Tim Cook takes the stand and explains why Apple keeps tight control over the App Store22
According to Bloomberg, Apple CEO Tim Cook took the stand this morning to defend the 30% cut of in-app payments that Apple receives. The tech giant also forces developers who want their app listed in the App Store to only use Apple's in-app payment platform to process such a purchase. When Epic Games sought to evade paying Apple's 30% cut for in-app purchases of Fortnite game currency by offering its own payment platform, that was a violation of App Store rules which led to the removal of the game from the App Store.
Tim Cook explains why Apple walled off the App Store
Cook called the App Store an "economic miracle" and also said that a document that revealed a whopping 78% profit margin for the App Store did not include several costs and was only supposed to show a trend, not a true financial figure. The executive said under oath that Apple had to take tight control over the App Store because of possible threats to iPhone security and privacy.
On the stand, the CEO said, "You have a phone in your pocket most of the time and you want instant service. We felt both the use cases and the threat profile would eventually be much greater because of the number of iPhones on the market."
While Apple has been criticized for the so-called 30% Apple Tax by music streamer Spotify and video streamer Netflix, Snap CEO Evan Spiegel had nothing but praise for Apple and the way it runs the App Store. Outside of the courtroom, Spiegel said that he is happy to pay Apple's 30% cut "in exchange for all of the amazing technology that they provide to us in terms of the software but also in terms of their hardware advancements." The executive told CNBC that "We really feel like Snapchat wouldn’t exist without the iPhone and without the amazing platform that Apple has created."
The trial could move on to closing arguments on Monday
On the other hand, Fox Broadcasting founder Barry Diller, who currently is Chairman and Senior Executive of IAC/InterActiveCorp and Expedia Group, had less than kind words to say. Diller stated that his companies are being "overcharged in a disgusting manner" by Apple adding that, "I mean, it's criminal. Well, it will be criminal."
In response to questioning by Epic's legal team, Cook said that the App Store rules for developers are designed to keep their customers' personal data private while preventing these customers from unknowingly installing malware. Apple's CEO added that developer fees are necessary to support the App Store.
No matter what Judge Yvonne Gonzalez Rogers decides (this is a bench trial which means that there is no jury), the trial has released a treasure trove of new information that will be looked over by U.S. lawmakers such as Senator Amy Klobuchar (D-MN) who is considering writing new antitrust laws that would ultimately protect consumers. John Bergmayer, legal director at consumer advocacy group Public Knowledge says, "This case has always been part of a bigger narrative rather than something that's going to decide the issue on its own."
Listening to Cook's testimony in the courtroom today was his counterpart at Epic, Tim Sweeney. The latter was Epic's first witness when the trial started two weeks ago, and today he took notes and played with a rubber band as Cook gave his testimony. Epic calls the App Store a monopoly because owners of the nearly 1 billion active iPhone units worldwide are forced to use apps that have been approved by Apple.
While Google also takes as much as 30% cut of in-app purchases made through the Google Play Store, it does allow Android users to sideload apps from third-party app stores. While iOS does not allow this, we will have to wait to hear whether Cook's explanation for Apple's walled garden (to keep customer's data private and to prevent the spread of malware) is enough to satisfy the judge. The trial is expected to move on to closing arguments on Monday and it will probably take some time for the judge to make her decision.