Fornite kicked off the App Store and Microsoft’s Surface Duo arrives on Sept 10th

Nilay, Dieter, Tom, and Dan discuss the timeline of events that lead to Epic Games suing Apple and Google after being kicked out of mobile app stores. They also discuss Microsoft's announcement of the Surface Duo's release date and technical specs. Stories discussed this episode: Big Tech pledged a billion to racial justice, but it was pocket change US passes 5 million coronavirus cases Big airlines are hoarding cash to survive the pandemic Vaping linked to higher risk of COVID-19 in teens and young adults, study finds Microsoft opens xCloud game streaming beta early on Tuesday Apple confirms cloud gaming services like xCloud and Stadia violate App Store guidelines Microsoft condemns Apple’s App Store policies Facebook slams Apple’s App Store policies, launches Facebook Gaming on iOS without games Fortnite vs Apple vs Google: a brief and very incomplete timeline Epic offers new direct payment in Fortnite on iOS and Android to get around app store fees Apple just kicked Fortnite off the App Store Watch Epic’s Nineteen Eighty-Fortnite short mocking Apple right here Epic Games is suing Apple Fortnite for Android has also been kicked off the Google Play Store Epic is suing Google over Fortnite’s removal from the Google Play Store Google forced OnePlus to decimate a Fortnite launcher deal, claims Epic Games Fortnite vs Apple vs Google: a brief and very incomplete timeline Epic rallies Fortnite players against Apple with a warning that they’ll miss the next season Microsoft’s Surface Duo arrives on Sept 10th for $1,399 Microsoft releases Surface Duo press event video with 30 minutes of demos The Xbox Series X could launch on November 6th Microsoft’s new Xbox Series S console confirmed in leaked controller packaging When I don’t buy the new Xbox, Microsoft will laugh all the way to the bank Android is becoming a worldwide earthquake detection network Google is re-adding a Calendar app to Android Auto so you can see how to get to your next appointment Google Maps finally works with CarPlay’s excellent dashboard mode Google promises the next Wear OS update will launch apps up to 20 percent faster 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, Tom Warren and Dan Seifert join me and Dieter to talk about the big antitrust fight in the world, Epic versus Apple and Google. We also talked about the game streaming controversy on Apple's App Store, and we got to talk about the service duo, Microsoft's new folding phone with two screens. That's coming up now on the Vergecast.

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• 1:20Nilay Patel?

  Hello and welcome to Vergecast, the flagship podcast for the Sherman Antitrust Act, Section 2. I was thinking I would start it like a bar review lecture class. Welcome. Please open your bar review textbook. Anyway, I'm not going to do that because that's horrible. And I just gave myself vivid flashbacks to the Vergecast. Anyway, this is Vergecast, a show about technology, but today kind of about antitrust. I'm your friend, Eli. Dieter Bone is here. I'm your valued business partner. Wow. That's a lot, Dieter. Tom Warren is here. Hey, Tom. Hey, I'm with the EU.

• 1:52Nilay Patel?

  Actually, you're not, though, right?

• 1:54Speaker 03

  Well, until the end of the year. Technically, no. I don't know. I don't know what's happening.

• 2:00Nilay Patel?

  Who knows? Dan Sevort is here.

• 2:03Speaker 04

  Hello, I'm not with the EU.

• 2:06Nilay Patel?

  Dan's like, I just talked about gadgets. A lot going on in the tech world this week. There was a fight about game streaming apps on the App Store. Epic, the maker of Fortnite, sued Apple and Google, got Fortnite kicked off of those app stores. The Surface Duo was announced. That's Microsoft's dual-screen folding phone. There's a bunch of Android news. There's just a lot happening in technology. I needed this crew to talk about it all. We're going to spend a lot of time on this antitrust stuff. It's a big deal, and I think it's going to change kind of the nature of the industry. But before we do all of that, as usual, all of this is happening in the context of the pandemic, the movement for racial justice in this country. So just some updates on our site because we're covering that stuff very heavily.

• 2:50Nilay Patel?

  I am, at this point, I think legally obligated to note that it has been 22 weeks since Donald Trump presented to the nation a flowchart about a testing plan where you would go to a website that... Dieter, it was Google that was building the website, right? Forty-five million Google engineers?

• 3:04Speaker 05

  Yeah, forty-five million Google engineers. And then another, another four million Alphabet engineers. And then Verily, also part of Alphabet, was going to do a bunch more. Actually, a real thing Verily done is they've set up their own approved testing lab. So they're like, they're starting, they're starting to be vertically integrated.

• 3:22Nilay Patel?

  Wow.

• 3:23Speaker 05

  But the website still doesn't exist, as so far as I know.

• 3:27Nilay Patel?

  Well, then there is a website. But it's not the nationwide testing strategy that we need to actually overcome the pandemic before vaccine. Twenty-two weeks since that happened. We're just going to keep counting. Other pandemic news, the United States, on a similar note, passed five million coronavirus cases this week, which is not a great milestone. You might have heard that Russia said it approved a vaccine. Mary Beth Greggs, our science editor, wrote about that. It's an unproven vaccine. It has not gone through the appropriate set of trials. It's very controversial. You should read that piece to gain an understanding of what's going on there. Sort of the, I keep saying the second order of the pandemic is important. The things that are changing because of the economic impact of the pandemic. Big airlines are now just hoarding cash to get through it because travel is obviously down.

• 4:13Nilay Patel?

  That's, that's one of those stories. The airline industry is just deeply changing because of it. That's on the site. And then this probably shouldn't surprise anyone, but vaping has been linked to a higher risk of COVID-19 in teenagers and young adults. I'm glad that we did a study to prove it. It should have been common sense for everyone. Don't, don't monkey with your lungs in a time of COVID.

• 4:31Speaker 05

  Or ever, maybe, yeah.

• 4:32Nilay Patel?

  And then lastly, on the racial justice front, Jay Peters spent weeks and weeks and weeks assembling data around the pledges from big tech companies to racial justice initiatives. So in total, a billion dollars was pledged from big companies ranging from Comcast to Disney to Apple to Facebook. And he made a bunch of charts and put it all in context. It turns out compared to their profits, compared to their spending on other things. This is just pocket change. And there's, you know, there's a lot of controversy around big companies using charity and using philanthropy to launder their public image. And you look at these charts, argument becomes a little more compelling. I think my favorite one is AT&T spent $73 million

• 5:15Nilay Patel?

  on an ad campaign for fake 5G, which is like almost as much money as they've committed to racial justice. So read that piece. It kind of helps contextualize the scale of the problem and the scale of the scale of the effort that the corporate side of the world is putting into it. Great piece. Very proud of Jay for it. All right. I never want to ignore that stuff. Obviously, I think those are the two biggest stories in the world. But I usually say, but there's tech news, but I actually think the antitrust stuff in tech is going to have long-term massive impact on the entire tech industry, on the consumer industry, as we're all sitting at home. You know, the economy is changing around us. We're all mediated by screens. Who gets to put what on your screen? Turns out to be of earth-shattering importance.

• 5:59Nilay Patel?

  And a lot of the action this week in tech was about who gets to put what on your screen. So I think obviously everyone knows the, the big story is Epic suing Apple and Google, baiting them into

• 6:11Speaker 05

  Situation where they could file that lawsuit. We'll get to that in a minute. I want to step one day back. It was like one day before this. The context of this is Apple was in another fight around streaming game services. So the one that's like top of mind is X cloud from Microsoft. Tom, walk us through what happened there.

• 6:32Speaker 03

  So basically Microsoft is going to launch this X cloud game streaming service, but only on Android. They did a test of the iOS version earlier this year and it was a really weird test. So on the Android side, they had like a bunch of their own games. I think it was around about a hundred at one point. On the iOS side, they had one, which was Halo.

• 6:51Speaker 03

  And they put it down to complying with Apple App Store policies. They didn't actually say we specifically which section or anything like that. But that was, that was literally what they said back then. Fast forward to now, they obviously want to launch it in September, bundling it with Xbox Game Pass. But they're not launching it on iOS. And initially they, they kind of didn't really say much about it. They were like, I mean, and her and then, you know, we're keeping this on the sort of download. But then they actually came out and basically sort of condemned Apple essentially for, for blocking them from launching it on, on the App Store. After Apple issued a statement saying, you know, Google started here and X cloud and stuff are not allowed on the platform. So.

• 7:30Speaker 05

  Did Apple say why they're not allowed on the platform?

• 7:32Speaker 03

  They're saying they're not allowed under a sort of remote desktop sort of clause in the, in the App Store where they, you, you basically, like they don't want you to connect to a remote computer that isn't your own, that you don't own strictly. I mean, it's so complicated. It's hard to actually break down.

• 7:51Speaker 05

  So what happened was the Microsoft, Kate, Microsoft did the thing where like they're not on iOS and Business Insider went to Apple and said, hey, what the hell? And then Apple gave them the statement and Business Insider printed the entire statement. It was actually the exact same statement so far as I know that they gave to Mark Gardner at Bloomberg like way back in March. But because we can look at the entire statement as just like a block quote, here is Apple's justification. It's like. It's so obvious that what we're doing here is like arguing about the moderation rules and like parsing out like why this but not that. And it it just caused everybody to like take another look and be like, what the hell? Why are VPN apps allowed but not game streaming apps?

• 8:33Speaker 05

  Oh, because you're connecting to a computer that you don't happen to own, sort of.

• 8:38Nilay Patel?

  VNC apps, not VPN.

• 8:40Speaker 05

  Yeah, VLC apps, sorry, VLC apps. Okay, well, why is Netflix allowed but not game streaming apps? But Apple's claim is for games, apparently, they want to review everything that you can play. So they want to be able to review themselves, every single Xbox game and every single Stadia game. And they want all of those games to be listed individually inside the App Store. So for all intents and purposes, they're banning game streaming apps.

• 9:11Nilay Patel?

  So I feel like a very important piece of context for all of this is the fact that Apple makes most of the money on the App Store from games.

• 9:23Speaker 05

  Yeah.

• 9:23Nilay Patel?

  And most of the services money that they make is from the App Store, right? So Apple's big narrative is we're now a services company. We've hit the ceiling of iPhone growth. Almost every other product they make is an accessory to the iPhone. So all of their growth is limited by the size of the iPhone market. And so their big narrative over the past few years has been we're a services company. All these people have iPhones, we're going to collect more money from them. Inside of that, the biggest chunk is the App Store. And inside of the App Store, the biggest chunk is in-app purchases and games. Candy Crush.

• 9:57Speaker 05

  Well, and maybe Fortnite, actually.

• 9:59Nilay Patel?

