During his Friday testimony denying accusations of operating an illicit monopoly, Apple CEO Tim Cook portrayed the company’s ironclad control over its mobile app store as a way to keep things easy for consumers while shielding them from security threats and privacy intrusions.
The rare appearance by one of the world’s most well-known executives came at the end of a three-week trial centered on an antitrust case brought by Epic Games, the maker of the iconic video game Fortnite.
Epic is attempting to deconstruct the so-called “walled garden” model for iPhone and iPad applications, which accepts consumers and developers while excluding competitors. The App Store, which was founded by Apple co-founder Steve Jobs a year after the iPhone’s launch in 2007, has grown into a major revenue generator for the company, helping it to a $57 billion profit in its most recent fiscal year.
Epic is attempting to demonstrate that the store has devolved into a price-gouging vehicle that not only reaps a 15% to 30% fee on in-app purchases, but also prevents users from providing other payment options. This includes simply displaying a link to a web page that offers commission-free ways to pay for subscriptions, in-game products, and other similar items.
Cook’s testimony sometimes sounded like an advertisement for the iPhone and other items he hailed as the best in the world, driven by polite questions from an Apple lawyer. It did not sound natural. Apple regarded Cook’s closely watched courtroom presence as an opportunity to tell its tale while the app store is under investigation by lawmakers and regulators in the US and Europe, in addition to relying on him to help win the case against Epic.
“The consumer is everything to us,” Cook said, wearing a face shield but no mask in an Oakland, California, courtroom where only a few people had access due to the pandemic. Cook said that part of that commitment is to keep Apple products “easy, not complicated,” and to protect users’ privacy, which he called “one of the most important issues of the century.”
When Epic lawyer Gary Bornstein grills Cook later Friday, Cook is supposed to face a far more tough challenge. This duel could last up to two hours and will most likely focus on Cook’s tactics after taking over as CEO nearly a decade ago, just months before Jobs died of cancer in October 2011.
Apple vigorously supports the commissions as a legitimate way for software creators to contribute to the cost of innovations and security measures while still benefiting app developers like Epic. Apple claims to have spent over $100 billion on such features.
It also claims that App Store commissions are close to those paid by major video game consoles such as Sony’s PlayStation, Microsoft’s Xbox, and Nintendo’s Switch, as well as Google’s own app store, which serves over 3 billion Android devices. That’s almost double the number of registered iPhones, iPads, and iPods that use Apple’s app store.
During Cook’s tenure, the App Store was one of Apple’s greatest achievements. Since its inception in 2008 with just 500 downloads, the store has grown to 1.8 million apps, the majority of which are free. Apple’s fees and unique in-app payment system helped the company’s services division more than double its annual revenue from $24 billion in fiscal 2016 to $54 billion last year. Cook boasted on Friday, “I think it’s been an economic miracle.”
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