It started with Tim and ended with Tim. Tim Cook, the chief executive of electronics company Apple, testified Friday as the last witness in the trial in Oakland, California, in which his company is facing video game maker Epic Games (“Fortnite”). The trial, which has been eagerly followed in the industry, had begun three weeks ago with the testimony of Epic CEO Tim Sweeney.
The trial revolves around an antitrust lawsuit that Epic filed against Apple last year. At issue in the case is the App Store, Apple’s platform for distributing applications for the iPhone. Epic accuses Apple of exploiting its monopoly on iPhones to impose its terms on app developers, such as a 30 percent commission on app revenue.
Tim Cook was on the witness stand for about four hours on Friday; as he himself said, it was his first testimony in court. He first faced friendly questions from an Apple lawyer, then a far more hostile cross-examination with Epic representatives – and finally surprisingly critical comments and questions from Judge Yvonne Gonzalez Rogers.
“Disproportionate amount of money.”
She said she felt Apple was making a “disproportionate amount of money” from video game makers, relative to what the company was providing in terms of technical infrastructure. While she understands that Apple helps app developers get customers, she said. But after that initial contact, she said, it’s the developers who keep users engaged, and even then Apple still profits.
The judge also questioned why the corporation does not allow developers to indicate options for purchases outside of Apple’s payment system in their apps. She also cited from a survey that 39 percent of app developers were dissatisfied with Apple, and asked if this was a sign that Apple felt little competitive pressure and accordingly was not forced to accommodate developers.
Cook countered that Apple is feeling “fierce competition.” He said he didn’t know the survey, but admitted the existence of “tensions” with developers and linked it to Apple not allowing many submitted apps into the App Store. He also defended the review of apps, saying otherwise the App Store would be a “toxic mess.”
He went on to say that if his company gave users options other than its own payment system for purchases, it would not be able to recoup its own costs for the platform. And he repeated the argument made repeatedly by Apple representatives during the trial that tight control over its own ecosystem serves to keep users safe.
Cook refused to be rattled
Judge Rogers has often asked critical questions of both sides during the trial, so her exchange of words with Tim Cook on Friday is not necessarily indicative of which side she is leaning toward. Cook was calm during his testimony and did not allow himself to become flustered, much like he has been recently during hearings before the U.S. Congress.
At some points, however, he was remarkably ignorant. For example, when it came to the profit margins with the App Store, which an expert appointed by Epic put at almost 80 percent during his testimony. Cook refused to be pinned down, saying only vaguely that Apple does not accurately calculate that margin itself. The Apple boss also claimed that he did not know how much money his company receives from the Internet company Google for making its search engine the standard on its iPhones. According to some estimates, that’s ten billion dollars a year.
The dispute between Apple and Epic began last August. The video game maker kicked it off itself when it put new software for “Fortnite” on the App Store that clearly violated Apple’s rules. It circumvented Apple’s payment system and thus the commission attached to it.
Apple immediately removed the game from the App Store, whereupon Epic filed the antitrust suit that is now at issue in court. Epic argued that Apple was exploiting its monopoly on iPhones to impose its terms on app developers. The video game maker wasn’t asking for damages, but for those rules to be changed. This is what makes the lawsuit so dangerous for Apple, because Epic is using it to try to undermine the App Store business model. Epic is also not the only company to complain about the App Store’s business practices. Music service Spotify, for example, has filed an antitrust complaint in Europe, based on which the EU Commission filed antitrust proceedings against Apple last year.
The trial in Oakland is scheduled to end Monday with closing arguments from both sides. The verdict will be in the hands of Judge Rogers, not a jury. Rogers said Friday she will likely take some time with her decision, but hopes to deliver a verdict by Aug. 13. She also said she expects the case to go to appeal, making the current trial just one of several chapters in the litigation.
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