  And maybe Fortnite. And I just, all of these conversations kind of center around abstract principles. Like, are you going to allow this app or that app? I just think it's very important to remember, there's a ton of money from games at stake here. And so I think we're seeing with game streaming, with Epic, whatever, that's where the most action is. Like Spotify is mad too, but whatever. Like, they just kind of like go along with it, you know? Amazon is mad that it can't sell, like, it's not the biggest chunk of money in the game. Well, and the idea that this is an argument over like, you know, platonic principles of how a platform should work and is it? We can have a whole what's a computer discussion and the difference between a console and a platform and a computer if you want.

• 10:41Nilay Patel?

  I'm, I'm, I will have that discussion for days with you. It's a spectrum you see. But the idea that this is about those principles and not just about the money. Like, Apple will only talk to you in the terms of principles.

• 10:56Speaker 03

  It's literally about power.

• 10:57Nilay Patel?

  Well, you look back and like, Amazon got a deal.

• 11:00Speaker 03

  15%, right? According to the documents and the emails. It's about power, right? Like, if you, if you open up your platform and let someone build on top of it. Hello, Windows and Steam, you know, Microsoft does not have power over that, that, that store. They didn't create a game store on the Windows store, so they've lost that power there. Apple has created this app store. They, they created it and kudos to them. They did a great thing with the mobile side. But now they're trying to control it and, and they want the power over it and anything that goes on the platform, they control. There's no way of sideloading those apps on, so there's no way of getting around that power. And I think that's like the core, the core problem, and it comes into the Epic Games stuff as well. That's the core problem, right? Like, they want to control what's on their platform.

• 11:41Nilay Patel?

  Well, no, I, I agree. I just think very specifically, the two big disputes between some of the most powerful players in the game, Microsoft, Facebook, Epic, Apple. They're about games for a reason, because that is the biggest chunk.

• 11:58Speaker 03

  It's the biggest entertainment industry, right?

• 12:00Nilay Patel?

  It's the biggest entertainment industry, but it's also the biggest chunk of Apple's services revenue narrative. And so if you break that, their narrative actually kind of goes sideways. Cause they're not making all those billions of dollars in services, uh, revenue on Apple Music. I guarantee, it's not Apple Music, right? They're not making it on Apple News Plus, the worst product that Apple makes. They're making it on in-app purchases and games and they're pretending that it's all the other stuff. They're pretending their TV service is meaningful.

• 12:29Speaker 03

  Sure. And on top of all of that, like in the context of all that, is that X Cloud is obviously launching on the Android side. But it's not launching with in-app purchases in the Google Play Store.

• 12:39Nilay Patel?

  Correct.

• 12:39Speaker 03

  They said they Microsoft's actually cut a deal with Samsung. We don't know what what percentage the default that Samsung offers is 30%, but they do specifically in their guidelines mention that, you know, you can cut a deal with us. Essentially, that's what they say in their guidelines. You can cut a deal with us when your app's getting approved, basically.

• 12:55Speaker 05

  I asked Samsung for comments and they're like, we'll get back to you. And that was that was that was 15 hours ago. So.

• 13:02Nilay Patel?

  Okay, so I got I got deep into this tangent of in of of services revenue. But really what you're looking at is X cloud, Facebook games, this next gen stadium, the next generation of game services looks like the games run on a server somewhere. The video streams to you over the internet and you stream control back to the games. Right. And in a world like the one promise of 5G that I believe is that the latency on the mobile network will be low enough to make that worthwhile on phones.

• 13:34Speaker 03

  Yeah, and you could you could tell that that's that's brewing to be the future when Facebook, Apple, Google, well, maybe not Google so much, but Microsoft are all sort of like arguing about it, right? Like, Google has suspiciously not said much about Stadia on iOS.

• 13:47Nilay Patel?

  But I think they gotta make it.

• 13:49Speaker 03

  They want to make it happen, presumably.

• 13:51Nilay Patel?

  Well, first it has to work.

• 13:52Speaker 05

  They gotta make it happen before they can make it happen.

• 13:54Nilay Patel?

  Like, step one, it works. Okay, we're 50% of the way there. Step two, people are using it. That's a little, it's maybe harder for Google. Anyhow, so the comparison Netflix here is really apt, right? I think credit to Renee Ritchie, I think he made this point in a YouTube video the other day. Netflix, you hit play, video streams at you from a server somewhere. Apple's not getting in the way of that. They're not reviewing every show on Netflix or Hulu or whatever. When it comes to game streaming services, Apple is saying, oh, we need to review every game available to you. So we're not going to let a catalog app like Netflix show up with games that stream and control streams back. That more than the VNC argument is where it just falls down for me, right? Like.

• 14:38Nilay Patel?

  What is really the difference between streaming video from a game running on a computer somewhere and streaming video from a TV service on a computer? There isn't one. The like, the interactivity of control is like not, it's not a meaningful enough difference to me.

• 14:54Speaker 03

  No, and I think if you put it in the context of if that's Apple's argument, that they want to review every piece of content, all that sort of stuff. And if they truly think games streaming is different to video streaming, then you have to consider things like Bandersnatch. What was that then? Was that, was that, were you watching a TV show or were you watching an interactive TV show that you?

• 15:14Nilay Patel?

  I just want to point out importantly, Bandersnatch was not available on the Apple TV.

• 15:19Speaker 03

  Really?

• 15:20Nilay Patel?

  Yeah.

• 15:21Speaker 03

  But that's probably more of a technical thing, maybe. I don't know.

• 15:24Nilay Patel?

  Oh, you mean the Apple TV that has the same processor as various iPads?

• 15:30Nilay Patel?

  Like, if this thing can run on a Roku that is basically a hamster wheel of a processor.

• 15:34Speaker 05

  I mean, I think what happened was they started to test it on the Apple TV and they lasted five minutes with Apple's remote. Like, you know what? Not worth it. Nope.

• 15:41Nilay Patel?

  Reed Hastings was like fumbling. He's like, screw this. It's not worth it. But I think Apple is enforcing this distinction around interactivity with game streaming in particular in a way that doesn't hold up to the scrutiny of we need to keep your kids safe, right? Because if that was true, they would review all the other video that you can stream from things, whether or not that video is generative, like video games or pre-recorded, like Netflix. And they certainly are not reviewing live TV, which who knows what your kids will see on various live TV streaming apps. So that's the context. So Microsoft is mad. Facebook launched Facebook Gaming on iOS without any games this week just to say, like, look at what Apple made us do.

• 16:24Nilay Patel?

  We're gonna take a break and transition to Epic, but I think one of the issues for both of these companies is that nobody's rooting for them against Apple this way, right? Like, XCloud isn't a thing yet. Facebook Gaming is run by Facebook. When they're mad at Apple, I don't think they... They build up that wave of support. Does that feel right?

• 16:45Speaker 03

  Yeah, well, like when Facebook is taking you to task, you know, you've got issues, right? Like, but I don't think like, I don't think people are really backing Facebook to have mini games in their Facebook gaming app, which, you know, people, people are using Twitch. We've seen, we saw that with the Mixer closure. Everyone went to Twitch, I think, really go to Facebook gaming. So I think they're kind of a relevant part of the conversation.

• 17:08Nilay Patel?

  But X cloud could be, I mean, obviously X cloud is connected to Xbox. We're about to have an Xbox moment with the, with the new generation of consoles. That feels much more fraught for Apple, but at the same time, what they're enforcing is the status quo, right? It's not a thing that people have that's being taken away. It's not a thing that people even know they want yet.

• 17:27Speaker 05

  Yeah.

• 17:28Nilay Patel?

  That they can't get. It's, everything's just the same for iOS users as ever. I think that's a, it's important to sort of land there. This is the context.

• 17:36Speaker 05

  In particular, the Xbox thing could be coming for Apple hard because Tom's talked about this a bunch. Sean Hollister wrote a great piece on this. Like, I don't think I'm buying an Xbox, but I might buy Game Pass Ultimate and like get a gaming PC and annoy Dan for six months about how to, you know, which one I should get and how I should do it. And if Microsoft actually is successful in its strategy of it's not the console stupid, it's the service, they could have a huge group of customers that are just like annoyed at Apple and annoyed at their phone. And like the big question for Apple is, are they going to be more worried about customers being annoyed at them and switching to Android? Or are they more worried about like, you know, losing that services revenue?

• 18:19Speaker 03

  I think it would, it's also going to depend on what Apple does in this space, right? Like assuming that they, they will be a player in this space somehow in the cloud gaming space. You'd imagine they might be. Do they create like an Apple TV-esque app for cloud streaming? I don't know. Like, who knows? Who knows what they'll do? But I just assume they haven't figured that out yet.

• 18:38Nilay Patel?

  But Apple is also, and I, I say this with love, historically bad at video games.

• 18:44Speaker 03

  Yeah.

• 18:45Nilay Patel?

  Right, like the essay of Apple Games now, or Apple Arcade. And it was great to begin with. It's sort of has died off. You don't hear about it quite so much. There was some reporting that game developers were being pushed to make games that had higher engagement rates, which sounds like the bad place. Like, you hear that phrase and you're like, oh, we're just making trashier things. And it's to prop up that, like, make the subscription worthwhile over time. So you're not paying four nine nine a month for games you don't play, or not, don't play a lot. Whether or not they can transition all of that into, we're going to stream AAA games at you. I mean, you can barely play a AAA game on the Mac. You know, like, they don't, they don't have that infrastructure. They don't have those developer relationships. They don't have any of that stuff, except for the, the free to play games in the App Store.

• 19:30Speaker 03

  Yeah, I think ultimately their play is probably, and we're at like a really weird point in hardware, especially on the iPad side, where like, you know, the only reason that Fortnite is on these mobile devices, they've got so much more powerful now, right? Fortnite is not a mobile game. It didn't start on mobile. But it runs really well now, like 90 frames a second, just crazy. So like, in the next five years, what are these devices going to enable us to do? And does Apple want to give up that, you know, the native experience of running these games? Like, should they just say to Microsoft, no, bring Halo to the iPhone? If that's how you want it to run on the iPhone. So there's, there's so much, there's so much going on with those devices and the way we're, where it's heading. Like, there's a crossover and the, the traditional console players see that.

• 20:14Speaker 03

  They know it's happening, they know it's about to happen and that, that things are shifting up. So cloud is the way for them to go, because they can't get on these mobile devices.

• 20:21Nilay Patel?

  As long as we're talking about App Store policy stuff, I should disclose again that my wife works for the App Store for Oculus, which is a division of Facebook. And I recuse myself from reporting on Facebook or Oculus or VR. So I don't really know what their policies are. I'm excited that the birds are going to join us for the rest of the show. We're going to take a break. Tom's going to take a broom and try to chase the seagulls away. It's going to be great. We'll be right back and we're going to get into Epic versus Apple versus Google. We'll be right back.

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• 21:51Nilay Patel?

  Okay, so we laid the context of pressure on the App Store. Right, we obviously had the hearing the other week. Big deal, Tim Cook in front of Congress. They came after the App Store. We've, we know about Hay and DHH. We've heard about the streaming services. There is a lot of pressure on the App Store. But I think what happened with Epic this week is the thing that broke it open. Dieter, do you want to? This timeline is incredible. Do you want to walk us through it?

