San Ramon, California: Apple CEO Tim Cook will defend the company’s iPhone app store from the witness stand on Friday against accusations that it has developed into an illegal monopoly – than its The predecessor Steve Jobs envisioned much higher when he was founded 13 years ago. .
The technology company is counting on Cook’s appearance to put an end to Apple’s antitrust case against Epic Games, the maker of the popular video game Fortnite.
Epic is trying to topple the so-called “walled garden” for iPhone and iPad apps that welcomes users and developers while keeping competition out. Created by Jobs a year after the iPhone’s 2007 debut, the App Store has become a key revenue source for Apple, a money-making machine that helped power the company to a $57 billion profit in its last fiscal year.
Epic is trying to prove that the store has evolved into a price fraud tool that can not only obtain 15% to 30% commissions from in-app transactions, but also prevent apps from offering other payment methods. Expanded to only show a link, the link will open a web page, providing a free way to pay for subscriptions, in-game items, etc.
Apple firmly defends these commissions and provides app makers with a fair way to help them pay for innovation and security controls that benefit both iPhone users and app developers (including Epic). Apple said it has invested more than $100 billion in these features.
It also believes that the App Store will charge mirroring fees from major video game consoles (Sony’s PlayStation, Microsoft’s Xbox and Nintendo’s Switch) and similar app stores run by Google for 3 billion mobile Android devices. This is approximately twice the number of active iPhones, iPads and iPods that rely on the Apple store to provide apps.
Regulators and legislators in Europe and the United States are already investigating Apple’s strict controls on the App Store.
The epic lawyer is expected to spend several hours roasting Cook on the shelf. Questioning may parse the strategy that Cook has developed since he became CEO ten years ago, just a few months after Jobs died of cancer in October 2011.
During Cook’s reign, the App Store ranks among Apple’s greatest successes. Since providing only 500 apps in 2008, the store has surged to 1.8 million apps, most of which are free. Apple has used its commissions and proprietary in-app payment system to help its service division’s annual revenue increase from US$24 billion in fiscal 2016 to US$54 billion last year, more than doubling.
Jobs did not foresee this prosperity. Soon after the store opened, Jobs publicly stated that Apple did not think the App Store would make money. Epic’s lawyers repeatedly cited these comments as evidence, proving that once the popularity of mobile apps became clear, Apple changed the store to promote its revenue growth.
During the three-week trial period, how profitable the App Store actually is has always been the focus of debate. Based on a review of Apple’s confidential documents, accounting experts hired by Epic estimated its profit margin to be between 70% and 80%. But Apple insists that these figures are inaccurate because they do not reflect the scattered expenditures throughout the company’s operations.
Phil Schiller, a longtime Apple executive and former Jobs confidant, conceded earlier this week that the company’s commission system had generated more than $20 billion in revenue through June 2017. Epic lawyer Katherine Forrest had presented him with that estimate, based on numbers that Apple publicly released in mid-2017.
Epic’s questioning of Schiller may foreshadow how Epic’s lawyers intend to go after Cook, who is generally unflappable in public and tightly focused on his message when dealing with reporters and lawmakers.
Epic’s lawyers have repeatedly referred to internal exchanges involving Jobs and other executives to depict Apple as using its investment in security and personal privacy as an excuse for preserving the huge profits that flow from its app store.
During Schiller’s testimony, for instance, Epic’s lawyers submitted a 2008 email Jobs sent to Schiller and another executive. In that note, Jobs wondered whether Google was taking aim at the then-nascent ad market that was emerging on the iPhone, which relies on operating software called iOS. “The more energy they devote to iOS the better,” Jobs wrote to Schiller.
Forrest then challenged Schiller with two questions. “You wanted Google to be beholden to Apple?” she asked, soon following with, “You were basking in the power to destroy a company’s business?”
Schiller did not answer both questions.