortable with all this. I don't know what it's like. It's weird to think of the iPhone as this mobbed up, right? That's what this feels like, is every time they see money flowing through the phone in weird ways that don't benefit them, there's an email chain and then like the weight of App Store review is brought to bear so that that process

• 55:34Nilay Patel?

  is bent back towards Apple's flows. Now, I hear this from a lot of listeners. Every time I do an episode of NITrust Law, I get these notes in my email inbox. This is why we pay Apple, to protect us, right? I choose the iPhone because I want Apple in this level of control. I trust them. I trust their taste. I like their products. They make great products. The M1 chip is gonna blow up the... Like, I get it. I hear all that.

• 56:01Nilay Patel?

  I don't think we've gotten to the next part of this trial, which is like, it is all but impossible to switch away from the iPhone. So if you don't like it, Apple's also trying to actively lock you in. And I think Epic hasn't really made that case yet, but I suspect they're gonna start soon.

• 56:15Speaker 03

  Yeah, yesterday was all about like, actually, it's not protecting you. And I'm hoping they get into this next.

• 56:21Nilay Patel?

  Let's talk about the not protecting you. So they asked a lot of questions of Apple of like, have you measured the security of the App Store? Have you measured if it's keeping people safe? Prove it. And Apple kind of said, we haven't done that.

• 56:34Speaker 03

  They basically, yeah, they will. Pretty much any claim that Apple made, Epic was like, well, do you have studies on that? And they're like, no. Unfortunately, I feel like, I don't know, maybe Tommy thinks differently. I felt like they didn't make a particularly strong case, because so much of their case yesterday for why the App Store isn't safe is that they just went through a bunch of developer feedback. And whenever anyone said something sucked, they just bred it out without details, which like, I don't know, if you ever gotten feedback about anything, someone will like, it just made, they didn't do a great job of not establishing it was not cherry picking, especially because there was one where someone was like, this thing is plagued with scams. And then they read the line out above that. And he's like, even though I gave the App Store a high rating,

• 57:19Speaker 03

  it does have a few pitfalls. Yeah, it's just weird. Because I, everything I read about is like, okay, the App Store does actually have tons of scams. Like, we featured someone who just hunts scams. That seems like there are a bunch of great examples they could have cited, and it felt like they were really weak.

• 57:34Speaker 02

  Yeah, like, Apple's, Apple's thing is obviously privacy and security. And like, we have to protect, like, think of the children. Basically, that's, that's what the argument is, right? Because we need to protect everyone, like, cover you in cotton wool. And like, that's fair. Like, that's why I like the iPhone. That's why a lot of people like the iPhone. That's why developers trust the iPhone. But we know, security is not 100%. We know that the App Store review process is, is not great. We've seen Phil Schiller screaming about it in emails. Like, we know this. And scam apps are coming through. I think Sean did a great story, piecing together some of like, a person on Twitter is literally finding scam apps that are scamming substantial amounts of money out of people on the App Store, like,

• 58:17Speaker 02

  on a regular basis, like, on a daily, weekly basis. So they obviously have some review issues there. We haven't had like, this massive, like, Thing with the iPhone where they've had a major security event, like a major apps got in there like, like, like what we've seen on Windows recently where there's been these crazy ransomware attacks. We haven't seen that on the iPhone, but I feel like it's, it's only a matter of time that that perhaps happens or some, something happens and, and the, the wall falls down a little bit. But these scam apps are like the very start of that, you know, like it's, it's these little things that creep in. And Apple's argument about that sort of stuff is like, yeah, like we don't want to open up the store because of these sort of, sort of scam.

• 58:59Speaker 02

  We don't want other, you know, stores on, on the iPhone because this is the sort of stuff that will happen, like all these things will happen. We don't want to open up Safari because, you know.

• 59:07Nilay Patel?

  Yeah, but like, think about it this way, like I like, like, you know, many people am a raging capitalist. It's true. A- Apple's accountability for that stuff getting through is totally muted.

• 59:20Speaker 02

  Yeah.

• 59:20Nilay Patel?

  So if you, if you hear that scams are getting through in the App Store and you're like, I don't trust this anymore.

• 59:26Nilay Patel?

  We'll talk.