• 22:17Speaker 05

  So, we're recording this on Friday. So Thursday morning, a update to Fortnite appeared on iOS and Android devices, offering a permanent 20% discount on V-Bucks if you buy it direct from Epic instead of via the in-app purchase standard thing on either iOS or Android. And this is deeply against the rules because on games, on Android, you have to use in-app purchases. On everything, on the iPhone, you have to use in-app purchases. Also, probably not, you know, according to the rules, to just silently push a server-side update with that major functionality included. Just a thing. So it was very clearly designed to be a thing. Like make these companies.

• 23:02Nilay Patel?

  I mean, they put out a blog post being like, screw you.

• 23:04Speaker 05

  Yeah.

• 23:05Nilay Patel?

  And to Tom's point, there are not many apps that can do what Epic did with Fortnite. Right. They pushed a server side update. So he did not have to go through app review and they enabled new functionality in their app. Like many apps can do that.

• 23:17Speaker 03

  It's not even server side. Like it's basically like you have a shell of an app and then that downloads the whole of the game files within the app. And there's like, it's only really games that do it. And it's only the really bigger games. So.

• 23:28Speaker 05

  So that happened. Apple did not back down. Apple said, yep, you banned.

• 23:34Nilay Patel?

  It took a long time. I mean, this happened in the morning.

• 23:37Speaker 05

  Yeah, yeah.

• 23:37Nilay Patel?

  And it was the late afternoon.

• 23:39Speaker 05

  Right.

• 23:40Nilay Patel?

  Epic got to, everyone wondered what was going to happen.

• 23:43Speaker 05

  For some time.

• 23:44Nilay Patel?

  And then we got a statement from Apple.

• 23:46Speaker 05

  And we got a statement from Apple. Do you want to read that statement?

• 23:48Nilay Patel?

  It's very long, but I'll read, I'll read, I'll read the good parts. We broke this. We had it first. Today, Epic Games took the unfortunate step of violating the App Store guidelines that are applied equally to every developer and is trying to keep the store safe for our users. Keep the store safe for our users are going to come up a lot. As a result, their Fortnite app has been removed from the store. Epic enabled the feature and established it's not reviewed or approved by Apple, and they did so with the express intent of violating App Store guidelines regarding in-app payments that apply to every developer who sells digital goods or services. And then this, that's the first part. We banned the app. Here's why. The second part is like, this is Apple's line. It's actually, it's Google's line too, as we'll hear. But this is kind of their rationale and this is where they're going to keep landing.

• 24:32Nilay Patel?

  Epic has had games on the App Store for a decade and have benefited from the App Store ecosystem, including its tools, testing and distribution that Apple provides to all developers. Epic agreed to the App Store terms and guidelines freely. We're glad they've built such a successful business in the App Store. The fact that their business interests now lead them to push for a special arrangement does not change the fact these guidelines create a level playing field for all developers and make the store safe for all users. We will make every effort to work with Epic to resolve these violations so they can return Fortnite to the App Store. If you remember, their line with, hey, the email app was, Basecamp has had apps on the store for a decade. They've built a business. They haven't paid us a dime. This is Apple's argument. We built the store. We own the platform. You haven't paid us.

• 25:10Speaker 05

  And in the same way that AT&T deserves credit for the success of the iPhone and smartphones, Apple deserves credit for the success of any app on its platform.

• 25:20Nilay Patel?

  I mean, it's, I think depending on who you talk to in my mentions, that argument is either very convincing or not convincing at all. There is no middle ground. So this is like gamesmanship. And I want to be clear. Epic issued the update, knowing that they had a video to release, knowing that they had a complaint written and ready to file. Apple issued the statement, "I'm more certain than not, knowing all those things were gonna happen."

• 25:48Speaker 05

  Oh, for sure. I don't know if they knew to the extent to which Epic was gonna go hard. So Epic CEO Tim Sweeney, very famously spiky and angry about this stuff. So they knew he was gonna do something. I don't know that he was going to release a shot-for-shot remake of Apple's 1984 ad, fighting against the evil corporate monopolist that they were going to try and break.

• 26:32Nilay Patel?

  I mean, that part is very good.

• 26:34Speaker 03

  It was pretty, um, it was pretty epic.

• 26:37Speaker 05

  You might say that we're in the middle of a battle royale right now.

• 26:40Nilay Patel?

  If the Seagulls can hear me, attack Tom.

• 26:45Nilay Patel?

  So, Apple releases a statement. They pull the app off the store. The news breaks. It's chaos. Epic is not saying anything, right? We're asking for comment. We're DMing Tim Sweeney. And they're not saying anything. They released this video in Fortnite. They're saying, we're having a special Fortnite event at 4:00 PM. They released this video called 1980 Fortnite. It is very good. Regardless of what you, it is very clever. And the hashtag at the end of the video is free Fortnite. We're taking on the App Store monopoly. We got kicked out the store. Hashtag free Fortnite. They are leveraging the army of Fortnite fans to change the public opinion of Apple.

• 27:22Speaker 04

  At the same time, tugging at like, like, like, it seems like, like this, this remake of the commercial is not gonna, like, there are people who are playing Fortnite right now are probably not going to know the original and understand the reference. But we do. And like, so like, the rest of press and like Twitter blows up with this. Look at what they did. And then the people in Fortnite can get latch on to the free Fortnite hashtag. So it's like this double play to get like press interest and like general interest in the tech community. And also interest from the Fortnite user base at the same time to come against Apple with this movement that Epic is trying to make.

• 28:03Speaker 03

  Although I will say, if you watched any of the streamers that were playing Fortnite, the general reaction was like, what was that? Or was that, was that it?

• 28:11Speaker 04

  That's exactly what I'm saying. Like, they, they, they don't know what this is referencing. But like, we do.

• 28:16Nilay Patel?

  You know who else does is like Phil Schiller, Tim Cook, all the old guarded Apple. And it really does box Apple in a little bit because Apple cannot credibly say that they aren't a Titan. Right. Apple not being the underdog anymore is like this big theme. So they do this thing. And the reason I want to talk about that before any of the legal stuff is unlike Microsoft and X cloud, unlike Facebook gaming. Now you've got an audience of people, kids who are at home, who are probably able to play this game on their consoles and not their phones. Who are having a thing taken away from them that they love and they have a hashtag, right? That is like.

• 29:00Nilay Patel?

  That is a much better, from just a PR standpoint, right? Like, that is a perfect, Epic is big, it prints money. They are not afraid of Apple, clearly. Tim Sweeney is not afraid of the fight. They were able to do the update on their end to get kicked off the store. There is not another company that is situated to be in this fight.

• 29:22Speaker 04

  I think it's interesting that they chose now to do it. Like Fortnite has been on the App Store for, what? Two, three years, whatever now? Like Epic must have looked at their growth trajectory and been like, we are at the point where Fortnite on iOS is kind of hitting saturation. They're not like getting a whole bunch of new users downloading. So we are going to play this move now to try and play our hand when it's not going to affect us as much in terms of our app growth, right? Like, how many people are new users downloading Fortnite at this point on iOS? So it was very calculated in terms of like the timing of waiting this long to do it and doing it now. And then knowing, obviously, that Apple was going to respond by pulling the app.

• 30:06Speaker 04

  Like Epic knew exactly what was going to happen. That's why they had this video ready. That's why they had what we'll talk about in a few minutes with the lawsuits. So it's like, it's almost like they are taking this principled stand now because the business is safe already. Like, they already have the user base.

• 30:24Nilay Patel?

  Epic isn't an accident. You know what I mean? Like Fortnite isn't an accident. Tim Sweeney isn't the CEO of one of the biggest gaming companies in the world because he's bad at business. Like, he lined up his, right? He lined up the dominoes and then waited to push them over. And like, I think that makes sense. I think he also waited until after this hearing. And then he waited until pressure was forming and then he dropped the bomb. And I think a lot of the legal machinations are of the same type. And we'll get to that. So that's, I just want to keep going through the chronology. So they dropped this video, they released the lawsuit. Incredible flex on how they released the lawsuit. They tweeted a link to a PDF.

• 31:01Speaker 04

  Yeah.

• 31:02Nilay Patel?

  Just a straight PDF on one of their, like, no one does this. They're like, here's our argument. It's a fucking PDF. Like, it is the filing. We want you to have the primary source. It's not a website. You know, like Spotify does it and it's a beautiful website.

• 31:16Speaker 05

  Yeah.

• 31:17Nilay Patel?

  Like how unfair it is. They're just like, here's our, here's our complaint.

• 31:20Speaker 05

  Yeah. Oh God, I want to talk about the plate. We can't. We gotta go through the rest.

• 31:23Nilay Patel?

  I promise we're gonna get there. I just, I'm setting all the stage because I think that the moves in the complaint are as considered as all these other moves we're talking about. I think they're all of the piece. At the same time, so this was all happening with Apple. They've made the video. The fight is with Apple. And we're like, well, they did it to Google too. What is Google? And Dieter and I had this conversation yesterday. I was like, if Google is smart, they would just do nothing. Right? They would just be like, well, that was weird, huh?

• 31:54Nilay Patel?

  But they eventually start, the wheels started turning and eventually.

• 31:57Speaker 05

  Eventually, it took them, it took them quite a bit longer than Apple to react, honestly. Uh, but they eventually did.

• 32:02Nilay Patel?

  And so Google had to know that the lawsuit was waiting for them too.

• 32:05Speaker 05

  Of course they knew.

• 32:06Nilay Patel?

  Right. It's, but it's like, it's, you know, it's, it's a percentage how much Apple knew the orchestration. I think they knew.

• 32:11Speaker 05

  Yeah.

• 32:12Nilay Patel?

  But you don't know for sure. With Google, they watched the whole cycle play out with Apple and now they have the information.

• 32:17Speaker 05

  They could have just waited like three days. You know, they could have done it on Saturday morning when no one was paying attention because they were all playing Fortnite, you know? Nope. No, like, let's, let's have the last thing that happens in today's news cycle be Epic coming after us. And then everyone goes to bed. That's, that's a great plan.

• 32:34Nilay Patel?

  I was very mad because I had to read the complaint.

• 32:36Speaker 05

  They issue a statement and we had it first. It was, um, the open Android ecosystem. Let's developers distribute apps through multiple app stores. That is like a number one thing that Google wants to tell you.

• 32:49Speaker 05

  There's some issues with that, but we'll come back to that. Uh, for game developers who choose to use the Play Store, we have consistent policies that are fair developers and safe for users. When Fortnite remains available on Android, while Fortnite remains available on Android, we can no longer make it available on play because it violates our policies. But we welcome the opportunity to continue our discussions with Epic and bring Fortnite back to Google Play. So Google's whole thing is. Hey man, you can get apps on Android however you want. They specifically here aren't calling out sideloading because they know, this already happened with Epic once. Epic went off the Google Play Store and said, "Sideload it." And then it turns out that sideloading on Android kinda sucks because you gotta click a bunch of scary prompts, right? And this is why Epic came back.

