Judge in Epic v. Apple trial presses Tim Cook on App Store model, competition

Posted:
in General Discussion edited May 22
Judge Yvonne Gonzalez Rogers, who is presiding over the Epic Games v. Apple trial, grilled Apple CEO Tim Cook in a round of direct questioning for nearly 10 minutes on the final day of the trial.

Credit: Apple
Credit: Apple


It was the single longest line of questioning she put to a witness in the ongoing trial. Gonzalez Rogers asked Cook about the App Store's business model and Apple's relationship with developers, and the line of questioning got increasingly tense for Apple as some of the questions started to shift away from Apple's favor.

"You said you want to give users control, so what's the problem with allowing users to have a cheaper option for content?" Gonzalez Rogers inquired. Cook countered by saying users have a choice between "many different Android models and an iPhone."

"But if they wanted to go get a cheaper Battle Pass and cheaper V-Bucks and they don't know there's not that option, what is the problem with Apple giving them that option?" Judge Gonzalez Rogers asked.

Cook appeared taken aback by the line of questioning. He said that Apple needs to receive a return on its investment in intellectual property. That's why Apple charges a 30% commission on app and in-app purchases.

"If we allowed developers to link out like that, we would give up our monetization. We need a return on our IP. We have 150,000 APIs to create and maintain, numerous developer tools, and processing fees," Cook said.

Judge Gonzalez Rogers did not appear satisfied with that answer. She said that Apple could make a return in other ways, and noted that it seems like the gaming industry is "subsidizing" other apps on the App Store.

"The gaming industry seems to be generating a disproportionate amount of money relative to the IP you have given them, and everyone else. In effect its almost as if they're subsidizing everyone else," Judge Gonzalez Rogers said.

Cook responded by stating games transact on the platform, so game developers owe Apple the commission. When Gonzalez Rogers responded by saying that "people do lots of things on [Apple's] platform," Cook said that "there are clearly other ways to monetize but we chose this one because we think it's the better way."

"It's also quite lucrative," Gonzalez Rogers shot back.

At another point in her line of questioning, Gonzalez Rogers asked Cook about a survey indicating that 39% of app developers were unhappy with Apple. He said that Apple "turns the place upside down" for its developers, but noted that there's friction because Apple rejects 40% of apps.

"I understand this notion that somehow Apple's bringing the customer to the gamers, to users. But after that first time, after that first interaction the developers of the games are keeping their customers. Apple's just profiting off that, it seems to me."

At one point, Gonzalez Rogers asked if Cook agreed with the statement that competition is good. Cook responded by stating Apple has "fierce competition." The judge responded by claiming Apple doesn't compete in gaming app distribution. Cook disagreed, stating that Apple competes with consoles like Xbox or the Switch. Gonzalez Rogers that's only if consumers know about those platforms, while Cook countered by claiming that it's up to developers to communicate.

"I view it differently than you do. We're creating the entire amount of commerce on the store, and we're doing that by focusing on getting the largest audience there, we do that with a lot of free apps so those bring a lot to the table," Cook said.

In other words, Judge Gonzalez Rogers' entire line of questioning seemed to communicate skepticism about Apple's business model. She also cast doubt that the company's small business program for the App Store was launched primarily because of COVID-19.

"It doesn't seem to me like you have competition or feel much incentive to work for developers," Gonzalez Rogers said.

Friday, May 21 is the last day of the Epic Games v. Apple trial. Judge Gonzalez Rogers said it may take some time to make a ruling because she has a heavy case load.

