Apple CEO Tim Cook is photographed at the 2020 World Economic Forum in Davos, Switzerland. Cook will take the stand on Friday, May 21, 2021 to defend the company’s iPhone app store against allegations that it has become an illegal monopoly far more profitable than its predecessor Steve Jobs ever imagined . Markus Schreiber / AP Hide the caption
Markus Schreiber / AP
Markus Schreiber / AP
Tim Cook, Apple’s CEO, will take the stand on Friday on a high-level trial over whether his company is abusing its market power unfolding in a courtroom in Oakland, California.
Cook will be under oath, personally answering questions from Apple attorneys and attorneys at Epic Games, the maker of the popular Fortnite video game that Apple accuses of being an illegal monopoly.
Why is that a big deal?
While Cook has testified before Congress, this is the first time he has taken the stand in a trial.
He’ll likely spend hours under oath answering questions about one of Apple’s most controversial business practices.
The study comes at a time when there are growing questions about the iron grip Apple has on its sizable portion of the mobile economy.
What was the process about?
Cook’s statement limits a three-week trial that focuses on a 30% commission that Apple charges on most purchases in the App Store. Epic Games said consumers should have more payment processing options and not be forced to pay “Apple tax”.
Is it about Epic? Or about all developers?
If Epic CEO Tim Sweeney is to be believed, he started legal proceedings against Apple on behalf of all developers, some of whom are too afraid of Apple retaliation to speak out.
Documents that emerged during the process shed light on Sweeney’s campaign, which Epic internally referred to as Project Liberty.
Epic executives viewed the effort as an attempt to turn the public against Apple, and as they put it: “to create a narrative that we are benevolent.”
How does Apple defend the Commission?
According to Apple, the fee is the industry standard (leading consoles like Nintendo Switch, Sony PlayStation, and Microsoft Xbox charge the fee same rate) and the money goes into maintaining the privacy and security of apps.
What can epic lawyers ask Tim Cook about?
You are likely to point out to Cook what his predecessor, Steve Jobs, said when the App Store launched in 2008 that it would never be profitable. Epics Experts say Apple’s profit from the App Store is nearly 80%, but Apple denies that number.
Cook is also expected to be asked about an email from Apple executive Phil Schiller suggesting that Apple’s 70-30 split could be lowered after the company’s App Store made a $ 1 billion profit would have.
What could the judge order in the case?
In his legal actionEpic is asking the judge to get Apple to “take all necessary steps to cease illegal conduct and restore competition,” which is open to some interpretation – and this can only apply to Fortnite or to all iPhone apps.
But if Epic wins, Apple may have to open its “walled garden” of an app store to alternative payment processors. Epic says if consumers had more options, competition in the market would force Apple to lower its 30% fee, which is invisible to consumers, but according to developers, in the price of paid apps and in-app purchases is embedded.
If Apple wins, nothing will change. Whatever happens, there will likely be a lengthy appeal process.
Is this trial version just an App Store fee?
In the truest sense of the word, yes, but it’s also about so much more.
Apple’s critics almost see this case as an attempt at redistributing revenue. It is argued that it is time for Apple to share some of its wealth with developers as Apple has become a technology giant through unfair and illegal systems and policies, Epic believes.
Is that a story of David versus Goliath?
Not exactly. This study is really a battle between two rich companies: Apple, valued at more than $ 2 trillion, the world’s most valuable company, and Epic Games, a company valued at around $ 30 billion, thanks in large part of the wild success of Fortnite.
Why is Silicon Valley so interested in this study?
The App Store fees may seem like a trifle in Apple’s vast world, but regulators in the US, Europe, Japan, and Australia have all investigated the controversial fee.
The criticism of Apple’s commission is a window into a larger criticism of the company: that it is one that is making it Systems and policies that exclude rivals.
The question is: are Apple’s rules anti-competitive or anti-competitive? The former is legal; The latter is illegal under the antitrust laws.
And this attempt is just the latest example of the growing scrutiny of the largely uncontrolled power of the tech industry and of whether more should be done to contain the power of Silicon Valley.
With Washington lawmakers slow to legislate for the industry, battles over the practices of tech companies have increased play in court.
What does this fee really mean for Apple?
For Apple, the 30% fee is hugely important as it not only generates billions of dollars, but is part of the increasingly important fee Source of revenue for the “services”, fees and subscriptions that have resulted in Apple’s record profits (especially since iPhone sales peaked years ago).
Since Epic sued, Apple has cut commission in half for small developers who make less than $ 1 million a year. This affects most developers. But Apple makes 95% of its money from the big guys, all of whom pay the full 30% commission.
When will the judge deliver a verdict?
U.S. District Court judge Yvonne Gonzalez Rogers leads the three-week trial. She has a lot of evidence and testimony to weigh. Antitrust case law tends to favor companies. Legal scholars say it would be surprising if Epic wins, but no one knows what will happen.
According to Cook said on Friday, the process will be completed the following week. It can take weeks or months for the judge to make a decision.