• 33:33Speaker 05

  And they came back to Android 18 months later, earlier this year, they came back. And Tim Sweeney's statement was like, "Yeah, we're back because this sucks, because no one's doing it, because Google is awful and these warnings on Android are terrifying. So this sucks, but I guess we're back, whatever." So Google specifically isn't talking about sideloading. They're talking about competing app stores, which is weird because in the world where people use Google Play, everywhere but China, it's a joke that anybody really wants to use any other app store. It's like, "Your phone is a failure if you don't have Google Play, look at Huawei." But increasingly Samsung is pushing its app store super hard. Both Microsoft and Epic are encouraging people to install their app via Samsung Store because they don't have to pay as high a fee apparently.

• 34:18Speaker 05

  But otherwise, like, raise your hand if you've ever installed Apple's underground app store. I'm raising my hand, but I guarantee you, it's me and like 3 people that are listening to us right now.

• 34:30Nilay Patel?

  No one else raised their hand.

• 34:31Speaker 05

  So this whole thing where you can go and install via a third-party app store is true. It does give Google an out that Apple does not have and does not want to have, which we could maybe argue about. But it's not the like, it's not a clean, pure-as-a-driven-snow, like, "We are morally better" stance because third-party app stores don't work as well on Android as the Google Play Store.

• 34:56Nilay Patel?

  And in Epic's complaint, it gets into that. So I wanna break these into 2. So that's the chronology of the day.

• 35:03Speaker 05

  Well, and then Epic sues Google.

• 35:04Nilay Patel?

  And Epic immediately sued Google.

• 35:06Speaker 05

  Yeah.

• 35:06Nilay Patel?

  Which we were all waiting. I mean, it was like an anticlimax, like, "Okay, it's finally here."

• 35:10Speaker 03

  They didn't do a video there, did they?

• 35:13Nilay Patel?

  They didn't, no video.

• 35:14Speaker 05

  Google doesn't have an amazing fucking historic commercial that has embedded itself in the psyche of America, so, no, no video.

• 35:23Nilay Patel?

  I mean, the video part, where all the, like, a bunch of teenage streamers and YouTubers are now all gonna make explainers about the 1984, like, it's genius. It's great. You have to just appreciate it.

• 35:35Speaker 03

  They could've done a Screw Google video.

• 35:37Speaker 05

  Oh my god.

• 35:39Nilay Patel?

  There's like three people who remember it screwed. Uh, and they're all on this phone call. Um. Okay. So there's two lawsuits now. I want to take them separately. I will say there's a lot of shared language between the lawsuits, a lot of shared claims, a lot of, they obviously mirror each other. One thing, and they're both filed by the same set of law firms. One of the law firms here, which I think is, and I want to like get to conspiracy theory on it. You know, like, don't over read this, but it's very interesting to me that Epic hired this law firm, uh, Krevath, Swain and Moore. This is a huge mergers and acquisitions of, they're like a legendary law firm. They're usually on the side of big stuff.

• 36:24Speaker 05

  Okay.

• 36:24Nilay Patel?

  Right? So.

• 36:25Speaker 05

  Well, hang on, Epic's not small. They're like a 17 billion dollar company.

• 36:28Nilay Patel?

  But in this specific way.

• 36:29Speaker 03

  They also, they also represented Qualcomm against Apple.

• 36:33Nilay Patel?

  Yeah, that's what I mean. So they represent Qualcomm against the antitrust action from the FTC and they just won. Uh, one of the most famous, and this will come up as we talk about this case for the next 10 years of our life.

• 36:45Speaker 05

  Wait, 10 years?

• 36:46Nilay Patel?

  This case is going to take 10 years.

• 36:48Speaker 05

  Why not, why not two weeks? That would be appropriate.

• 36:51Nilay Patel?

  Nope. 10 years. There's a Amex, uh, American Express went all the way up to the Supreme Court on an antitrust case on a very novel theory of what's called the two-sided market. So merchants were suing Amex for unreasonable fees. Amex's argument was, look, prices for consumers are getting lower. You have to consider the whole market. No one thought this was a winner. Very few people thought that was the right decision. Guess who won that case? After one decade of litigation, Krevath, Swain and Moore. So they're usually on the side of big stuff. You know, uh, who Krevath also represented? Time Warner in the merger, uh, with AT&T against the DOJ who was trying to break out that case. So this is a huge law firm that is usually on the side of consolidation. They usually wins the cases for consolidation and market power.

• 37:34Nilay Patel?

  So it's very interesting that they hired this firm to file this lawsuit. And I, and if you look at some of the lawyers, you've got an ex FTC commissioner, you've got an ex federal judge. This is heavy hitters. We've covered other apps for antitrust cases before. And it's like, it's usually like very rickety email apps, like whatever, right? Like. This is not that. This is the real shit. So I just from the kind of the beginning, you're looking at Epic is in it. They're paying the money. And this law firm, which has had this streak of antitrust defense wins is now on the offensive. And you can, you can pay lawyers to do anything. What I mean, I can say I was a lawyer. It's like, it's fine, but law firms like this, they value their reputations.

• 38:18Nilay Patel?

  So they're not going to be on the streak of defense wins and then go on the offensive if they don't think they have a chance.

• 38:23Speaker 05

  Right.

• 38:24Nilay Patel?

  That's again, I don't want to over read it. I just want to set that up like I'm reading the filings. Here are the things I'm noticing.

• 38:29Speaker 05

  So before we get into the legal stuff, can we just point out that the like, just like the video, the intros for both of these things. They specifically needled each company for don't be evil and for the 1984 thing. And they're specifically like, just the first two pages, you should go and read them because there's, there's nothing legal about them. It's, it's strictly a moral argument designed to appeal to, you know, everybody from me down to, you know, a 12 year old kid who wants Fortnite back on the app store for the iPhone.

• 38:56Nilay Patel?

  This is tweeting the PDF. They want you to read this.

• 38:58Speaker 05

  Yeah.

• 38:59Nilay Patel?

  They want this argument to be the thing. They want people to make these arguments in public. Okay. So the Apple one, they're long. I will say this, I read the Apple complaint and I'm like, this is an episode of the Vergecast. That's what it is. It has a long argument in there about lock in. It has a long argument in there about switching costs. It has a long argument in there about who else gets to distribute apps in the app store. If you've been listening to the show for a long time, you're going to read this complaint, you're like tick, tick, tick. I recognize all those arguments regardless of what side you're on. This complaint brings all that stuff to a head. So the heart of it is they define markets for each company. And the reason I want to take them separately is the Google market and the Apple market are differently defined entirely.

• 39:42Nilay Patel?

  So with Apple, the market that Apple is monopolizing and using like illegal contracts to maintain is one, the iOS app distribution market. So if you want to enter the market of iOS apps, Apple has a monopoly and they're using their contracts to legally further that monopoly.

• 39:58Speaker 05

  That is, okay.

• 40:01Nilay Patel?

  Yeah, it's a lot. And the iOS in-app payment processing market, which is the other part. So there's two things here that they are talking about. One is if you want to distribute an app on iOS, that's a market that Apple controls. The other one is if you want to accept in-app payments, that's another market that Apple controls. Now, one of the most common things about this argument is you say, well, if you want an app on the App Store, you sign the contract with Apple and you agree to it, you're screwed, right? What these complaints are about is those contracts are illegal. Those contracts illegally further these two monopolies into these two markets that we defined. So if you just like, take a step back from basically everything we've been talking about, public opinion, your own instincts, whatever, what is this case about?

• 40:42Nilay Patel?

  Whether Apple's contracts in relation to their markets as defined here are legal or not legal, whether you are using your power in one market and whether you're taking your power in one market and then using a contract to tie another service into it illegally. It's the classic tying and bundling that Microsoft got in trouble for. So this complaint very much mirrors the Microsoft arguments. Yeah. Right? And there's a reason, like lawyers are smart. They're saying that was a winning argument back then. We're going to structure this thing to look like that and we're going to pursue it under that.

• 41:16Speaker 05

  So how does this, how does this structure that are the contracts, are they using their market power in having created the iOS ecosystem to make illegal contracts because they have monopoly on it? Get around like the, like obvious thing that I'm sure Apple will say immediately and be very pissed about, which is like, we have a monopoly on the thing that we made? Yes. So? Like, we made the thing. What? We can't control the thing that we made? What the hell? Like, there's no, there is no iOS marketplace unless we make iOS, so.

• 41:44Nilay Patel?

  And that's, so we, we saw that in that statement, right? We're very proud of you for making money on our platform.

• 41:49Speaker 05

  Right.

• 41:50Nilay Patel?

  Deal with it. This is where the lock-in argument comes in. So this is like a long section of this thing after they lay out all the harms and how there's monopoly. So in a normal case, you would have competition. This is Apple's like hilarious argument in front of Congress, like, if people don't like it, they can just write their app for the PS4.

• 42:08Speaker 05

  Yeah.

• 42:11Nilay Patel?

  So this is like a long piece of the complaint where it says, Apple's power in the relevant market is not disciplined by competition in the sale of mobile devices. There's no market force here making Apple act better. Isn't there Android, though? Right. Apple mobile devices cost, this is from the complaint. Apple mobile device customers face significant switching costs and customer lock into iOS ecosystem. These conditions manifest themselves in Apple's ability to maintain its power in the sale of premium smartphones and tablets. And then here's this fairly wonky argument. Apple's power in the market is not disciplined by competition because consumers cannot account for and switch away from Apple's anti-competitive conduct through their device purchasing behavior. The cost of app downloads and in-app purchases are unknowable by the consumer at the time

• 42:55Nilay Patel?

  that you buy a smartphone and less than the price of the device. So when you buy an iPhone, you are not, as a consumer, aware of its contractual relationship with Epic Games. Unless you're a Vergecast listener. Unless you're, unless you're, and God bless you all. You're not aware of it, or now that you're like a teenager on Fortnite being like, what's the 1984? But you're not aware of it. And you're certainly, because the price is like, the marginal cost to you is so low, depending on the contract, 15% versus 30% to you as a consumer is pennies, right? It's not going to play a factor in your decision. So they're saying, actually, Apple's lock-in is preventing this, is preventing consumers from exercising their power in the market and forcing Apple to be better. This is a, this is like the heart of this

• 43:40Nilay Patel?

  argument is ecosystem lock-in. Which, again, if you've been listening to the show, like, when I say, like, I read this thing, like, oh, this is a Vergecast episode. Like, what have we always talked about? It's ecosystem lock-in. How many times is iMessage mentioned in the? I, dude, I scrolled through this so fast, looking for, it's not in here. Damn it. So there's like this one argument that it's too hard to learn Android if you're on iOS. I don't buy it. But then there's this, which does make sense. Switching from iOS may cause significant loss of personal and financial investment that consumers put into the ecosystem. You have a bunch of apps that you've bought that you're gonna have to let go of. You have a bunch of in-app content that you might have bought that only works on that phone. You might not get all the apps that you want. All this stuff is there, and you've put it into iOS. You've spent all this money investing in iOS. And

• 44:25Nilay Patel?

  then you've got family and user lock-in. So if you have all your family members on iOS and all of your purchases are shared, switching to Android is a very high cost. FaceTime isn't there, so that's in here. Oh, iMessage is in here.

