Apple CEO Tim Cook came under fire in a series of intense questions from the judge in the Epic Games vs Apple trial on Friday.
Cook answered all the questions from the lawyers for both sides regarding the App Store, in-app payments, and more. Judge Rogers’ harsh questioning caught the internet by surprise.
Judge Rogers then asked about the amount of revenue that the App Store brings in, which he noted is significant. He also asked about the lack of choice in terms of which app to buy.
Rogers: But if they wanted to go and get a cheaper Battle Pass or V-Bucks, and they don’t know they’ve got that option, what is the problem with Apple giving them that option? Or at least the information that they can go and have a different option for making purchases?
Cook: If we allowed people to link out like that, we would in essence give up our total return on our IP.
Rogers: But you could also monetize it a different way, couldn’t you? I mean, that is, the gaming industry seems to be generating a disproportionate amount of money relative to the IP that you are giving them and everybody else. In a sense, it’s almost as if they’re subsidizing everybody else.
Cook: The bulk of the apps on the App Store are free, so you’re right that there is some sort of subsidy there. However, the way I look at that, Your Honor, is that by having such a large number of apps that are free on the store, it increases the traffic to the store dramatically, so the benefit somebody gets is a much higher audience to sell to than they would otherwise if there weren’t free apps there.
Rogers: So your logic then is that it’s more of a customer base, not an IP, then?
Cook: It’s both, because we need a return on our IP. We have 150,000 APIs that we create and maintain, and numerous developer tools, and the customer service piece of dealing with all these transactions.
Rogers: But let me ask you, so banking apps. I have multiple banking apps, I haven’t paid for them, but I suspect other than the $99, you don’t charge Wells Fargo, right? Or Bank of America? But you’re charging the gamers to subsidize Wells Fargo.
Cook: In the gamers example, they’re transacting on our platform.
Rogers: People are doing lots of things on your platform.
Cook: But this is a digital transaction with an observable change in currency.
Rogers: It’s just a choice of a model.
Cook: We’ve made a choice. There are clearly other ways to monetize, but we chose this one, because we think this one overall is the best way.
Rogers said that the model was very lucrative and that it was mainly focused on impulse purchases.
Cook said that they were focusing on getting the biggest possible audience for their apps, and that’s why they don’t charge developers anything. He also noted that it seems to her that they were being exploited, and that’s why they don’t collect any commission.
She also asked about the commission rate, which she claimed was not influenced by competition. She also noted that the App Store was not under pressure to improve its performance.
Cook said that Apple’s openness has turned the place upside down for developers. Judge Rogers’ broadside was a shock to many in the industry.
On Friday, Cook did make one very big revelation about the App Store and iPhone, stating that even if developers used alternative payment methods to charge for digital goods, Apple would still collect commission on these payments.
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