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Apple CEO Tim Cook testified as the final witness in the Apple v. Epic Games antitrust trial on Friday, and the poised executive faced a difficult round of questioning from the federal judge Yvonne Gonzalez Rogers.
The concerns had been pointed and gave a uncommon window into the pondering of YGR, as the judge is regularly referred to, about arguments supplied in the course of practically 3 weeks of testimony. The 10-minute round of questioning was essential since Gonzalez Rogers, who presides more than the U.S. District Court for Northern California in Oakland, will make a decision the case in lieu of a jury.
During her questioning, she brought up a survey that discovered that 39% of Apple’s developers had been unhappy with Apple. Cook shook that off as he mentioned that Apple rejects 40,000 of the the one hundred,000 apps that it gets each week and that can place it on an adversarial footing with developers. She also noted that the majority of income for the Apple App Store comes from games, which are monetized via in-app purchases. Apple does not charge for a reduce of marketing in games and apps, and so these developers do not contribute toward alleviating the charges of operating the retailer.
The judge then noted that it appears that Apple is placing the burden of paying for the charges of the retailer and other investments on the backs of the game developers in a disproportionate way.
“It’s almost as if they’re subsidizing everybody else,” Gonzalez Rogers mentioned.
Cook replied there was worth for the retailer for the free of charge apps, as these free of charge apps create a big quantity of targeted traffic for the retailer. That advantages everyone, like Apple and game developers, who can get more downloads and ultimately more paying customers out of the people today who are drawn to the free of charge apps. But amongst these free of charge apps are these like Wells Fargo’s banking app, the judge replied.
“You use gamers to subsidize Wells Fargo,” she mentioned. “It’s disproportionate.”
And she noted that Apple might bring a lot of prospects into the retailer as they download free of charge apps. But soon after that initially time that an individual opens a game, the game developers are on their personal soon after that. In other words, she mentioned the game developers are maintaining the prospects in the games. They’re developing commerce at scale, she mentioned.
In its opening argument, Epic mentioned Apple no longer earns the 30% charge it has charged given that the launch of the App Store, and that Apple need to not get a royalty each time an individual tends to make a acquire in a game they have currently downloaded. Epic compared this to Apple obtaining a share of the acquire cost of a vehicle and then obtaining a 30% share of income paid for gas for the vehicle each time the driver refuels.
This aspect of the case was essential since it exposes some of the narrative that Apple has been espousing in the trial as flip-flopped. Apple has argued that it spends a lot of income on 150,000 application programming interfaces, retailer upkeep, safety, app reviews, and other platform responsibilities. The 30% costs that Apple charges assists it recover these costs and a return on its intellectual home investment, which Cook mentioned amounted to more than $one hundred billion given that the launch of the iPhone. He noted Apple has in no way raised its royalty price given that it designed it, and he noted that the retailer would be a “toxic mess” without having reviews.
How substantially does the App Store make?
Still, Cook steadfastly denied that he knew how substantially income Apple tends to make in income on the App Store. Epic’s legal professional estimated that Apple’s profit margin on the App Store was 78%. In other words, these are monopoly income, from Epic’s view.
Gonzalez Rogers’ concerns noted that she is conscious it is a two-way street. Games bring massive worth to the iPhone by developing one thing fascinating on the smartphones that people today will essentially spend for, above and beyond paying for the phone. How Apple treats these game developers, who she noted are not satisfied with Apple, is a matter for antitrust consideration.
Asked why Apple does not let apps to promote a superior deal for in-app purchases outdoors of the internet site, Cook brought up an analogy.
“It would be akin to Apple down at Best Buy saying ‘Best Buy, put in a sign there where we are advertising that you can go across the street and get an iPhone,’” mentioned Cook.
Cook noted that developers can ask for a user’s e mail address and make that offer you more than e mail. Others observing on Twitter would note that the extension of the analogy would be that Best Buy would also be in a position to get a royalty each time an individual employed a Best Buy item to make an added acquire, like acquiring blades for a razor.
Cook and other Apple executives Phil Schiller, Craig Federighi, and Tristan Kozmynka mentioned in their testimony that Apple is a excellent steward of the platform that enables games to attain a substantially bigger audience than was probable on just consoles and PCs. They also mentioned that they face a lot of competitors from makers of rival smartphones such as Samsung and other people such as Google’s Android platform and Google Play retailer. Cook referred to Android as the “dominant” mobile ecosystem. Google need to take that quote and run it in an ad.
Most of the day had no such fireworks, as Apple’s lawyer began with gentle concerns that focused on Apple’s prestige and its regard for privacy, security, and safety. Apple has argued that it tends to make policy choices on the basis of guarding customers from a privacy and safety standpoint, rather than how it can make more income. He mentioned that Apple’s $50 billion in analysis and development spending came from its “maniacal focus on customers.”
He mentioned that Apple tends to make choices on behalf of the user — one thing that Epic’s lawyers calls taking away options — since Apple desires to “take a lot of the complexity away from the user” when it comes to security, safety, and privacy. These choices support Apple make the ideal merchandise in the world, he mentioned. He mentioned that privacy in a world exactly where absolutely everyone watches your each move impacts your freedom of expression.
Competing wants in between customers and developers have designed tension, but Cook mentioned that the business focuses on the customers in its choices. That is, it does not reject a lot of apps since it is anti-developer, but since these apps represent some sort of danger to customers. Cook echoed earlier testimony that Apple’s malware dangers on iOS are far decrease than it is on Windows and other platforms, with Apple account for 1.7% of malware incidents compared to more than 40% on Windows. Cook mentioned this is how Apple delivers on a “brand promise of privacy, security, and safety.”