• 44:38Nilay Patel?

  FaceTime, Find My iMessage, AirDrop. These are all features that you might use to prevent you from switching. So they're, they're making the argument that your switching cost as a consumer is so high compared to the marginal, right? It's $7.99 if you buy a Vbox from Fortnite Direct. It's $9.99 if you buy it with Apple. That $2 is not enough to offset your lock-in costs, your switching costs. And then, argument, you're also in the Apple ecosystem. So if you're an iPhone, you're likely to buy a Mac. You're likely to buy an iPad. That ecosystem lock-in prevents you, the consumer, from exercising market power. This is, to me, it's the argument, right? They're saying the market doesn't function because you can't, consumers cannot actually

• 45:21Nilay Patel?

  switch away to protest Apple's policies. They might not know about them. The switching cost is so high, and the marginal cost to consumers of 15, 30, 20, whatever percent is a dollar. So why would you, why would you care?

• 45:35Speaker 05

  So the argument here isn't so much, uh, Apple shouldn't be allowed to have a locked-in ecosystem. It's that a function of the locked-in ecosystem is that people really can't switch away because it costs too much, and therefore, it should be better regulated. It's a little bit more nuanced than the traditional, "how dare they walled garden." It's, "Go ahead and have your walled garden, but because you have a walled garden, somebody needs to be able to go in and prune the bushes."

• 45:58Nilay Patel?

  I think this is more the argument of, "Well, we built iOS. We should get to do whatever we want on it." It's, "You've built iOS. You've also actively built barriers to access to customers on iOS." And if you believe, as I think most people believe, that phones are the most important computers in our lives, then that, we should evaluate that, right? Like, is this a computer, is this a general-purpose computer? This is like that console argument, right? Like, Epic isn't suing Sony and Microsoft about PS4 and Xbox policies because those are game consoles. Like, they're targeted devices. There is competition between the two. But these are general-purpose computers, and they can point to the Mac, which they do in this. They're saying, "All of these arguments Apple's making about security and privacy and user

• 46:43Nilay Patel?

  safety, they could make about the Mac, but they don't do it on the Mac, and you can see the competition on that." Now, is that a good argument relating to Mac and Windows desktop applications? I don't know. I don't know. But it's right there for them, and they go ahead and make it. So the, the specific pieces of the puzzle are, here are the markets. The market is iOS app distribution. Here's where the market has failed, right? Here's where the market isn't getting signal from consumers about what they want. And they're not getting signal from developers because, well, actually the other way around. They're getting a lot of signal from developers saying, we don't like this. But because there isn't pressure from the other side, Apple is the gatekeeper in saying, we actually don't have to react to the market of developers.

• 47:25Speaker 05

  Can we do a Vergecast and I trust lightning round with terms that I think our listeners have probably heard before? And there's two specifically I want to talk about, market definition and consumer harm. Because when we've talked about antitrust in the past, we've been like, well, the definition has been, does it make, do consumers have to pay more money? And like, that definition sucks, so we need some other definition. I don't know what that is anymore. And then there's like, market definition, which is if you have a monopoly, you have to like, control the market. But if you like redefine the market to be some other bigger thing, then it's no longer monopoly. So in Google's case, it's, we don't have a monopoly on, on web ads because there's, the, the, the market is all of advertising in all of history, right? Amazon makes the same case with retail. We don't have monopoly because we compete with, you know, Joe's, you know, popsicle

• 48:10Speaker 05

  stand or whatever. So do those two things that we've talked about a bunch, apply to what's going on here?

• 48:17Nilay Patel?

  They do, and I think they're related in this very specific way, which is antitrust law over the past, longer than that, 40, 50 years, has gotten increasingly more technical and like, math-based because of the consumer welfare standard, right? So the consumer welfare standard says it's, it's not a problem unless prices go up. And then that invited a million economists to show up and issue surveys and data and studies about whether or not prices go up.

• 48:42Speaker 05

  Math ruins everything.

• 48:43Nilay Patel?

  Well, it just became this very tangled, complicated math problem. And I think that has led people to approach components of the legal arguments as math problems. So it's not a problem unless you have 51% of the market, right?

• 48:58Speaker 05

  Right.

• 48:59Nilay Patel?

  And then you can define the market and you can do that. That's, I think, I think that's a mistake. And one of the big pushes, sort of in response very lately, is to get away from that hyper-technical economic approach to antitrust law and to say, look, you can feel it. And one of the reasons for that is Amazon, like, Amazon, like, lowers prices. Google's services are free. Like, how can you prove prices will go up when the price is free? Or buying another competitor will just mean more free stuff paid for by monopoly profits somewhere else? So there's a big push on there, but I think it, I see this from, like, my Twitter replies or our audience, like, the law isn't a math problem. Like, built into the structure of how cases are decided is the very real possibility

• 49:42Nilay Patel?

  that judges will get it wrong and be overturned. And then those judges will have gotten it wrong and someone else will look at it and maybe it will overturn them. So there's not like an algorithm here that says, if you have 51% market share and you define it this way and you make this much money, it's definitely wrong. There's just a bunch of people in suits yelling at each other in a structured way. But like, the, on the margin, it's, yeah, the first thing you have to do is define the market. What market are you talking about? That's a first argument. And you obviously want, you know, here Epic wants to define the market such that Apple is obviously the monopoly. iOS app distribution. And Apple will define the market as app stores. And so, look at how many app stores there are.

• 50:22Nilay Patel?

  I think that's just sort of less, it's less important about what the percentage is, because the big push here is what's actually happening to users. I think that's the political climate that we're in, and I think that's very important. So that's the Apple argument. They make three, there's like six federal claims, there are a bunch of California state claims. I always think those are just thrown in, like, maybe California a lot stronger, you know, like, but basically, they're saying the iOS app distribution market is a meaningful market, they've got monopoly power, they do something wrong. The payment market is a valid market, they're doing something wrong, over and over and over again. If you read the complaint, and you should, you will note that it's written as though everything is true, that everything they're saying is absolutely true.

• 51:06Speaker 05

  Yeah.

• 51:07Nilay Patel?

  Because that's how complaints are written. That's how, like, they're saying, they're saying what they believe. Apple will have to reply, we'll see what Apple has to say, but... That's the Apple one. It is very much about ecosystem lock-in. Like, the heart of this is this market has failed because consumers cannot express their preferences about Apple's prices because they're locked in. That is very different to the Google argument.

• 51:28Speaker 05

  Right.

• 51:28Nilay Patel?

  Epic's point here with Google is that the first market they define is the merchant market for mobile operating systems, which is very boring, but all that basically means is that Windows Phone failed. Just be honest. That's what that means. Uh, and we're gonna talk about the Surface Duo. It's like, there's a theme here. Right? If you want to make a phone, you have to use Android, unless you're Apple. And they're very clear about this. And so if you want to make a phone, you have to use Android. If you want to use Android, you end up in Google Play Services, you end up using a Google Play Store. Again, it sounds like an episode of Bridgecast. Once you do that, Google has a lot of power over you. They've talked about these contracts a lot. And so if you want to make an alternative app store,

• 52:10Nilay Patel?

  the argument here from Epic is, yep, you can make your own app store, but Android is designed to make that scary. It will tell you that sideloaded files are dangerous. It will pop up warnings about how you shouldn't do it. It has security features like Play Protect that restrict you. You have to enable sideloading and it warns you. Alternative app stores are not allowed to do auto updating, which is a key feature of app stores. So they're saying, yes, they've got this argument. Yep, sideloading is available to you, but at every turn, the user is told not to do it. So that's a design decision. And then there are multiple examples in this complaint of contractual restrictions placed on phone vendors to keep them from working with Epic.

• 52:54Speaker 05

  So the, this is why, when I was talking about Google's statement about Android is open and you can install any store you want, it's fuzzy because historically, like, in the misty mists of time before the iPhone was released and like broke the carrier monopoly and everything was what crap were, the most important thing about phones was what was on deck. And on deck meant what got preloaded out of the box when you, you know, bought it from the carrier, those games, that was the only way to make money with an app, full stop. And so all of the negotiations for software were these like- Really complex gnarly backroom, smoke room, filled room deals with carriers and manufacturers, right, ahead of the phone's release. And then the iPhone came along and it's like, you know what? We don't like AT&T and we think this thing is pretty good. So we're just not going

• 53:38Speaker 05

  to do any of that shit. And it worked. And then everything was beautiful and glorious until Samsung wanted to get a deal from Verizon and things started turning down a little bit. But it turns out that that was never, the story was never that clean on Android anyway, because Google has been using its power with the Play Store to get all sorts of stuff on deck from manufacturers and carriers. You know, when you open up your Android phone and there's a folder that says Google on it, there's a reason for that. There's money behind that. And Epic is specifically sort of like pulling the curtain back a little bit more on some of those like backroom deals to get stuff on deck to push the Google Play Store than we were aware of before. We knew some of it from,

• 54:24Speaker 05

  Russell Branham got some, you know, looked at some contracts in France, I believe it was. The EU has gone after Google specifically for this stuff and we could get into all the browser ballot, blah, blah, blah, blah, blah. But like fundamentally, at the core of Epic's case is Google's stance that Android is open, you can do whatever you want, fundamentally isn't true because Google exercises so much power behind the scenes before the phone even shows up in the store.

• 54:48Speaker 03

  Yeah. And that power is basically something called Google Mobile Services, which is like an API layer that they sort of bundle with any phone that they say you can get access to Google Play Store. But what that actually does is if you're a developer, you create an app. So I created Snapchat. I rely on some, I don't know, camera APIs or something like that. Google's been bundling more and more of those into GMS over the years. So basically you become reliant on this layer that comes with Android, Google, Google Android, let's call it, not Android AOSP. And if you want to go to another store and run that app, sideload it on another store, it just won't work because that layer is not there. Like a lot of these apps just don't work.

• 55:31Speaker 03

  Like you'd be surprised at how many do work.

• 55:34Speaker 05

  So this is specifically called out in the complaint. So where the heart of the complaint against Apple, and I call it the heart, I mean, it's a very long complaint, but that big lock-in argument.

• 55:44Nilay Patel?

