If you listened to all three weeks of testimony in the trial between Epic and Apple, you would have heard plenty of interesting anecdotes and facts about how both companies run their respective businesses. You would have also heard from outside experts–some from Apple’s competitors, about whether the company’s control over the App Store is anti-competitive.
None of what you heard, however, would have compared to the final 10 minutes of public testimony. In those 10 minutes, a trial that Apple appeared to be winning suddenly became very interesting after questioning, from all people, by Judge Yvonne Gonzales Rodgers, who is hearing the case.
Most outside observers had been curiously anticipating Friday–the last scheduled day of testimony–to hear what Apple’s CEO, Tim Cook, would have to say. Cook is not only the most public face of Apple, he is a masterful communicator that is known for his calm and charming style.
For most of the four hours that Cook was on the stand, that was exactly what he delivered in responses to question from Apple’s attorneys, as well as cross-examination by Epic’s lawyer, Gary Bornstein.
For Cook, however, this wasn’t a scripted product launch. Instead, it was the most important sales pitch of his career. Even though Apple has been seen as the likely winner of this case, it has a lot riding on the outcome. A loss could mean dramatic changes to how it runs the App Store, and a painful cut to its highly lucrative services revenue.
Throughout it all, Cook made his case that Apple’s rules for the App Store are meant to protect the promise the company makes to its users around “simplicity, safety, security, privacy, reliability, and quality.” It was classic Cook, where every challenging question was met with a “that’s not how we think about it,” and “we believe this is best for users.”
He also managed to lighten the mood with humor, even as Bornstein challenged his credibility. In one exchange, Epic’s attorney asked Cook if Apple considered Google a competitor in operating systems. Cook responded that Apple competes with Android devices, but not Google. Bornstein then showed a video clip of Cook testifying before Congress that Apple does consider Google a competitor.
“Was that you on the video clip?” Bornstein asks.
“It sure looked like me,” Cook replied.
Cook told Epic’s lawyer that when Apple said it would allow Fortnite back on the App Store after banning it for violating the rules if it came into compliance, “we weren’t thinking about the money, we were thinking about the users.” That was clearly the message Cook showed up to deliver, and while it’s hard to imagine that the CEO of the world’s most valuable and most profitable company doesn’t think about how it makes money, the questioning so far had done little to get him off that message.
It wasn’t until the court was ready to enter a sealed session to discuss confidential matters that Judge Rodgers had a few questions of her own. Until this point, Rodgers had occasionally asked questions of witnesses, but nothing like this.
The Judge seemed to focus most of her pointed questions on two issues. The first is whether the company feels any pressure at all to address the concerns of developers.
Rodgers referred to a study that said 39 percent of developers were “unsatisfied” with how Apple manages the App Store and asked Cook how that was acceptable. She also asked whether Apple feels compelled to make changes. Cooks response: “I’m not familiar with that document.”
In what might have been the most revealing exchange, Rodgers pointed to Apple’s Small Business Program, which allows developers who make less than $1 million a year from the App Store to apply to have their commission reduced to 15 percent. Cook said the “majority of developers” fall in that category.
Cook had earlier explained that Apple’s motivation for launching that program was “to do something for small businesses as a result of COVID.” Rodgers called his bluff:
The issue with the $1 million Small Business Program, at least from what I’ve seen thus far–that really wasn’t the result of competition. That seemed to be a result of the pressure that you’re feeling from investigations, from lawsuits, not competition.
Finally, Rodgers challenged whether the company should give users a choice to make purchases outside of Apple’s rigid in-app-payment (IAP) system. She pointed out that games are the largest portion of IAP transactions, making up the bulk of App Store revenue, and that it seems they subsidize all of the free apps on the store. “What’s the problem with Apple giving them the option (to link out to other ways to pay for transactions)?” she asked.
“If we allowed people to link out like that, we would in essence give up our total return on our IP,” Cook responded. “There are clearly other ways to monetize, but we chose this one because we think this one overall is the best way.”
Cook, and Apple’s other executives, are clearly brilliant business people who have successfully grown Apple into a $2 trillion machine. It’s obvious to everyone that the primary reason for requiring developers to use Apple’s IAP is so that it can collect its cut. That’s not even surprising. It was, however, quite revealing to hear it coming out of Tim Cook’s mouth under oath in response to skeptical questioning from the Judge.