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Tim Cook said Friday that the iPhone was a product in a “fiercely competitive” market, as he tried to dispel allegations that the company was operating an illegal monopoly in a lawsuit that could have far-reaching consequences for a billion. of iPhone users and for thousands of developers.
Apple’s chief executive has taken a stand in the high-stakes case filed by Epic Games, the maker of Fortnite. Epic argues that Apple is abusing its position by forcing developers to distribute apps through its App Store, where it requires a 15-30% commission.
Apple kicked out Fortnite from the App Store last year, when Epic tried to avoid fees by giving gamers a zero commission form to make purchases from the app.
At stake were “billions of dollars” of high-margin revenue for Apple and legal precedents of what constitutes a monopoly in the digital age. he argued Gene Munster of Wolf Ventures.
Cook pulled out a list of rival phone makers to illustrate the competitive market and said iPhone customers valued the healing experience of having a unique app store. “For us, the customer is everything,” he said. “We try to offer the customer an integrated solution of hardware, software and services.”
Apple’s software, hardware, and services ecosystem is in jeopardy increased scrutiny by regulators in Washington and Brussels, where Epic has also been protesting against the iPhone maker. But Epic has faced a seemingly upward battle in the courts, after Judge Yvonne González Rogers said late last year that the company was arguing over the frontier of antitrust theory.
$ 72 billion
The amount spent on the Apple App Store in 2020
Epic has relied on economists, app development colleagues and the words of Apple’s own executives to argue that Apple deliberately lured developers with a set of expectations – an App Store that didn’t seek profits, such as said Steve Jobs in 2008 – Before introducing a number of mechanisms to block consumers in their ecosystem and hinder change.
Apple said Jobs’ statement was not a promise, but a prediction, true, wrong, but wrong because the App Store turned out to be, in Cook’s words, an “economic miracle.”
Jobs had said it could become “a $ 1 billion market at some point in time,” while, according to Sensor Tower, spending on the App Store reached $ 72 billion by 2020.
Epic lawyers asked Cook in the kitchen on Friday if the App Store has margins close to 80%, a figure that Epic’s expert witness introduced “from the files of Apple CEO Tim Cook” . Epic sees this figure as a clear reflection of unduly high margins, reflecting its control over developers.
Cook did not dispute the authenticity of the report, but described it as “timely” that did not accurately reflect all the investments Apple puts in the App Store. He said Apple does not break profits and losses for the App Store.
Sometimes the serious case has taken strange turns, including an argument about whether there were animated bananas. Fortnite they’re “naked” without the tuxedos, Apple’s attorney said.
The seemingly trivial comment referred, in fact, to a basic argument that Apple has used in its defense: that an exclusive and curated App Store is good for iPhone users, as it protects them from lewd content that might appear if the company was forced to resign. control and allow alternative application stores to your hardware.
Epic called this argument “security theater,” a pretext for maintaining high rates and strict control. Epic advisor Katherine Forrest took a few minutes to show that iPhone users can search for terms like “porn” and “BDSM” in apps like TikTok, Instagram, and Reddit. In the App Store itself, Apple sells ads for search terms, including “escort,” and charges a commission for in-app purchases on apps such as Love Positions 3D, Forrest said.
Whatever the outcome, the trial has offered a rare insight into the internal workings of the world’s largest company and has revealed materials that Apple critics around the world can use to advance claims it has acted anticompetitively.
Emails discovered in the discovery process, for example, showed that Apple executives were opposed to allowing the company’s iMessage app to also be used on rival Android phones, as this would “eliminate” [an] obstacle for iPhone families who give their children Android phones “
In another change, an Apple engineer said it “would be amazing” for Apple to be able to sell ads on the App Store, just as Google does for the Play Store, but acknowledged that this would “disagree” with that Cook “explained to the world that we make great products without getting revenue from users.” However, Apple launched the service in 2017 and expanded last month.
Apple has complained about the “trial by anecdotes.” His lawyers argue that Epic has failed to prove that Apple’s App Store rules are unusual, that its 30% share is excessive, or that its interest in preserving user safety is a pretext.
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