  That Epic makes against Apple is here in a pared down form. But what's really here in the Google complaint that's not in the Apple complaint is that license. So they call it the Mobile Application Distribution Agreement. Through that agreement, Google requires OEMs to locate the Play Store on the home screen of each mobile device. They must further pre-install up to 30 Google mandatory apps, locate those apps on the home screen and next screen. These requirements ensure that the Play Store is the most visible app store any user encounters and places any other app store at a significant disadvantage. And then it goes on to say, hey, we actually tried to make a deal with OnePlus, right? Where OnePlus has high refresh rate screens. We are going to pre-install the Epic Games Store. We are going to run at the highest framerate possible. And then Google stepped in and said, no, you can't do that.

• 56:29Nilay Patel?

  And we actually only launched that deal in India in one market where Epic and OnePlus could get away with it. The quote from OnePlus to Epic, "Google is particularly concerned that Epic Games app will have the ability to potentially install and update multiple games with a silent install by passing the Play Store." Getting around this, the app would be rejected due to the Epic Games app serving as potential portfolio of games and games update in competition with Play Store. So you've got this evidence from OnePlus. They were going to make this deal to do sideloading and run Fortnite at a higher framerate. And Google stepped in and said, no. LG had the same, there's evidence here of LG saying it had a contract with Google that blocked side downloading off the Google Play Store this year. But if you use a Play Store, we can definitely make Fortnite available.

• 57:11Nilay Patel?

  Google prevented LG from installing the Epic Games app on LG devices. So what you're looking at is, yep, they've got this technical out. You can check the box. Sideloading is available on Android, but at every turn, Epic's claim is that Google makes that hard for consumers, impossible for OEMs. This, I think, gets to the other thing I've seen all over Twitter in the past day. What Epic really wants to do is make its own store and take its own cut, right? They're just totally self-serving. All Epic wants to do is take even more money and make Steam for phones.

• 57:40Speaker 05

  Yeah.

• 57:40Nilay Patel?

  Yes, I think they want to do that. I think the game here is, if they did that, would you trust it as a consumer? Would you trust that it was as safe and secure as the iOS App Store or the Google App Store? Would they offer a lower rate to developers? And would that force the rate on the Google and Apple stores to go down? Because that would just be competition. I think it's totally acceptable for Epic to have a very self-serving interest here. Because what you want is competition for app distribution. And that, I should have said this at the top, but you know, at the beginning of both of these complaints, Epic says, "We are not after money. We do not request any money. We don't request any compensation. We don't want any damages. We just want this changed so that we can compete." Which I think is very smart.

• 58:23Nilay Patel?

  Also, Epic prints money in Fortnite. Like, they sell fake money to people for real money. That's their business. It's incredible.

• 58:32Speaker 03

  There's also the context that-

• 58:34Nilay Patel?

  They can just do that.

• 58:35Speaker 03

  Yeah. And of course, they want app stores within app stores. Like, this is literally Tim Sweeney's argument with Windows and with the HoloLens and stuff. Like, he's been big against the Windows Store and all that sort of lockdown that Microsoft attempted there. For good reason.

• 58:52Nilay Patel?

  By the way, the other line here, there's something called the Developer Distribution Agreement that Google makes everybody sign. If you want to deliver an app in Google Play. It restricts you from selling an app store in the Play Store. So like, well, if you made it your own app store, what would be the best way to put it out in the world? Would be to put it in Play Store. And so Epic's argument is, you're making it, at every turn, you are making it hard to sidewide on Android. And one of the places we're making it hard is, we can't put the Epic Games Store in the Play Store. Which is very circular.

• 59:22Speaker 05

  You know where you can't get the Epic Games Store is in the Samsung Galaxy Store.

• 59:26Nilay Patel?

  That's amazing. So then there's this like, long part, and I'm just going to read these words to you. And I just want to see if you guys laugh as hard as I did. "Direct downloading Android mobile devices, however, differs dramatically. Google ensures the Android process is technically complex, confusing, and threatening, filled with dire warnings that scare most consumers into abandoning the lengthy process."

• 59:47Nilay Patel?

  This makes it seem like your phone light's on fire when you try to sideload it. And I'm like, is it? It doesn't feel like that.

• 59:52Speaker 05

  It's not that bad. It's not, it's not as nice as it could be. And I, I agree with the fact that like the, the warnings are just like 10% more arcane and scary than I think they need to be. But Google has an incentive to do that. If you, you know, like if they don't make them a little bit scary, then, you know, people are just going to go install a bunch of really bad pirated shit, right? That's, that's the reason, if you want to give Google the benefit of the doubt on those warnings.

• 1:00:22Speaker 03

  And I think it's fair to say that consumers have gotten used to the idea of an app store now. So like trying to sideload apps with like weird security warnings is gonna make people go, huh? Should I do this?

• 1:00:33Nilay Patel?

  Well, so let's take, I think Google and Apple both have valid security arguments. Let's just like take them at face value.

• 1:00:41Nilay Patel?

  There are more phones than any other kind of computers in the world. More people use them at every level of sophistication. Android phones in particular have had malware issues in the past. Phones are high-profile targets for hackers and security people. Shouldn't they be locked down? Right? Like if you make a world in which there's a bunch of malware on the web saying, download this app store, and then the app store can download whatever apps it wants. Like, aren't you opening up the bad thing?

• 1:01:11Speaker 05

  I mean, I would have more sympathy for that argument if we didn't somehow survive 1975 through 2005 without the apocalypse coming, right? Like, computers managed to continue working.

• 1:01:24Nilay Patel?

  There were some close apocalypses along the way.

• 1:01:26Speaker 05

  Okay, sure.

• 1:01:27Nilay Patel?

  But like, you just read Sandworm?

• 1:01:29Speaker 05

  Yeah, okay, I did just read Sandworm, and it's, it's a lot. I don't know, the, the thing about Android in particular is, even if you, even if you never install a single app from the Google Play Store, but you still have Google Mobile Services, they're scanning your apps and checking for stuff. And they can like, they can remotely reach into your phone and pull something bad out if they, if they know something bad is on there. There's actually a much higher level of control, separate from the App Store, on Android in particular, that doesn't get talked about all that often because it doesn't, we, we don't see it on most of the big-name apps. But there's a slew of like, just-

• 1:02:02Speaker 04

  Bottom of the barrel garbage malware stuff that Google just has an index of and is looking for constantly and can just reach into your phone and pull out, whether you sideloaded it or installed it via the Play Store.

• 1:02:12Nilay Patel?

  Tom, I feel like the Windows example is kind of instructive here.

• 1:02:15Speaker 03

  Yeah.

• 1:02:15Nilay Patel?

  Right? Like, Windows has had to get increasingly more locked down after sort of the Windows 95 free for all. How does that model work?

• 1:02:24Speaker 03

  Well, I mean, it's kind of similar. So it's some of the stuff that like Google does, especially on Android, because they're pretty much the equivalent, right? Like, Android is the mobile equivalent of Windows in very many ways. And like, these agreements and stuff like that, that's exactly what Microsoft used to do in the 90s. They used to force all their partners to bundle certain things, or like, they couldn't do this and they couldn't do that. Like, it's just the classic sort of thing that Microsoft used to do with Windows. How it's changed is obviously Windows has now been influenced by mobile. Everyone's got a computer in their pocket now. And Microsoft's tried to respond by like, trying to lock things down, but not in the same sort of fundamental way. So the difference here is that like, if Microsoft was to win in the HoloLens generation, if they won

• 1:03:06Speaker 03

  that out and everyone was wearing a computer on their face, and that's the next thing that we'd all do, then the difference is they've actually committed to allowing app stores on that platform. And Tim Swinney was part of that announcement. It's something they've committed to do. Like, they probably won't win it because, you know, Google and Apple have that dominance there that Microsoft just can't play off, if we're ever going to wear these things on our faces anyway. But yeah, like, on Windows itself, they tried to like, I guess sandbox apps, so you wouldn't get these like ransomware, malware crapware sort of stuff happening on Windows. So they've tried taking some good aspects of the mobile side and tried to apply into Windows.

• 1:03:47Speaker 04

  But Tom, Windows has a scanning utility, much like Dieter described on Android, right? I think maybe they don't have the ability to reach in and grab something, but if you download a file, like, I think it's called SmartScreen, is that right? And you try to run it, they have like an index that will stop you from installing it.

• 1:04:03Speaker 03

  Yeah, SmartScreen will basically flag up something. And obviously Chrome does it as well. Like, there's multiple layers of this stuff. And then there's Defender, which is like their antivirus. But SmartScreen basically sort of like takes a check of the file and says, hmm, does anyone actually download this regularly? And it will say, you know, this hasn't been downloaded regularly, or this isn't like a certified file. Do you sure you want to run it? And you have to go through some scary prompts to allow it. You have to kind of like really dig in to actually allow it to run, so.

• 1:04:30Nilay Patel?

  Well, so on the Mac, Apple is doing code signing for Mac applications now. So you can download a Mac application from anywhere. But if the developer hasn't signed it with Apple and Apple doesn't have some keys, you have to jump through some hoops, right? The reason I wanted to get into it is I think that is Apple and Google's best argument here. Right? We have seen, we have looked chaos in the face with open app distribution on the desktop. There is not one, but two orders of magnitude more of these devices in the world. We, and they are, they are cameras and microphones that people care, and location trackers that people carry with them all the time. The stakes are higher. I always think it's very funny when Apple and Google are like, we're not smart enough to solve this problem. Like, come on.

• 1:05:12Nilay Patel?

  I think that you are. And there are all these like mechanics that they use on the desktop that you could maybe apply. I think that like, I don't have a point of view on it. Right? I think it's, that's the thorniest part of this is one of the reasons my parents have iPhones is because I just don't have to worry about some of this stuff.

• 1:05:31Speaker 03

  Yeah, I don't, I don't think the answer is to like have a second app store on, on, on the iPhone. I think that's just complicated for consumers. It's just, you know, like it will, it will create good competition. Sure. Maybe. But I think the answer is just for the policies that Apple applies to be more fair. And they're cut like they, they can take a cut, like they're entitled to a cut for running that service, but I don't think 30% is the cut, right? That's, that's, that's a huge amount. That's the difference, especially when we're talking about games. It's the difference between a studio hiring two more people for, for a title or like, you know, not focusing on so many games, but actually putting some love into a title

• 1:06:16Speaker 03

  than, than them not. We were talking about two giant corporations at the moment, but this really, that goes all the way down to indies and.

• 1:06:23Nilay Patel?

  You see, Tom, in, in 1987, if you wanted to buy a software from Babbage's, you had to walk into a store and pay for a cardboard box and they took like a 50% cut or more.

• 1:06:32Speaker 03

  It's true. Yeah. The market forces are there. I know. But like

• 1:06:37Nilay Patel?

  Yeah, but like there are multiple stores.

• 1:06:39Speaker 03

  Yeah.

• 1:06:39Nilay Patel?

