On Friday, Apple's chief executive Tim Cook was heard as a witness in the ongoing antitrust trial between his company and Epic Games – the maker of the hit video game Fortnite – which is being held in the court in Oakland, California. Cook's deposition, which has almost reached the end of the trial, was long awaited, because the outcome of the trial could depend on the way in which Apple will be forced to manage its App Store, one of the company's best-known products, and the how all other digital stores will be managed.
Experts predict a verdict in favor of Apple, but the trial had a partly surprising development precisely during Cook's testimony, because the harshest and most critical interrogation of Apple's CEO was that of the judge who will have to decide. on the case, Yvonne Gonzalez Rogers.
The trial was brought by Epic Games against the payment systems available for apps such as Fortnite: both the App Store and the Play Store, the store that Google uses on Android smartphones, require developers to pay a percentage on all purchases made within the app, and prevent the use of alternative payment methods. This means that if a Fortnite player buys an upgrade or an item to use within the video game, Epic Games must transfer a percentage (30 percent) of the proceeds to Apple.
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Last August Epic Games rebelled against this system, introducing its own in-app payments service, alternative to those of Apple and Google, which offered users significant savings because it did not include the previously withheld 30 percent percentage. In response, both Apple and Google had banned Fortnite from their app stores, explaining that it had violated the terms set out when it agreed to distribute the app through their services.
Epic Games had therefore sued both Apple and Google. The trial of Apple is by far the most anticipated and important, due to the influence the company has on the smartphone market.
The thesis of Epic Games is that Apple, with its App Store, manages a monopoly on apps for iPhone and iPad, and that it uses it to benefit its products. Among the reasons presented by Epic is the fact that, for example, the App Store system gives a great advantage to Apple's services, for example the Apple Music streaming service, which enjoy a higher profit margin. having to give a third of the revenues to another company.
If Epic were able to prove not only that Apple manages a monopoly but also that it abuses its dominant position, the ruling could cause a major change in the market, and for example, forcing Apple to accept not only other forms of payment on the iPhone and iPad. inside the App Store, but also other app stores.
During the trial, numerous senior Apple executives were heard as witnesses and confidential documents and conversations from the company's management were made public, but the most important moment was Cook's deposition.
Cook was questioned both by Apple's attorney Veronica Moye, who asked predictably undemanding questions that allowed Cook to reiterate that Apple does not operate a monopoly, and by Epic Games attorney Gary Bornstein, who focused his questions about the profits Apple makes from its App Store: this is an important element, because the presence of profits would allow Epic to argue that Apple has an interest in maintaining its monopoly.
Although analysts estimate that the App Store generates substantial profits for Apple, and although documents presented during the trial show that Cook has attended meetings on the App Store's profitability in the past, the company has never made accurate figures public. and Cook said he didn't know how much Apple makes from its product. He answered vaguely, saying he did not know or did not remember, also to other questions about the earnings of specific products or sectors of Apple's business, or about the investments spent to improve the App Store.
The surprise of the day, however, was the harsh interrogation carried out by judge Yvonne Gonzalez Rogers, who asked Cook the decidedly harder questions and who in some moments seemed to take Epic's side. Among other things, the judge asked Cook why Apple is demanding a 30 percent transaction fee from video game apps and not, for example, banking apps. “You ask video game players for money to subsidize Wells Fargo,” he said, quoting a well-known American bank.
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The judge also criticized Apple on other issues, for example when it said that the decision to discount App Store commissions at 15 percent to small developers, announced a few months ago, was made to avoid legal and other problems, such as had supported the company to help entrepreneurs during the pandemic.
As Bloomberg noted, legal experts believed Apple had a clear advantage in this process, because Epic Games' arguments would be difficult to consistently prove. The rather harsh exchange between Judge Gonzalez Rogers and Cook, however, was an unexpected and unfavorable deviation for Apple, even if that won't necessarily determine the outcome of the trial. The sentence will be issued directly by Judge Gonzalez Rogers (there is no jury) and should arrive by mid-August.