• 59:27Speaker 02

  Yeah, where else are you gonna go?

• 59:29Nilay Patel?

  Like, well, you can't point your dollars somewhere else.

• 59:31Speaker 02

  Yeah.

• 59:32Nilay Patel?

  Unless you switch platforms and then your friends won't talk to you anymore because your bubble's green. Like, that is a real dynamic at play here, where just like the basic accountability mechanism of the market is blunted. Like, Apple can screw up the App Store a lot.

• 59:47Nilay Patel?

  Right? It ca- it could let a major scam app go through. It could let a virus go through. And I, you know, I think again, idealistically, like they don't want that to happen and they try hard not to let it happen and they believe they shouldn't let it happen. They invest in making sure it doesn't happen. But if it did, the actual repercussions for Apple would not be felt. Right? Because I wouldn't throw my iPhone away and, and go buy an Android phone. Well, I might, but like, a lot of people would be like, well, there's nothing I can do.

• 1:00:15Speaker 02

  Yeah.

• 1:00:16Nilay Patel?

  There's not another App Store I trust more.

• 1:00:18Speaker 02

  Yeah.

• 1:00:19Nilay Patel?

  And that to me, there's like, I don't know if the Epic versus Apple lawsuit is going to get to that point. But that to me is like what's coming out here a lot. Like, we know Apple uses the lever of the App Store to achieve business outcomes in a way that is uncomfortable. And Epic is trying really hard to show that the mechanism in the App Store doesn't even accomplish necessarily the things Apple says it does.

• 1:00:42Speaker 02

  Yeah, and this is kind of like part of Epic's argument and Tim Sweeney in general is that like he's like essentially arguing should you trust Apple with this like this amount of power and for them to control the App Store in this way like do we do we trust all of that? I did he like back in I think it was like 2015 like Microsoft tried to do a similar thing to the App Store really let's be honest on the Windows side. They were they were trying to lock down Windows to S versions which would only work with their store apps. So very similar to iOS model and Sweeney came out really, you know, against that saying it should be an open model and and they kind of listened to him to be honest. And welcomed him on stage when they were opening up their App Store and changing their policies and stuff.

• 1:01:26Speaker 04

  Well, but like there's a the tiny difference with that is the Windows App Store apps when Windows S mode was available were not good. And it was maybe an attempt to be a forcing function to like get good apps into the Windows S mode App Store. But yeah, no, it was bad. And like, that's one of the things here is like, is the App Store any good? Well, there's a lot of lot of lot of really good apps in it. And that's like, that's one of the things at play here.

• 1:01:53Speaker 02

  Yeah, it's really hard to argue against because I genuinely believe like there's teams at Apple that are trying to keep these things secure. They're trying to get the apps in there, but then there's that push and pull with the business process like that we're getting a bit of an insight into. It's like, but what level does that goodness of like keeping the App Store healthy and consumer friendly and everything else? Then kind of break down because Apple wants it to be a certain way and they want to control it in a certain way. And I think that's that's kind of the arguments here is it's so hard to like argue.

• 1:02:28Speaker 02

  And we're seeing it with Epic Games that I don't I honestly don't feel like their argument is particularly strong yet because it's very hard to argue this case.

• 1:02:36Speaker 03

  One thing I'm kind of surprised I haven't heard come up is piracy, because that's like, maybe the number one thing that, or number two after fragmentation that keeps game developers on iOS, is that it's a lot harder to pirate an app and put it on there. And if you make an Android version, then somebody's going to crack it and give it an APK.

• 1:02:55Nilay Patel?

  Yep.

• 1:02:55Speaker 03

  And it's odd that I feel like I haven't heard anybody even gesture to it.

• 1:02:59Speaker 02

  That's true. And it's also like developers flock to iOS first. Like, we see it time after time. There's reasons for that. The tooling is better. The App Store discovery is better. They will market your app better. Like, there's plenty of reasons. Like, the consumers, at the end of the day, spend more money on the App Store than they do on Android. Like, there's plenty of reasons that this App Store is good. But as we see, there are some lurking reasons that some of it should be questioned.

• 1:03:26Nilay Patel?

  Yeah. I will say, Addie brought up Android fragmentation. One thing we learned from this trial, talk about ancient Vergecast topics. Apple surveyed a bunch of developers, and developers told Apple that Android fragmentation is not really a problem anymore.