  I mean, that's like, this all comes down to, there used to be a lot of competition and maybe the numbers were higher. But if you were, if you were a software vendor, if you were, and what was it? Mac who made Oregon Trail? If you were like making Oregon Trail and like, you're like, I'm mad at babbages. I'm going to Software City. Like, you could do it.

• 1:07:01Speaker 03

  And it also comes down to like, when, when Steve Jobs launched his App Store in 2008, he specifically said like, he, he said to like Wall Street, we don't think this is going to be a massive profit generator and stuff, even though they have the 70 30 split, but we think this is going to improve the value of the iPhone and make us sell more of the iPhone hardware, which is where we're making our money. Like, if that was their original, I mean, whether he truly thought that or not, like, but I think, I think it comes down to that, like, should, should Apple be allowed to take that 30% cut on, on everything now? Just because they've created this railroad? Or should there be a bit more flexibility there? Like, I don't, I don't know whether another App

• 1:07:43Speaker 03

  Store solves that. I don't know whether, kidding, some of these iOS policies solves that, but I think the key thing is that 30%. It's been a sticking point for Spotify, you name it. Everyone else, everyone's upset about that 30% cut because it gets everything.

• 1:07:59Nilay Patel?

  To bring this back to where we start, right? I think that's a great point. Apple's statement with Hey, with Fortnite, with Spotify is, we're very happy you built a business on our platform, but it's our platform. And with Hey, they're like, well, you never paid us a cent. And here, it's like, we give you tools and distribution and advertising. We make these great phones, like, pay the money. And either you find that very convincing, or you think that is a bad argument for Apple to take a cut of everything that happens on its phone. Right? Like, that is, I would just point, Apple is the richest company in the world. They do not need to take a cut of every, they, they have so much money, they, they're, every time they do results, they're doing share buybacks and dividends, right? They're returning money to investors at a high

• 1:08:43Nilay Patel?

  rate. They don't need the money for R and D or investment or tooling or whatever you need to make the next phone. So you gotta, I mean, I don't have a position on it, like, Should Apple get a cut of everything that happens on the phone? Like, maybe? Like, I, I think it's great that my parents' credit card is like not being entered into tax fields all over the internet. That makes me happy, you know? But is the argument, we built the phone and now you're going to pay a tax if you want to access a consumer a good argument? Like, that's very much at the heart of all this. Okay, I want to end on a, well, this is not going to end. First of all, this case, I, I read these complaints. Epic is not backing down, right? They're not asking for money. There's no amount of money that you can pay Tim Sweeney to make him go away.

• 1:09:27Nilay Patel?

  They're asking for structural change to how these stores work. They've hired the fanciest law firm they can hire for this thing in opposition to that law firm's own history of litigation. That law firm also wants a big halo win. There is a congressional antitrust investigation going on. There are state-level antitrust investigations going on. They're in this thing for the long haul. Either Apple and Google are going to back down tomorrow, which I don't think they are going to do, or they're going to litigate this thing to the Supreme Court. So I think we're going to talk about this for a long time. I think there's going to be a lot of like discovery and emails and all that stuff is going to happen. So we can stop talking about it now because we're going to talk about it for the next 10 years of our life. But I will end on this, the most Verge cast wonky thing.

• 1:10:10Nilay Patel?

  So I'm reading the complaints, I get to the counts, and I notice that all the counts are the Sherman Act, which is one of the antitrust regulations in America, and not the Clayton Act, which is the other one. The Clayton Act is very specific. It prevents tying, right? It has anti-tying, anti-exclusive dealing, like outlaws those things specifically because the Sherman Act was not specific or powerful enough for Teddy Roosevelt. This is a real thing. Okay, I tweet, I don't understand this. Why didn't they, why didn't they use these specific laws in the Clayton Act? And a bunch of lawyers replied to me, the Clayton Act only covers the sale of goods, physical goods.

• 1:10:49Speaker 05

  Ooh.

• 1:10:50Nilay Patel?

  Are Fortnite skins goods?

• 1:10:52Speaker 05

  Hmm, I mean, they're good, but are they good?

• 1:10:55Nilay Patel?

  But are they, are they, are they commodity? Are they, are they sheets of copper piping or whatever? Right? Like, that's where we are, we're at with the, the laws are written in like 1917.

• 1:11:06Speaker 03

  I mean, I think that's, that's the problem, right? These, these laws are so old and things move so fast. Like, I didn't even realize it was Friday today.

• 1:11:15Speaker 05

  I would like more credit for my two-week joke, but we should move on to the next.

• 1:11:19Nilay Patel?

  The Sherman Antitrust Act is 1890. The Clayton Act is 1914. And so it's a real question whether a digital good in Fortnite meets the requirements of goods. I don't know, man. But like, in terms of Vergecast questions, it's a pretty good one. All right, we gotta take a break. We're not gonna do another hour on the meaning of goods. Although, Dieter, I can see his eyes are lit up. He's raring to go. We'll have a special episode of the Vergecast of Dieter just ranting about the nature of virtual scarcity. Look for that. Never. All right, we're taking a break. We're gonna head back and talk about the Service Duo.

• 1:11:58Speaker 06

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• 1:12:59Nilay Patel?

  All right, enough antitrust law. Let's talk about some flippy phones.

• 1:13:03Speaker 05

  Phones?

• 1:13:07Speaker 04

  What is a phone?

• 1:13:08Nilay Patel?

  I thought Lauren Good had a great piece at Wired where she was like, "Microsoft made this ultimate mobile productivity device and now they have to convince you that it's good on the couch." It was a fun, it was a fun read. But Tom, Surface Duo is out. Notable piece of hardware. Tell us about it.

• 1:13:24Speaker 03

  Yeah, so it's coming September 10th. I mean, we kind of know about it, I guess. We knew most things apart from the specs inside. And I think that's been quite the conversation this week, the specs and the price. Those are the two sort of things we learned this week. So it's 1,400 bucks, which is probably, I'd say 400 more than it should have been.

• 1:13:47Speaker 04

  It's a lot of money.

• 1:13:48Speaker 03

  It's a lot of money. And the specs are old. You've got an 855, I think, in there, Qualcomm 855, Snapdragon 855 processor in there. No NFC, no 5G, and the battery's kind of diddly for two screens. I think it's just a bunch of questions around it. But like, and I know everyone's going to talk about that and all that sort of stuff. But I think that is kind of like an aside to what they're trying to do. And I think like when the first Surface Pro came out, everyone was doing the same thing like, "What is this thing? This is weird." And then Surface Pro 3 came along and it was like, "Oh, okay, I understand their vision." I think that's where they're trying to go with this. It's whether their vision is correct, whether you need two screens on mobile to like do more. If you believe that, I think that's the fundamental.

• 1:14:33Speaker 04

  And whether they can twist the arm of an operating system that they don't technically control into making those two screens work.

• 1:14:40Nilay Patel?

  I mean, they're like literally adorable on Twitter at each other right now, right? Like.

• 1:14:45Speaker 04

  Yeah, but they're not the developers of all the other apps that you use on Android.

• 1:14:49Speaker 03

  Yeah.

• 1:14:50Speaker 04

  So like, like, I mean, like Android has supported tablets for so long. And the story with Android is that tablet apps basically don't exist on Android. So like.

• 1:14:57Speaker 03

  Yeah.

• 1:14:58Speaker 04

  How can Microsoft make that work?

• 1:14:59Speaker 03

  But I think the only way, I think the way that they're doing it initially with this hardware, and I know it's not as sexy looking as the fold too, and I think, but having those two screens separate actually gives them that kind of like app advantage in a way, because those apps do run separately, don't have to span across the bigger display.

• 1:15:16Speaker 04

  Yeah.

• 1:15:16Speaker 03

  So they're kind of getting away with it initially. And sure, this thing's going to fold in a couple of generations, right?

• 1:15:22Nilay Patel?

  Yeah. I actually think the Surface Duo looks better than the Galaxy Fold, but I don't know if it'll work better. Let me give you my hottest, hottest take. You ready?

• 1:15:32Speaker 05

  They couldn't fit a good big enough battery in there. They had to go with an older processor. I don't actually care about that. I'm not like if the specs are bad, it's going to be bad. I love the Pixel 4, for example, so it's possible to overcome mediocre specs. I'm very worried about the camera and I'm worried that they're not going to nail it on the first try. So my hottest hottest take is they know that they don't have it yet, that it's going to take a little while longer for them to get better at hardware for it to be what they want it to be. And they got to work on the software. And because the specs are bad and old, they chose to price it high because then fewer people would buy it. Because then it will be less likely to tank the thing in everybody's minds because only a core group of enthusiasts will buy it and that will give them time to continue iterating on it for V2 and V3.

• 1:16:13Speaker 03

  I mean, that's a, yeah, I think that's fair. I mean, the way I think about it, right, with any Surface device, whenever they launch a new one. So it always brings me back to this quote from Ralph, who's their design lead, Ralph Groen. He said, "We have like three generations of a Surface product when we launch one on three tables in a secret room at Microsoft." So they know where they're going, like the third generation is like the perfect one, right? Like that's where they're going. So you always have to look for that third generation of Surface stuff because that's ultimately the vision realized with the hardware they're able to do. So I think anything that they do up until that point is like testing the wars and getting developers interested because they need something for people to build on to get these things going.

• 1:16:55Speaker 03

  So it always brings me back to that. So yeah, yeah, it wouldn't surprise me if that's their grand plan.

• 1:17:01Speaker 05

  When they announced it, we had Panos on the podcast. We got to use it for a minute. He let me swipe through his phone. I've seen Sachin Adella use it as his phone in another event. But then I'm reading the coverage and like Harry McCracken at Fast Company had one. He was like, "This is pretty buggy."

• 1:17:21Speaker 03

  Yeah.

• 1:17:22Speaker 05

  And so I'm like, "What happened?" Like last year, it was like, I was watching the CEO of Microsoft. I mean, he was just like pretending to use it, but like it looked like he was using it for real. And like we flipped through Panos's and it looked fine. So I'm curious what happened along the journey to making it complete.

• 1:17:39Speaker 03

  So they haven't really demonstrated much of it. If you remember when we had it, we were able to take photos. We couldn't really touch it and play around. One of the first public demonstrations they did, it was like a developer event. And it crashed in the middle, like they couldn't span apps and stuff. It was super like just laggy. Um, because of the two screens and everyone was like, you know, it's beta, it's still coming. And then they did the press event the other day, the behind closed doors thing. And a couple of times the app's crashed there as well. Um, it seemed a lot more polished and a lot less laggy and stuff. And, and these are Microsoft's own apps, right? Like this is like Office and Outlook and like Word crashing.

• 1:18:16Nilay Patel?

  There might've been a Kindle crash.

• 1:18:18Speaker 03

  I think, yeah, there was a third party app crash. I can't remember which one it was, but I mean, these things happen during demos and stuff, but like, it would not surprise me if there's, yeah. If there's going to be some, some bugs around the edges here, um, especially just having to power two displays as well.

