The Epic v. Apple trial ended how it started: with a Tim.
On Friday, Apple called
CEO Tim Cook to the stand, three weeks after Epic CEO, Tim Sweeney, testified as the trial’s first witness. What followed was a tense exchange between Cook and Judge Rogers.
Apple booted Fortnite from its App Store last year after Epic adopted an in-app payment system that skirted the App Store’s 30% commission fee. Epic marched
to court, arguing iOS is a monopolistic “walled-garden” that should be opened up to third-party app stores.
In the hot seat, Cook used two shields to defend the App Store’s business model.
Shield #1: user safety. Cook argued third-party app stores would open up a pandora’s box of privacy and safety concerns.
“Technology has the ability to vacuum up all kinds of data from people, and we like to provide tools to circumvent that.” Potentially insecure third party marketplaces, explained Cook, would splinter Apple’s “integrated solution of hardware, software, and services.”
Shield #2: profit. When asked why developers can’t use other payment methods to sell in-app purchases, Cook was pretty blunt about Apple’s motivation: “we would be giving up a total return on our IP.”
Apple has repeatedly argued its multibillion-dollar research to maintain the App Store helps developers, and it’s accused companies like Epic of wanting a free ride by ducking commission fees.
Judge Rogers, though, flipped the script. She argued in-app game purchases – like Fortnite V-Bucks and Candy Crush gold – were subsidizing the rest of the App Store.
“I understand this notion that somehow Apple’s bringing the customers to the users. But after that first time, after that first interaction, developers are keeping the customer with the games. Apple’s just profiting off that, it seems to me.”
Rogers twisted the knife further yet, saying it doesn’t sound like Apple’s recent App Store price drops
were motivated by competition — just fear of regulation.
Judge Rogers’ was noticeably quiet on the possibility of opening up iOS to third party app stores. Instead, her line of questioning focused obsessively on allowing in-app purchases. Could this be indicative of how she’ll rule? Maybe, maybe not.
Either way, a judgement that forces Apple to allow in-app purchases may look good on paper compared to the alternative of opening up iOS - but it would effectively slaughter Apple’s cash cow
My opinion: it’s not weird that Apple, a business with a beating capitalist heart, wants to profit from the money it pours into developing the App Store. But thicker margins have no bearing on consumer welfare – the key standard in antitrust trials.