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Comments

  • Reply 1 of 104
    williamhwilliamh Posts: 810member
    As armchair CEOs we all have the right to question why Apple does things as they do.  But I don’t understand the matter of law behind the lawsuit or the judge’s questions.  Maybe there’s a better way to sell Mac apps.  Maybe the iPhone App Store is very lucrative. Surely developers like smaller fees. So what? What is the basis for making Apple do anything other than what they choose to do? Apple doesn’t have a monopoly on anything as demonstrated by the various venues in which “epic” sells their game. 
    MauiMac5341JFC_PAStrangeDaysMisterKitBombdoepscooter63flyingdpwilliamlondonequality72521blastdoor
  • Reply 2 of 104
    The hole I see that may cost Apple this car is that free apps are serviced for nothing. That kind of negates Apple’s contention it needs to get a cut to support the work it does. I don’t agree with this, but Apple’s is arguing as if they have to justify their fees. They shouldn’t have to at all. 
    edited May 21 williamlondonwilliamhradarthekatelijahgwatto_cobra
  • Reply 3 of 104
    To paraphrase the judge. What’s wrong with Amazon providing a link to allow customers cheaper option to buy stuff elsewhere?   Wait that doesn’t make any sense here either
    williamlondon9secondkox2hlee1169radarthekathcrefugeekillroyjony0watto_cobra
  • Reply 4 of 104
    JFC_PAJFC_PA Posts: 645member
    Lucrative is hardly against the law, in fact it’s a fiduciary responsibility. Odd observation. 
    StrangeDaysBombdoepscooter63williamlondonbaconstanggilly33Beatsbshankradarthekathcrefugee
  • Reply 5 of 104
    cpsrocpsro Posts: 2,932member
    "Yes, it's almost as if the gaming industry is subsidizing the platform they profit from. Hmmm, yes, isn't that interesting. How revolutionary that a company should pay for what they profit from. [Maybe I can attend B school at night and get in on this.]"
    edited May 21 StrangeDaysbshankradarthekatkillroywatto_cobra
  • Reply 6 of 104
    lkrupplkrupp Posts: 9,634member
    ""It's also quite lucrative," Gonzalez Rogers shot back.”

    Is having a lucrative business illegal in the Unites States?

    But no matter what the decision this will wind up in the SCOTUS eventually.
    edited May 21 flyingdpwilliamlondonwilliamhhlee1169bshankhcrefugeekillroyjony0watto_cobra
  • Reply 7 of 104
    StrangeDaysStrangeDays Posts: 11,764member
    Wow. She sounds entirely ignorant of how the platform works and where the competition is. If Xbox and Nintendo charge, so should Apple. If not, should McDonalds have to start publishing Whopper or sushi vendor menus in their stores?
    williamlondonequality72521baconstang9secondkox2hlee1169bshankradarthekathcrefugeeApple-a-daykillroy
  • Reply 8 of 104
    cpsrocpsro Posts: 2,932member
    The hole I see that may cost Apple this car is that free apps are serviced for nothing. That kind of negates Apple’s contention it needs to get a cut to support the work it does. I don’t agree with this, but Apple’s is arguing as if they have to justify their fees. They shouldn’t have to at all. 
    Free apps don't drive technology development like paid apps.
    lam92103bshankradarthekathcrefugeekillroywatto_cobra
  • Reply 9 of 104
    canukstormcanukstorm Posts: 2,557member
    Wow. She sounds entirely ignorant of how the platform works and where the competition is. If Xbox and Nintendo charge, so should Apple. If not, should McDonalds have to start publishing Whopper or sushi vendor menus in their stores?
    The judge is not suggesting that Apple shouldn’t charge. She’s implying that there would be more competition in iOS if Apple opened it up to side loading apps or 3rd party app stores. I personally disagree with it. Sure Apple’s policies can be improved but opening up the entire platform is not the way. 
    pscooter63williamlondonbaconstangBeatshlee1169bshankhcrefugeed_2jony0watto_cobra
  • Reply 10 of 104
    22july201322july2013 Posts: 2,657member
    A lot of people here are inferring that a hostile question from a judge means that the judge's decision will reflect her questions. This is a presumptuous belief. Many judges ask difficult questions so that their opinions, which are going to be favourable to the person being spoken to, have all the possible angles covered. I learned this from reading the US Supreme Court transcripts.

    Or maybe she's an idiot judge. Both explanations are possible.
    flyingdpcanukstormwilliamhbaconstanghlee1169bshankhcrefugeejd_in_sblongpathmike1
  • Reply 11 of 104
    bloggerblogbloggerblog Posts: 2,111member
    I feel judges make too much money, and after the first day in court a judge is just profiting off of their city’s hard earned money.

    What do you say, just go to another judge? How about if the plaintiffs don’t know that there are other judges in the world? Huh then what?

    What a shallow minded dumbass judge. 
    jd_in_sbRonnyDaddyjony0watto_cobrabadmonk
  • Reply 12 of 104
    genovellegenovelle Posts: 1,297member
    The hole I see that may cost Apple this car is that free apps are serviced for nothing. That kind of negates Apple’s contention it needs to get a cut to support the work it does. I don’t agree with this, but Apple’s is arguing as if they have to justify their fees. They shouldn’t have to at all. 
    The fact that these apps live on their servers, they maintain the bandwidth does the marketing that gets people to use the platform and actually pay for apps and services. If they have their own platform and their own customers, they don’t have to pay Apple anything because the customer signs up with them and only needs the app to use the service. 