• 1:03:39Speaker 03

  Yes, that was a really interesting thing from the trial.

• 1:03:42Nilay Patel?

  They just target a handful of the most popular phones, and that's the end of the day. And the same developers told Apple that Apple has so many phones that iOS fragmentation is also a problem. So they've like, arrived at the same conclusion. Like, you have too many screen sizes and chips. And like, we're doing the same thing on Android as we do on iOS, which is we just target the top of the market and let things fall where they may. Addie, this all brings me to kind of the biggest question. Yep, this is a bunch of stuff we talked about for literally years on the show, and we could talk about it forever. There is only one person who matters. That is a judge. Judge Yvonne Gonzalez-Rodgers. What does she think?

• 1:04:21Speaker 03

  I mean, I'm going to caveat this by saying that I don't want to seem confident at all, because I think that it's really hard to tell what judges think when they ask questions. Like, so just, I want that to be the baseline, is that I am reading tea leaves. But she seems skeptical of a bunch of this. Kind of distinctions that Epic is drawing like she whenever she has jumped in it's often to question Epic trying to make or like Microsoft trying to make some kind of very clear binary between say general purpose and specific purpose devices. She's like, okay, well, does it just have to be one thing? Like, what if this thing is is media like one category? So that she seemed kind of fuzzy on questioning whether Fortnite is actually

• 1:05:05Speaker 03

  a some kind of metaverse experience or something that basically is a game, but you get this extra perk where you can go into a lobby and have con like concerts. Also, there was one sort of odd aside where she we're not odd, but like tangential aside where she's like, well, look, maybe actually it should be harder to buy V bucks. Maybe we want a bunch of friction in and out purchases because your entire audience is kids and they shouldn't be able to make impulse buys. And that's what it seems like you're asking for.

• 1:05:32Nilay Patel?

  I feel like she has like a teenager who spent like $500 in V bucks.

• 1:05:36Speaker 03

  I do think she said as a parent. I have no idea what what kind of kid she has.

• 1:05:40Speaker 02

  But she she also jumped in when the discussion about like the Xbox and been able to check your banking on it. And she's like, you know, I could I could do that on my Xbox, right?

• 1:05:50Nilay Patel?

  Well, it has a browser.

• 1:05:51Speaker 02

  Yeah.

• 1:05:52Nilay Patel?

  The banking example is like really interesting to me, right? Like, we know Apple controls a huge chunk of the app experience and like is in the weeds of these app developers. Like, there are emails at Apple talking about whether you should be able to buy Bitcoin in your banking app, which is an in-app purchase of a digital good. Like, they have to have a policy that sorts that out. And they are going to have to deal with that and figure out a definition and a set of conditional statements that says, okay, you can buy Bitcoin in the in the Cash App, but you can't buy V bucks in Fortnite, and that means something to us. And like, that level of like literal economic control is like just deeply weird

• 1:06:36Nilay Patel?

  to me. Like, that's where Apple has landed itself at. I I say, is the judge buying it? Like, my bet is that the judge is like, this case is dumb. It started because you broke your contract. I don't really care. Like, go home. Right? Like, that's kind of her posture. Maybe she's gonna get convinced by iMessage switching costs. Maybe she's gonna get convinced that Bander Snatch is a video game. Maybe she's gonna get convinced that Apple does anti-competitive stuff. But like, that's where she's at.

• 1:07:07Nilay Patel?

  Overall so far, in my opinion. At the same time, Epic has just escalated this conversation way out of this trial. Right? Like, it is national news, international news. Lawmakers are paying attention to this stuff. There are hearings. It is empowered and sort of, I don't know, given other developers the confidence to say this stuff is happening to us too. Like, that's my mentions. Yesterday, I retweeted a Ben Thompson thread from last June where he's like, "All kinds of developers are telling me that Apple's strong-arming them into adding in-app purchases." That's weird. Like, I don't know, I can't not put it in a context of, well, two weeks ago, Senator Klobuchar was on Decoder talking about her hearing in the App Store in her book about antitrust.

• 1:07:52Nilay Patel?

