Tim Cook dinner, chief government officer of Apple Inc., heart, arrives at U.S. district court docket in Oakland, California, on Friday, Could 21, 2021.
Nina Riggio | Bloomberg | Getty Pictures
Apple CEO Tim Cook dinner confronted sharp questioning on Friday from Decide Yvonne Gonzalez Rogers about Apple’s App Retailer enterprise mannequin on the finish of his testimony within the Epic Video games v. Apple trial.
The questioning gave a preview into Decide Rogers’ pondering earlier than she decides whether or not Epic Video games’ argument is powerful sufficient to power Apple to permit it to put in various app shops on the iPhone and keep away from the App Retailer’s 30% price on in-app purchases.
Rogers requested Cook dinner what his drawback was with permitting iPhone customers the selection of a decrease price, particularly for video games. Cook dinner mentioned that customers have a selection between iPhones or Android gadgets.
She adopted up by asking about whether or not Apple has an issue with giving customers data to get the identical in-app purchases by way of an internet browser, bypassing Apple’s 30% price, suggesting a compromise the place Apple would enable an organization like Epic Video games to hyperlink app customers to an internet browser to make transactions, as an alternative of forcing them to make use of Apple’s in-app buy mechanism.
“The gaming trade appears to be producing a disproportionate amount of cash to the IP you are giving them and everybody else,” Rogers mentioned to Cook dinner. “In essence, it is virtually like they’re subsidizing everybody else.”
Cook dinner mentioned that Apple confronted fierce competitors for builders and customers.
“You do not have competitors in these in-app purchases, although,” Rogers replied.
Rogers additionally expressed doubt that Apple’s Small Business Program, which cut App Store fees in half for small builders, was made out of concern for small companies throughout the Covid pandemic, as Cook dinner testified on Friday.
“That gave the impression to be the results of the strain accrued due to investigations, of lawsuits,” Rogers mentioned.
Cook dinner mentioned that lawsuits have been behind his head, however what triggered this system was fear over small companies throughout Covid.
Rogers remarked that she had seen a survey that 39% of Apple builders are dissatisfied with the App Retailer.
“It does not appear to me that you simply really feel any strain or competitors to really change the way wherein you act to deal with the issues of builders,” Rogers mentioned.
Cook dinner disagreed and mentioned that Apple “turns the place the wrong way up for builders.”
Friday was the primary time Cook dinner has testified in court docket, he mentioned.
The three-week trial will conclude on Monday, however Decide Rogers warned this week it might take weeks or months till she comes to a decision. After that, the dispute is more likely to be appealed, she mentioned.
Earlier than Cook dinner was questioned by Rogers, he testified on Friday that Apple faces fierce competitors in smartphones and in america, the iPhone solely has “excessive 30s” p.c of market share. Internationally, the iPhone has about 15% market share, Cook dinner mentioned.
The market share figures cited by Cook dinner are a uncommon instance of Apple discussing the market share of its most essential product, the iPhone, in an effort to say it doesn’t dominate the smartphone market.
“There’s a complete listing of various handset rivals. It is fiercely aggressive,” Cook dinner mentioned.
Apple’s U.S. share cited by Cook dinner is decrease than many exterior estimates. For instance, a current report from Counterpoint Research pegged it between 40% to 65% relying on the quarter since 2019.
Apple has argued that its management of its App Retailer, the one manner for shoppers to put in software program on iPhones, is important for the corporate’s safety and privateness guarantees to its customers, and an essential distinguishing characteristic in a aggressive marketplace for smartphones.
“We may now not make the promise of privateness, security, and safety” if Epic Video games prevails, Cook dinner testified, saying that the App Retailer can be a “poisonous mess” with out Apple’s guidelines and insurance policies that Epic is preventing in court docket.
Epic Video games argues safety is an excuse to extract charges and management what software program makers do, and that Apple may safely open up its platform to competing app shops.
Cook dinner talked about Samsung, Vivo, Oppo, Huawei and Google as handset rivals, all of which use a model of Google’s Android. He mentioned Apple additionally faces competitors from different app shops, together with Google Play, and consoles like Microsoft Xbox and Sony PlayStation.
Apple CEO Tim Cook dinner testifying in Epic Video games trial
When questioned by Epic Video games legal professionals, Cook dinner declined to reply a query about whether or not Apple’s iPhone competes with Google’s Android within the working system market.
“Prospects do not buy working techniques. They purchase gadgets,” Cook dinner mentioned.
Cook dinner mentioned that Apple makes use of surveys to trace whether or not iPhone customers change to Android gadgets. “Making efforts to get Android folks to change to iPhone, that is a vital activity for us,” Cook dinner mentioned.
Cook dinner mentioned on Friday that Epic Video games’ transfer final 12 months to bypass Apple’s 30% in-app buy charges on Fortnite, its shooter sport, was “malicious.” Apple subsequently removed the app from the App Store.
A lot of Cook dinner’s testimony on Friday surrounded a personal, inner Apple doc that was despatched to him describing profitability tendencies for varied Apple divisions, together with the App Retailer. Epic’s legal professionals mentioned it confirmed that Apple’s App Retailer may be very worthwhile, attempting to bolster its argument that Apple makes use of its management to spice up its personal income.
Cook dinner mentioned that the doc was not “totally loaded” with all of the bills Apple spends on the App Retailer and that it was a “benchmarking” train. He mentioned that he has a “really feel” for the App Retailer’s profitability, however didn’t present a quantity. An accountant employed by Epic Video games beforehand testified that Apple had an working revenue margin of 77.8% in 2019.
Epic Video games legal professionals additionally requested Cook dinner about Apple’s take care of Google to be the default search on the iPhone browser, which was estimated at $10 billion per year by a Congressional report citing a Wall Road analysis word. Cook dinner mentioned he didn’t bear in mind how a lot Google pays.
Cook dinner was additionally questioned by Apple legal professionals about iMessage, Apple’s messaging program that’s constructed into iPhones and unique to Apple merchandise. Cook dinner mentioned that he did not suppose the shortage of iMessage on Android has prevented iPhone customers from switching to rivals.
Cook dinner dismissed issues that folks switching from an iPhone to an Android gadget would possibly miss textual content messages, saying that “you may simply flip off your iMessage.”