    Of course he couldn’t say it, but the correct answer for the judge’s question is we only choose products or projects that are lucrative for us. We tried other models earlier in our existence and nearly died. Nearly every one of our competitors from that time no long exists. 

    It’s my job to make Apple successful. We choose to bring a lot of other companies with us. We don’t have to do that. 

    As far as the free apps being serviced, if you make money from our platform, we make money and reinvest it. If you are just providing additional value to the platform and not directly making money from it then you don’t pay. 
    edited May 21 pscooter63baconstangradarthekatlaBombawatto_cobraDetnator
  • Reply 13 of 104
    IMO, the judge would have to rule that a single app store on iPhone/iPad is a violation of antitrust law in order to rule on any of the details like anti steering. How could the judge justify telling Apple they couldn't have an anti steering clause just like Steam or Amazon or EBay or the Playstation Store otherwise? I suppose the judge could try it, but it would be really easy to overturn on appeal. 
    williamlondonhcrefugeewatto_cobra
  • Reply 14 of 104
    genovellegenovelle Posts: 1,297member
    If Apple is forced to remove their revenue stream. Expect the App Store to be disinvested in. I would expect Apple to heavily invest in games by taking on several gaming partners that directly compete with Epic and spend billions promoting them. They may even decide to do That first party game console using the M2 chip and invest in it like they are with Apple TV+.  Microsoft would then regret joining in this mess. They don’t realize the last thing they want is Apple to suddenly get serious about gaming. Remember the iPhone was going to fail, the iPad was a joke, and Apple should have given shareholders all their money back in 1997 and closed shop. 
    pscooter63baconstangh4y3s9secondkox2Beatsbshankradarthekathcrefugeedope_ahminebloggerblog
  • Reply 15 of 104
    Quite something to be an expert on law AND know how to run the world’s most successful tech business better than those who do. 
    9secondkox2radarthekatjony0watto_cobra
  • Reply 16 of 104
    Tough, skeptical questions are exactly what Apple’s lawyers needed to see. Cook isn’t responsible for Apple’s closing arguments. His lawyers will address these questions. It’s the judge’s job to ask them.
    AppleZuluradarthekatbshankhcrefugeeforegoneconclusionlongpathjony0watto_cobra
  • Reply 17 of 104
    genovellegenovelle Posts: 1,297member
    My question to the Judge is if Epic made a billion dollars from Apples platform using tech they develop and support, how much should Apple make and who decides it should be less than their competitors?  Remember the argument that once the customers signs up Apple has done their part applies to the developers more so.

    Apple should go back to one and done apps and kill the subscription and pay in app model on the App Store. If the courts have a problem with Apple being profitable on their own platform they should remove the problem. That would mean everything goes back to how it was and developers like Epic’s income will be cut off.  Leave Arcade as a part of their Apple TV subscription and expand its offering and capabilities considerably. They have avoided first shooter games, maybe Epic wants more competition in the space to make it better. 
    edited May 21 Beatsradarthekatdanoxaderutterwatto_cobra
  • Reply 18 of 104
    williamhwilliamh Posts: 810member
    A lot of people here are inferring that a hostile question from a judge means that the judge's decision will reflect her questions. This is a presumptuous belief. Many judges ask difficult questions so that their opinions, which are going to be favourable to the person being spoken to, have all the possible angles covered. I learned this from reading the US Supreme Court transcripts.

    Or maybe she's an idiot judge. Both explanations are possible.
    Ok, you make sense.  But why is this even in front of a judge? The only party to have violated an agreement is epic and Apple didn’t sue them. 
    Beatsradarthekatbshanklongpathjony0watto_cobra
  • Reply 19 of 104
    applesauce007applesauce007 Posts: 1,677member
    I think Epic will eventually lose.  
    They cannot call Apple a monopoly nor anti-competitive in this case.
    All they can do is build a better or cheaper product to compete against Apple.  Good Luck with that.

    Microsoft should be ashamed of itself for testifying against Apple in this case.
    9secondkox2Beatsbshankqwerty52aderutterlongpathjony0watto_cobra
  • Reply 20 of 104
    gilly33gilly33 Posts: 377member
    JFC_PA said:
    Lucrative is hardly against the law, in fact it’s a fiduciary responsibility. Odd observation. 
    And herein lies the problem. It seems more and more today that making money is a bad thing. If I’m in business hell yes I want it to be lucrative. 
    9secondkox2Beatsd_2longpathApple-a-dayurahara80s_Apple_Guyjony0watto_cobra
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