Mikey Campbell
Apple CEO Tim Cook in a prepared opening statement to be read at a U.S. House antitrust hearing on Wednesday denies that his company participates in anticompetitive behavior, adding that it does "not have a dominant market share in any market where we do business."
Cook plans to position Apple as "uniquely American company" that abides by the rules, according to prepared testimony seen by Bloomberg.
Apple's Cook is expected to be grilled by lawmakers on a number of subjects, including the App Store. Over the past few weeks, a growing chorus of developers has openly criticized the company over its revenue sharing policies, which take 15% or 30% of in-app purchases and store proceeds. Last month, David Cicilline, chair of the U.S. House Subcommittee on Antitrust, called Apple's slice of App Store sales "highway robbery," setting the stage for a bruising debate.
Ahead of Wednesday's hearing, Apple SVP of Worldwide Marketing Phil Schiller defended App Store practices in an interview with Reuters. Cook appears ready to do the same.
"After beginning with 500 apps, today the App Store hosts more than 1.7 million — only 60 of which are Apple software," Cook's testimony reads. "Clearly, if Apple is a gatekeeper, what we have done is open the gate wider. We want to get every app we can on the store, not keep them off."
He adds that the App Store's pricing structure is a more appealing alternative to what previously existed when boxed software was the distribution method of choice. Further, Cook claims the "vast majority of apps on the App Store" supply a 100% revenue share to developers, the report said.
"When the App Store was created, the prevailing distribution options available to software developers at the time did not work well. Brick-and-mortar stores charged high fees and had limited reach. Physical media like CDs had to be shipped and were hard to update," the testimony reads. Cook later adds, "Apple's commissions are comparable or lower than commissions charged by the majority of our competitors. And they are vastly lower than the 50 to 70 percent that software developers paid to distribute their work before we launched the App Store."
Schiller hit on the same points in his interview today.
"In the more than a decade since the App Store debuted, we have never raised the commission or added a single fee. In fact, we have reduced them for subscriptions and exempted additional categories of apps," Cook says. "The App Store evolves with the times, and every change we have made has been in the direction of providing a better experience for our users and a compelling business opportunity for developers."
The chief executive goes on to tout the App Store's contributions to the economy, citing previously reported statistics like the creation of 1.9 million U.S. jobs. Cook also mentions a contracted study that found the App Store facilitated half a trillion dollars in commerce around the world in 2019.
Cook will offer testimony and answer questions alongside Amazon CEO Jeff Bezos, Facebook CEO Mark Zuckerberg and Google CEO Sundar Pichai. The remote congressional hearing is schedule to take place at noon Eastern.
Update: Cook's opening testimony was released by the committee late Tuesday. This article has been updated with information from the official statement.
William Gallagher
Christine McKee
AppleInsider Staff
Chip Loder
Malcolm Owen
39 Comments
It is interesting that when I sold goods on the Spotify equivalent for my country I could markup by 60% and so undercut the local market that the local importer made a play to shut us down. Big box are not selling at a loss when the have 50-60% off sales either. Fees of 15% - 30% are At least half of gray market rates outside USA. Remember that gray marketers generally offer six to twelve months replacement guarantee out of those profits also
I don't think that Apple should reduce their 30% fee. People only countenance the idea because Apple is making so much money. So they arbitrarily decide that it is "too much for one company to have." It has nothing to do with trusts or markets. Note that no one talks about Amazon's 30% fee for their AppStore. It is only because while the Amazon AppStore is certainly profitable, Apple's store makes magnitutes more money.
It wouldn't "stick anything" to Android-based stores. First of all, how is that possible in the first place with Android's market share? Also, it isn't as if there is true competition in the first place. True competition is going to the same store with Kelloggs cereals right next to General Mills on the same aisle. Or it is going to an intersection where a Burger King is across the street from McDonald's. But with Android, you can only buy or download apps from Android app stores. With iOS the same: only Apple's store. So the apps and how their gatekeepers handle them on the other platforms don't matter. If it did, Apple having more and better quality apps would have affected market share long ago. Instead, Android retains 85% with phones and 65% with tablets because Android users don't care about the higher quality and better vetted apps on iOS any more than iOS users care that the Android apps that do exist often allow you to do way more because they aren't as restricted.
As for Tim Cook's comments ... they only evade the issue, which is that why should the App Store be the only method of installing software on Apple devices. Saying "if you don't want to deal with that then just buy an LG phone" is a problematic stance for both consumers and developers. It will be curious to see how he responds to the actual issue when he is forced to confront it by direct questioning. The folks in Congress aren't the same as the ones in the media who are so in love with their iPhones, iPads and Macs that they never challenge Apple in the same way they do other large companies. You will see more negative articles about Facebook, Amazon, Google, Disney, Comcast, AT&T or Wal-Mart in a day than you will see about Apple in 5 years. Especially with some of the more agenda-driven ideological types in the media who insist that it is the job of the free press to challenge large corporations ... except Apple of course. We love them and everything they do and stand for! It would be curious to see how he handles the "tough room" that he never encounters otherwise.
Okay, how ‘bout this.