  And then Epic, maybe they'll lose, but they're, they are doing what they can to change the public perception of Apple. And there's a part of it that, it just, to me at least, seems to be working, regardless of what the judge thinks.

• 1:08:06Speaker 03

  As you said, like, the sort of prototypical antitrust case is something that, like, the Justice Department or the FTC brings, and that's definitely not off the table.

• 1:08:15Speaker 02

  I think it will ultimately feed into whatever the EU does. Because we still don't really know exactly what they're doing there. Like, they've also done the Spotify Music stuff, but they've also mentioned there's a bunch of cases. Like, it's not, it's not just that. So, I feel like they're waiting on this sort of stuff as well to, like, see what comes out of this. And there's a lot of stuff coming out.

• 1:08:40Nilay Patel?

  And if there's one thing we know about the EU, it's that it loves doing stuff. Does the stuff work? Who knows?

• 1:08:47Speaker 02

  Especially to American companies, yes.

• 1:08:48Nilay Patel?

  They just love doing it. Like, browser ballots, that's an idea, we had it. Did it work? Who knows?

• 1:08:54Speaker 04

  I mean, if you just look at how this whole thing started, it started with a giant media campaign where Epic made a parody video of the original Apple 1984 commercial. I'm sure they want to win this case, but I'm more sure that they want to change the perception of Apple, because that's like, that's honestly how they started this whole thing.

• 1:09:14Speaker 03

  For some reason, I find the email where they say, that has been surfaced during this, where they're like, "Yeah, this will make us not look like the baddies."

• 1:09:22Speaker 03

  One of my favorite things from this trial.

• 1:09:24Nilay Patel?

  We should mention that this entire project of Epic is called Project Liberty.

• 1:09:29Speaker 04

  Yeah.

• 1:09:29Nilay Patel?

  Like, they're on a high horse here. And it's, I think Liz is working on it. She wrote a long piece this week, which was great about why Epic is burning all this cash. Like, the Epic Game Store doesn't make any money. This lawsuit might not work. And it's definitely, they're spending a lot of money. And she's like, burning all that cash is worth it to Epic if they are in control of the metaverse, right? If this like, massive virtual world where Epic is in charge of things and gets to make business deals around it, that's a much bigger payoff than whatever this is costing them now. And like, yep, Epic's on its high horse and people like Fortnite. The metaverse is like, an even more all-controlling economic environment.

• 1:10:12Nilay Patel?

  And that's the thing they're looking at. And so, yep, you know, it's the two giants fighting, and we're just here asking what a computer is, basically, is my takeaway from this trial so far. But

• 1:10:22Speaker 03

  This ends with Epic makes a phone.

• 1:10:24Nilay Patel?

  Uh, it worked for

• 1:10:25Speaker 03

  Makes a metaverse phone.

• 1:10:26Speaker 04

  Worked for Facebook real well. Disclosure, my wife works for Oculus, a division of Facebook. It completely failed.

• 1:10:32Speaker 03

  Yeah. And then what did Oculus build? They built a VR, what did Facebook build? They built the Oculus VR headset, which now runs the entire category of VR.

• 1:10:39Nilay Patel?

  Yeah.

• 1:10:40Speaker 04

  Yeah.

• 1:10:40Speaker 03

  To the point that companies refuse to compete with it.

• 1:10:42Nilay Patel?

  As we are recording this, this morning, Mark Zuckerberg gave an interview to CNET where he was like, I believe the future is the metaverse. Does he think the future of the metaverse is Tim Sweeney's metaverse? Or Mark Zuckerberg's metaverse? Like, at the end of the day, there's one of these overlords. All right, I pick Apple. I'm with Dieter. It's whatever.

• 1:11:00Speaker 04

  No, like, this is, the answer to what's a computer is who makes the most money when you push a button. That's it.

• 1:11:06Nilay Patel?

  Yeah. It seems depressing. Whatever. I'm gonna start using open source, like, web browsers on my X.

• 1:11:15Speaker 03

  This came up in trial. Linux Epic says is particularly, has a reputation for being particularly difficult to deal with.

• 1:11:21Speaker 04

  Oh, great.

• 1:11:22Nilay Patel?

  No.

• 1:11:25Nilay Patel?

