Judge in Epic v. Apple trial presses Tim Cook on App Store model, competition

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Judge Yvonne Gonzalez Rogers, who is presiding over the Epic Games v. Apple trial, grilled Apple CEO Tim Cook in a round of direct questioning for nearly 10 minutes on the final day of the trial.

It was the single longest line of questioning she put to a witness in the ongoing trial. Gonzalez Rogers asked Cook about the App Store's business model and Apple's relationship with developers, and the line of questioning got increasingly tense for Apple as some of the questions started to shift away from Apple's favor.

"You said you want to give users control, so what's the problem with allowing users to have a cheaper option for content?" Gonzalez Rogers inquired. Cook countered by saying users have a choice between "many different Android models and an iPhone."

"But if they wanted to go get a cheaper Battle Pass and cheaper V-Bucks and they don't know there's not that option, what is the problem with Apple giving them that option?" Judge Gonzalez Rogers asked.

Cook appeared taken aback by the line of questioning. He said that Apple needs to receive a return on its investment in intellectual property. That's why Apple charges a 30% commission on app and in-app purchases.

"If we allowed developers to link out like that, we would give up our monetization. We need a return on our IP. We have 150,000 APIs to create and maintain, numerous developer tools, and processing fees," Cook said.

Judge Gonzalez Rogers did not appear satisfied with that answer. She said that Apple could make a return in other ways, and noted that it seems like the gaming industry is "subsidizing" other apps on the App Store.

"The gaming industry seems to be generating a disproportionate amount of money relative to the IP you have given them, and everyone else. In effect its almost as if they're subsidizing everyone else," Judge Gonzalez Rogers said.

Cook responded by stating games transact on the platform, so game developers owe Apple the commission. When Gonzalez Rogers responded by saying that "people do lots of things on [Apple's] platform," Cook said that "there are clearly other ways to monetize but we chose this one because we think it's the better way."

"It's also quite lucrative," Gonzalez Rogers shot back.

At another point in her line of questioning, Gonzalez Rogers asked Cook about a survey indicating that 39% of app developers were unhappy with Apple. He said that Apple "turns the place upside down" for its developers, but noted that there's friction because Apple rejects 40% of apps.

"I understand this notion that somehow Apple's bringing the customer to the gamers, to users. But after that first time, after that first interaction the developers of the games are keeping their customers. Apple's just profiting off that, it seems to me."

At one point, Gonzalez Rogers asked if Cook agreed with the statement that competition is good. Cook responded by stating Apple has "fierce competition." The judge responded by claiming Apple doesn't compete in gaming app distribution. Cook disagreed, stating that Apple competes with consoles like Xbox or the Switch. Gonzalez Rogers that's only if consumers know about those platforms, while Cook countered by claiming that it's up to developers to communicate.

"I view it differently than you do. We're creating the entire amount of commerce on the store, and we're doing that by focusing on getting the largest audience there, we do that with a lot of free apps so those bring a lot to the table," Cook said.

In other words, Judge Gonzalez Rogers' entire line of questioning seemed to communicate skepticism about Apple's business model. She also cast doubt that the company's small business program for the App Store was launched primarily because of COVID-19.

"It doesn't seem to me like you have competition or feel much incentive to work for developers," Gonzalez Rogers said.

Friday, May 21 is the last day of the Epic Games v. Apple trial. Judge Gonzalez Rogers said it may take some time to make a ruling because she has a heavy case load.

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