The judge also tipped her hand asking why Apple decided to reduce the royalty price for compact enterprises, these producing significantly less than $1 million in revenues, from 30% to 15%. Apple did that earlier this year, and the judge noted that it wasn’t competitors that brought on Apple to do that. Cook mentioned the cause was that Apple wanted to do one thing for compact enterprises in the pandemic. But the judge wondered whether or not it was the stress from antitrust litigation and speak of more regulation, rather than worry of competitors, that brought on Apple to make that transform. Cook repeated his answer and he noted there is big competitors for the mindshare of developers.
During the trial, Epic’s attorneys attempted to make Apple look incompetent when it comes to safety. The litigation began last August soon after Epic broke Apple’s guidelines and advertised inside Fortnite that customers could get a superior deal on Vbucks, or the virtual currency of Fortnite, on Epic’s retailer. It also incorporated in the game a hyperlink to sideload the internet site for generating the acquire. Apple prohibits such sideloading on iOS for safety factors.
Epic’s attorneys pointed out that Apple enables sideloading on the MacOS, and Apple executive Federighi made a exceptional admission, throwing the Mac below the bus. He mentioned that the level of malware on the Mac is at “unacceptable” levels. Epic’s lawyer likely need to have followed up with the query, “Then why are you still selling Macs?” Sadly, these fireworks did not take place. But Apple did extract a lot of proof suggesting that Epic wasn’t so excellent at safety itself, even to the point exactly where Sweeney had to apologize to Ubisoft Yves Guillemot for possessing so substantially download fraud linked with sales of Ubisoft’s The Division 2 game on the Epic Games Store.
When it comes to privacy, Epic’s lawyers noted that Apple will share information and facts about customers with the Chinese authorities. Asked why Apple did that, Cook mentioned, “We have to comply with the laws and the restrictions in each of the countries where we operate.”
Asked if Apple would let Epic Games’ Fortnite back on the retailer, Cook mentioned, “I think it would be to the benefit of users to have them back on the store, if they abided by the rules. The user is caught in between two companies here, and it’s not the right thing to do to the user.”
Epic is our pal
At the similar time, I got the vibe that if Apple operated by an “omerta” code, Sweeney would be on the hit list. Cook mentioned that Epic’s action of pulling a sneak attack and altering the Fortnite app in a “hotfix” update was “malicious” and a “terrible thing to do.” But Epic justified that by saying Apple had tied its hands and that this was the way to demonstrate that Apple’s policies genuinely had been Draconian and that there was true demand for customers to purchase things on an option retailer at decrease rates.
A lot of the case has revolved about whether or not Epic CEO Tim Sweeney was in search of a unique deal just for Epic. Apple steadfastly mentioned that it treats absolutely everyone fair, like developers of all sorts. Epic pointed out that Apple does not charge a 30% royalty to firms that use apps to sell physical goods, like Amazon or Uber. Phil Schiller mentioned in his testimony that Apple does not want to take duty for these purchases and deal with factors like security ratings for children or returns. He also noted that these sorts of firms generated $400 billion in sales of physical goods by way of apps on Apple in 2019. Otherwise, Apple mentioned it treats absolutely everyone fair.
Epic’s lawyer picked that apart, noting that Apple permitted Google to spend a lot of income to be the default search app on iPhones. A government antitrust case has alleged that Google has paid more than $10 billion for that privilege.
Asked about that, Cook mentioned he didn’t bear in mind the precise quantity.
What’s a game?
Epic also noted that Roblox does not spend the similar sort of royalty for games played and bought on the Roblox platform, when accessed via an app on iOS. Apple’s Kozmynka attempted to make the absurd argument that Roblox and the “experiences” on it had been not games. He mentioned a game has a “beginning, an ending, and challenges.” That began a entire round of silly and really serious concerns about what is a game. Roblox even changed reference to it as a platform for experiences, as Roblox does not want to get charged an added 30% for each iOS transaction.
Apple’s Schiller ultimately relented on that absurd argument and conceded Roblox is a game. That wasn’t the only concession in the case, as Epic’s Sweeney made a important admission as properly. He had noted that Epic wasn’t asking for damages in the case and wanted fairness for all developers and for Apple to do the proper issue and decrease royalty prices for absolutely everyone. But asked below oath if he would have taken a unique deal from Apple to decrease the royalty prices on Fortnite, Sweeney mentioned yes.
Friction was a large subject. Sweeney mentioned it was unfair for Apple to push people today to the net browser for off-App Store purchases. He mentioned that was inconvenient and it added friction to the course of action. Cook and other people from Apple noted that the net browser was a way for other people, such as cloud gaming applications, to avail themselves of iOS customers even if their apps went against Apple’s policies and weren’t permitted in apps.
Game dev reactions
I asked for reactions from game developers. Seamus Blackley, a former game maker and co-creator of the Xbox, mentioned, “Cook reinforced my notion that Apple could give a fuck about games outside of the revenue. The respect for the art form and artists that they at least feigned for iTunes isn’t even apparently worth attempting. Not what you were looking for, but that’s what I heard. Made me sad.”
And Larry Kuperman of Night Dive Studios mentioned, “I have been both entertained and embarrassed by some of the things that have come out, but my heart is with Epic on the issue of platforms. They are monopolies, they do act in restraint of trade, and not in the interests of the industry.”