Game Theory

Apple vs Samsung Patent War

Antonius Cliff Setiawan 29119033

Lecturer: Dr. Eng. Manahan Siallagan S.Si, MT, M.Sc

MASTER BUSINESS OF ADMINISTRATION

INSTITUT TEKNOLOGI BANDUNG
2019-2020
Background:
Samsung and Apple have been rivals in smartphone industries, ever since Apple released first
Iphone in 200, this have become a challenge to Samsung that already in the cellphone industry
since 1985, to compete with this challenge Samsung begin to release Samsung Galaxy in 2009.
The 2 companies keep competing with each other until 2012 when Apple patented some of it’s
intellectual property namely “rubber banding” and “pinch and zoom” feature in their phone. This
feature also exist in Android phone that create legal issues. Arguably no one really knows who
come with this feature first, but it become a problem when Apple patented it this mean Samsung
is in due for court.

Analysis:
Implementing Game Theory based on this case, there are some choices both companies can
made, Apple file a lawsuit and Samsung doesn’t which will benefit Apple, Samsung file a
lawsuit first and claimed the technology is different and Apple doesn’t file a lawsuit. Both file a
lawsuit or neither file a lawsuit.

Samsung files a lawsuit Samsung doesn’t file a lawsuit

Apple files a lawsuit 4; 2 8;1
Apple doesn’t file a lawsuit 3; 7 7;5

Whether or not Samsung file a lawsuit, Apple will file a lawsuit, and whether or not Apple file a lawsuit
Samsung will eventually file a lawsuit, so file a lawsuit is the dominant strategy for both company. The
Nash equilibrium is when both companies file a lawsuit and the Nash solution is when both companies
didn’t file a lawsuit.

Here we can see both company actually benefit when none of them file a lawsuit, because no further
cost created to pay for court and attorney, but it ended with Apple file a lawsuit that will cost Samsung
about $ 1billion and there are also more trials that ended with Samsung lower their payment, which cost
both companies more money and time.

Sources:

https://johnsmithk.wordpress.com/2013/04/13/an-understanding-of-nash-equilibrium-and-nash-
solution/

http://www.economist.com/blogs/schumpeter/2012/08/apple-versus-samsung

https://www.bbc.com/news/technology-44108835