  All right, we gotta make a phone. Honestly, the economic future for all of us is multiple competing phones. The Verge is making a phone. You heard it here first. We have gone over, as always, I want to just mention a few things. The other huge news this week is that the Facebook Oversight Board issued half a decision on whether or not Facebook was correct to ban Trump. I say half a decision because they said the ban was correct, but they punted it back to Facebook to make an actual policy about that that they will then review in six months. I did an entire episode of Decoder with Kate Klannick, who's a law professor who's deeply studied the Oversight Board. That's going on Tuesday. By the way, think about this. This is really on

• 1:12:04Nilay Patel?

  my mind. Between the Oversight Board and this whole App Store review process, two of the biggest and most important companies in America now have things that look like legal systems and courts. And they are deeply in control of what you can and cannot do and the money you cannot make. That's nuts. Someone should make a sci-fi movie about that. Just put that out there. Call me. I got ideas. Another piece of very Vergecasty news, the New York Attorney General finished an investigation into all the fake comments that hit the FCC's website during the net neutrality comment period. Yeah, they were all just like broadband industry bots. Yeah, like just straight up 18 million out of 22 million were just like fake. 8.5 million of those 18 were from the

• 1:12:48Nilay Patel?

  broadband industry. We knew it. I want to credit Fight for the Future and Gizmodo in particular, who like led that entire charge of investigating that stuff. But the Attorney General's investigation said it's true. I don't know if that means anything, but it's very validating to know that our suspicions are correct. And lastly, if you have a Peloton treadmill, I just, I don't know, put it, put it far away from you until the recall takes hold and the truck comes to your house. Yeah. Because they are indeed very dangerous. And also Peloton has an API bug that may have exposed user data. Not a good day for exercising. By the way, who is the Pelotana computer? That's just an Android tablet. A bad one, apparently.

• 1:13:25Speaker 03

  Well, did it have to moderate QAnon content? I think that makes it a computer.

• 1:13:31Speaker 02

  It's a computer that wants to crush small children. Because that video was terrifying.

• 1:13:36Nilay Patel?

  The video is terrifying. If you have one of those things, um, yeah, just, uh, set it aside. But it is just an Android tablet. I'm just putting, that's all it is. Okay. That's it. That's the Vergecast. You can tweet at us, I'm at Reckless, Dieter's at Backlon. Addy is at the Dextrarchy. Tom is at Tom Warren. Both of them are live treating the trial, except for this hour a week, for the next two weeks, when I make them come on the show and talk about what happens. Follow them. Liz, who's at the trial today, in person, is at MS Lopato. Lots of trial coverage coming. Is it May 12th, next week already? It's nuts.

• 1:14:10Speaker 03

  Yeah, that sounds right.

• 1:14:11Nilay Patel?

  I want to call out that, uh, next Wednesday, May 12th, we're having, speaking of broadband, we're having a virtual event with Senator Ed Markey, the Democrat from Massachusetts. McKenna is going to be talking to him about broadband infrastructure and building a better internet in the United States. Very cool. Like I said, next week, Kate Klonick talking about Facebook Oversight Board on Decoder with me. That's it. I think that's the whole thing. That's the Vergecast. We'll see you next week. Rock and roll.

• 1:14:35Speaker 04

  Get a vaccine.

• 1:14:55Speaker 07

  Running a business shouldn't feel like surviving a software group project. One at for accounting, another for inventory, another for sales, and somehow, none of them talk to each other. That's where Odoo comes in. An all-in-one business management software that brings every part of your business together. From sales and accounting to inventory and marketing, all in one powerful platform. No messy integrations, no bouncing between tabs, and best of all, no spreadsheets. Stop managing software and start managing your business with one unified system. Try for free today at Odoo.com/vox. That's O-D-O-O dot com slash vox.

• 1:15:31Speaker 06

  Your heart can tell you a lot about your health. Apple Watch Series 12 measures your heart rate every 5 seconds with the most accurate heart rate sensing in wearable. So your vitals app, now with heart rate variability, can tell you when something is off. And your readiness score can let you know when to rest and when to push. Hear the story in every heartbeat with Apple Watch Series 12. The features described are for wellness purposes only and not for medical use. iPhone 11 or later required. Based on Apple conducted study of heart rate accuracy, August 2026. Visit apple.com slash apple watch series 12.