Apple doesn't hurt app makers, Tim Cook argues in antitrust trial
Outcome of case could determine if company maintains dominance of $133b app market
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Apple chief executive Tim Cook on Friday, leaving the Oakland, California, federal court where he testified that Apple faces plenty of competition, and that commissions it collects from app developers help fund better security in the company's App Store. Epic Games is suing Apple, claiming that the iPhone maker has created a monopoly with the App Store.
PHOTO: BLOOMBERG
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OAKLAND (California) • Mr Tim Cook, testifying in a trial that could undermine Apple's efforts to fend off growing scrutiny of its power, defended his business from accusations that it hurt app makers while on the hunt to expand its profits.
Mr Cook, who took the witness stand on Friday for the first time as Apple's chief executive, answered friendly questions from an Apple lawyer and faced pointed questions from both an opposing lawyer and the federal judge who will decide the case.
The trial's outcome could maintain the company's dominance of the US$100 billion (S$133 billion) app market or upend it.
Epic Games, creator of the popular game Fortnite, is suing Apple, claiming that the iPhone maker has created a monopoly with its App Store and uses that power to take an unfair cut from other companies that rely on the store to reach customers.
An Epic victory would invigorate an expanding antitrust fight against Apple. Federal and state regulators are scrutinising the company's control over the App Store, and the European Union recently charged Apple with violating antitrust laws over its app rules and fees.
The company faces two other federal lawsuits about its App Store fees - one from developers and one from iPhone owners - that are seeking class-action status.
Mr Cook's testimony came towards the end of a three-week trial at a federal court in Oakland, California, that has homed in on the power Apple wields with its App Store and the commission of 30 per cent that it takes on sales of most digital goods and subscriptions.
Mr Cook testified that Apple faced plenty of competition, and he said commissions it collected from app developers helped fund better security in the App Store.
In a cross-examination, an Epic lawyer took aim at Mr Cook's credibility and questioned why he said he did not know some details of Apple's business, including the profit margins made from the App Store, which one outside expert testifying on behalf of Epic said could be as much as 80 per cent.
Mr Cook said that was wrong. He said the App Store was profitable, but Apple had not tried to determine precisely how profitable, in part because it would be difficult, based on how the company structured its costs.
The Epic lawyer challenged that claim, showing Mr Cook internal Apple documents that suggested the company could calculate the App Store's profitability.
Mr Cook countered that the documents showed incomplete figures.
The most concerning moment for Apple and Mr Cook came at the end of his testimony, when Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California joined in the interrogation.
Throughout the trial, the judge had asked pointed questions of witnesses from both Apple and Epic, and her back-and-forth with Mr Cook on Friday revealed particularly intense scrutiny of Apple's arguments.
The judge asked whether Apple's decision last year to reduce its commission on app sales for developers making less than US$1 million a year was designed to deflect scrutiny of its App Store policies.
Mr Cook acknowledged that scrutiny was a factor, but he added that Apple mostly wanted to help small developers affected by a weak economy during the coronavirus pandemic.
The judge then brought up a survey that said 39 per cent of app developers were dissatisfied with how Apple managed the App Store.
The judge's biggest challenge in deciding the case may be defining the market that Epic and Apple are fighting over.
The trial will wrap up tomorrow, but the judge said that a ruling would probably take months.
NYTIMES