• 1:18:35Nilay Patel?

  So someone pointed this out at me when Panos was on the Vergecast announce. We said, how much is it going to cost? Cause what do we, honestly, if you're an executive and you show up with a new product or a show and it doesn't have a price, I'm asking you how much it costs for an hour. Just be ready for it.

• 1:18:49Speaker 09

  What's pricing on that thing going to be like? I'm not going to tell you, I'm not going to tell you. Am I going to be happy or unhappy? Super happy. Describe my feelings. My, uh, you, you will be elated. I like elated. Yeah, I think you'll be pretty pumped about it. I, I am.

• 1:19:02Speaker 03

  Are you happy?

• 1:19:03Nilay Patel?

  I don't know that $1,300, $1,400, $1,399. I don't know that that was the number in his head when he told me I was going to be super happy, right? Like, that can't be the case. But at the same time, I think it's like 240 chess to say they raised the price so high so no one would buy it and they could skate out of first gen or like.

• 1:19:23Speaker 03

  I said it was a hot take.

• 1:19:24Nilay Patel?

  I know it's a hot take, but like, you know, who's going to get, you're going to get one and Joanna's going to get one and Lauren and Marquez and like, all of these reviewers that people like and trust are going to be like, this is very expensive. This processor is a year old and this Kindle app is a mess, right? Like, that is still going to be in the world. Like they stopped, like, Panos is not out there trying to make a half baked product. Like, he obviously cares about the products being good. I, maybe the spec thing and maybe the development and COVID pushed it back. But I think the part where they're trying to hide a bad product by announcing it with like the world's most adorable tweets at the operating system vendor. You know, like, I just don't think they're playing that game.

• 1:20:06Speaker 03

  No, I think the fundamentals, whether you look at the basic hardware, like I was saying, you can look at the hardware and the price and all that sort of stuff, but it's really whether you need two screens, whether that's actually going to change the way we use phones. Like, because this is the promise that Samsung, like, what did Samsung say? It was like their pillar of their future or something like that. It was a pretty grand statement. So if Microsoft's betting that as well, like, something's happening here.

• 1:20:30Nilay Patel?

  I don't know that it's necessary, but I will tell you, having just used the busted ass fold a couple of times, yes, I want to have a thing that folds out into a bigger canvas. Full stop. It's great. I love it.

• 1:20:44Nilay Patel?

  You know, like, we have iPads at home, and I would say, like, half the time, I'll catch myself just, like, on my phone for a half an hour and my iPad is two feet away. It's like, what am I doing? Why am I not using the good screen? And so having the thing that you're going to pull up and look at anyway, be the good screen, is very, very compelling.

• 1:21:04Speaker 03

  Yeah. I think I kind of agree with Samsung and Microsoft, but I'm just, I'm apprehensive about whether the hardware will truly get there soon. Because I think the software and stuff, you can do anything in software, right? Like, that's, that's less of an issue, but getting that hardware there in the next few years is, uh, yeah, it's going to be interesting. Is it, like, foldable glass?

• 1:21:25Nilay Patel?

  So I will, I mean, I just recall Panos being very skeptical of plastic screens, right? And like, there have just been a lot of hints in the world that where Microsoft wants to go is foldable glass, and they're waiting on Corning, and Corning has some prototypes out there. Like, I think the big bet for all these companies is a form factor shift, right? Like, that's what they're saying. Like, we've done rectangles, we lost at rectangles, what about squares? Microsoft's time to shine. And like, whether or not you believe the core screen technology is good enough to enable that fold, and you start with dual displays and just get people there, I think it's smart.

• 1:22:07Nilay Patel?

  I think the big question is, right, it's app developers, it's ecosystem, it's whether, I mean, I just, I probably said this anecdote on the Verchess 10,000 times. So I just remember Tony Fadell being like, every year we changed the way the iPod looked, right? Like, one year it was fat, and one year it was skinny, and one year it didn't have any buttons, and the next year they're like, buttons again. And like, they just made it look different a lot, and that kept consumer interest high in what was effectively the same product over and over and over again. And like that is just, it's a lesson that has stuck with me is the phones like continue to be rectangles. How do you make it look different? You make it fold in half. And so if Microsoft can just capture that moment and get people to buy it on their Android phone and like cut a deal with Epic and be like Fortnite's on this phone. Like it's

• 1:22:50Nilay Patel?

  a pretty, they're big moments for them to capture attention.

• 1:22:53Speaker 03

  Yeah, no, I agree. I think the app development side is going to be crucial, isn't it? Especially given the Android situation with tablets and stuff.

• 1:23:02Nilay Patel?

  Yeah, I mean, both Microsoft and Android have shown an incredible ability to get developers to make apps for new platforms.

• 1:23:09Speaker 03

  The interesting sort of thing about all of this, though, is that like, basically, Samsung engineers are like, well, before COVID, were onsite at Microsoft working on some of this stuff, like their little partnership that they've got going on. And now they've got the same sort of thing going on with Google. Like, all three of those are trying to do similar sort of stuff, but from their own perspective. I think it's going to be super interesting to see like where Android adapts and changes. And it also will see be interesting once Apple comes into this side of things, shakes it all up as well. Because I don't think they're going to be that far off, right? Probably like two or three years away, maybe.

• 1:23:45Nilay Patel?

  Yeah, I mean, I think Apple's, Apple and Samsung are just like different in that way, right? Like Samsung will put out the not ready technology and be like, this is, this is it, right?

• 1:23:55Speaker 03

  They want to be seen as innovative, right?

• 1:23:57Nilay Patel?

  Dieter, what's your read on the Google side of it? Because they seem very happy to have another vendor that wants to compete with Samsung. Microsoft and Samsung are super close, though, and Samsung is obviously doing all this App Store stuff. Like, what is the, what's Google's position here?

• 1:24:12Speaker 05

  Well, there's a rumor that there's a foldable Pixel coming along, so that won't matter.

• 1:24:21Speaker 05

  They have been very, very excited about foldables for a couple of years now. I would, like, they, you know, I get to go and look at the version of Android that's going to be like official with all the new features pretty early. And it's been like two, almost three years that they've been like in foldables, man, it's real. And maybe that's just they knew the Surface Duo is coming and knew the Galaxy Fold is coming. But I feel Like there's one more turn in the hardware that Google knows is coming that it's excited about. And it also knows that Android or something, Google needs some kind of operating system on a big screen that isn't Chrome OS in schools, right? They just, they do, they don't have a general computing platform that they use for your work. Unless you were like into Chrome OS and you stick with Chrome OS after you get out of school, right?

• 1:25:07Speaker 05

  Cause Android is terrible on big screens. And so Foldables gives them another crack at having a successful platform outside of phones. Cause they've got it with Chrome OS in one context, but they don't have it in the generalized context, the way that like Windows, Mac or iPad does.

• 1:25:24Speaker 03

  Yeah, like the thing that's really super interesting to me about all of this is that when they announced the duo, Microsoft in that event in October, they also kind of announced a partnership with Google, right? With it like they kind of didn't really dig into it, but the rumors are that there's like gives and takes that will go far beyond just Android. And if you set it in the context of like what Apple's doing on the Mac and ARM side, and you see where that's going, where that could potentially lead to, then you see Samsung and Microsoft doing their partnership, you can obviously see that's gonna go up against that. And then it's like, where does Google fit in there? And where does Chrome OS fit in and Windows? And like, how do all those things sort of come together? Cause Windows is basically the desktop equivalent of Android, Android, the mobile equivalent of Windows.

• 1:26:10Speaker 03

  So do we in the future see a partnership between Microsoft and Google where Android apps run on Windows?

• 1:26:15Speaker 05

  Oh, for sure. I totally buy that's gonna happen.

• 1:26:18Speaker 03

  It's gotta happen, right? Or something's gotta give there. And the same, the same with like the Chrome OS stuff, like where that goes. But there's definitely like such a different mix going on. And the duo is just a part of that. And it's, you know, that is trying to be the, the future of mobile devices and stuff. But I think the fundamentals that are going around, going on behind the scenes is gonna be super interesting to watch. To see who does what and who gives what, whether it means, I don't know. Microsoft's obviously gone down the age route with Chromium. Like what does that mean in the future? Like there's, there's so much stuff going on.

• 1:26:48Speaker 05

  I think the only obvious answer is that Microsoft and Google are going to merge. One more five hour antitrust episode when that happens. We have gone incredibly long, Dieter. I just want you to read the four Android headlines because there's some Android headlines.

• 1:27:04Nilay Patel?

  Google is making every Android phone a seismometer to create a worldwide earthquake detection network. They're not the first ones to use phones as seismometers, but they're putting it in all of Android, which is huge. They have added better accessibility options to their like lookout app. They have, Dan loves this one. They've put the calendar app back in Android Auto, which is great. And then Dan especially loves the new Wear OS news.

• 1:27:27Speaker 04

  Can't wait. 20% faster. It'll almost be fast.

• 1:27:32Nilay Patel?

  That's great. And then, Tom, you scooped the new Xbox Series S out of a controller.

• 1:27:37Speaker 03

  Oh, yeah, that was a crazy weekend.

• 1:27:39Nilay Patel?

  Xbox Series X coming on the 6th. Maybe it'll have Fortnite on it, maybe it won't. Who knows?

• 1:27:43Speaker 03

  Well, maybe it'll come out on the 6th. Maybe.

• 1:27:45Nilay Patel?

  November 6th.

• 1:27:46Speaker 03

  Yeah. It's definitely coming out in November. That's all we know, for sure.

• 1:27:50Nilay Patel?

  All right. A lot of news this week. Thank you for sticking with us through this, my 1L in a trust seminar. I had a good time. Thank you, gentlemen. Let's see if I can do all the Twitter handles. Dan is DCCFert. Dieter's Backlon. Tom is Tom Warren.

• 1:28:06Speaker 03

  I'm actually at EU.

• 1:28:10Nilay Patel?

  If you have any questions about Microsoft, just tweet it to EU. See if they have any answers. You can read Dieter's newsletter, Processor, the Verge.com newsletter. There's obviously all kinds of other policy news happening in the world. Casey's newsletter is Interface. It comes back next week. On Tuesday, this interview was super fun. Lana Schwartz, who's a media professor at the University of Virginia, has a book about money and how money is a communications medium and network. We got all the way into how, at one point, the CEO of Starbucks was like, I will control one of the only digital currencies in the world. Wild book. That's coming out on Tuesday. It's the interview episode. We'll be back next Friday with the chat show. That's it. Rock and roll.

• 1:28:49Speaker 04

  Wear a mask.

• 1:29:10Speaker 10

  Everyone's got a hard question about AI. Your job, your kids, where it's going. Anthropic was built to surface those questions and share what it finds along the way, because there's hope in hard questions. Ask yours at claud.ai/spotify and keep thinking. That's claud.ai/spotify.

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