Hidden in these questions could be the key to Judge Gonzalez Rogers’ ruling.
Notes from 9to5Mac’s live blog, arranged in chronological order:
- Judge Yvonne Gonzalez Rogers asks Apple CEO Tim Cook about his statement that Apple wants to give users a choice. Why not a choice for a cheaper option for content? Cook says that customers have a choice between iOS and Android.
- “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,” the judge says. “You’re charging the gamers to subsidize Wells Fargo.”
- Cook says Apple has to monetize its intellectual property. YGR says part of the issue is impulse based purchases.
- Why can’t developers at least link out to their own websites for purchases? “If we allowed people to link out like that, we would in essence give up our total return on our IP,” Cook said.
- Judge YGR says competition didn’t prompt the App Store Small Business, concerns about antitrust regulation did. Cook says COVID prompted the change, and a feeling that Apple should do something to help small businesses. Cook notes Google announced a similar program after Apple.
- “We are creating the entire amount of commerce on the store and we are doing that by getting the largest audience there,” Cook says. “I think competition is great. We have fierce competition.”
- Judge YGR asks Cook about a survey that showed 39% of developers are unhappy with Apple. Cook says that Apple “turns the place upside down” for developers.
- “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,” the judge says.
- “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,” says Cook.
My take: Without a jury, the outcome of the case is in Judge Gonzalez Rogers’s hands (pending appeals). Care to try to read between the lines?
I detected a negative bias toward Apple, but that’s also the nature of probing the witness. Does she always ask this many questions – that could be the tell.
She also implies App Store should be free after the initial sign-up – what, there’s no ongoing maintenance, security costs to Apple? That’s naive.
“She also implies App Store should be free after the initial sign-up – what, there’s no ongoing maintenance, security costs to Apple?”
Beyond that, why can everyone else make a profit on their app stores, but not Apple?
I think Epic and their lawyers just can’t believe that Apple doesn’t run like Epic thinks it should, with detailed cost accounting on individual segment profitability.
So if I decide to sell my game at $10 and sell 100 games, that’s 1000 dollars of gross revenue, and $300 in Apple’s cut. Now if I sell my other app at $1 and sell 100 copies, that’s $100 in gross revenue and $30 in profit. So the allegedly “disproportionate percentage” of revenue for games is MUCH MORE due to the price of the game and its sales, than it is to anything that Apple has control over.
This entire case is about big companies using the enormous profits they make to pay for lawsuits so they can keep more profit and not pay for Apple’s services. You know, freeloaders.
What’s truly egregious here, is they don’t give a damn about the very negative consequences for everyone else by degrading a very well run system. Epic is a selfish, self-serving, short-sighted miscreant.
“Apple will appeal any ruling – especially by judges with a very limited understanding of the technology.”
There is zero guarantee that Apple will get a more knowledgable judge or set of judges the next time. Apple absolutely needs to educate this judge – as politely as possible, of course.
Apple’s gaming success is due to massive investments in chips and software for gaming (yes, I’m a broken record on this); and Apple’s loyal, trusting, well-heeled user base due to Apple’s commitment to customer safety, privacy and security.
Apple’s only sin is high ROI investments, based on a long-term view and core principles.
Apple’s business model is successful because controls the user experience (the people that provide the funds to make all happen). That experience cannot be duplicated on any other platform, even though the cost of entry on competing platforms is demonstrably less the the entry price into Apple’s environment. Users willingly pay more for the Apple experience. If they didn’t prefer it they’d move to a lesser cost competitor, of which there are many.
Apple makes a healthy profit because it manages its business very well, and offers the public products they are willing to pay more for.
These questions by YGR aren’t about a lack of knowledge of the technology, it’s about dotting the “i’s” and crossing the “t’s in support of her decision (whichever way it goes).
Apple Managing the ENTIRE App Store experience is key to providing the superior user experience which users have paid for and bought into, at a price they willingly pay for more benefits, real or perceived. There has always been “cheaper” alternatives out there as Cook pointed out and Android has a major majority in IB, market share, and to developers, similar to exactly the same fees/rules. Both users and developers have choices in the marketplace for their apps and how much they will pay/charge, plus gamers have major external console platform options for much larger and high powered gaming at home.
IMO, why should Apple be penalized for running a very transparent profitable business model built on the foundation of all of Apple’s hardware investments and subsequent user base?
Apple isn’t holding a gun to anyone’s head that forces them to buy into the Apple ecosystem. However, Apple has built such an attractive ecosystem that, apparently, people have no choice but to enter it, and be trapped there.
/s
Trying to discern how she will ultimately rule based on her asking various questions is like reading the tea leaves.
From the snippets I read regarding testimony, Epic fell well short of the mark necessary in making a legally cogent antitrust presentation. They complained and presented information as to how much money Apple derives from the App Store. So what! That’s not an antitrust claim.
I’ll look forward to her ruling once it’s released in the next month.
IMO, this is entirely incorrect. Every developer / company on the App Store can (or not) charge whatever they want for their app, and offer (or not) in App purchases, fees, or other charges, or ads vs subscriptions to monetize their app. Wells Fargo (and banking apps in general) provide a service to their customers/account holders in exchange for the monetary compensation of holding/using the account holders money, plus outside services the customer may use. Hence, “free” apps and why all banking apps are “free”.
If anyone is subsidizing “free” apps, it is Apple because Apple provides the platform, cultivated the users, created a superior user experience, and essentially receives no direct compensation for it other than continued and future hardware purchases.
It is not Apple’s fault or problem if it’s USERS have made gaming the most popular downloaded and revenue generating app category, it is what it is. IMO, there should be no reason why Apple cannot monetize its App Store under the rules and conditions it sets forth, apparently users have no problems with that in general. For users, if they prefer a cheaper experience and costs, they can move over to Android at any time or have a secondary cheaper Android alternative. Same for developers.
Why would anyone ever build a store anywhere if that is allowed to happen in the name of a nonsensical antitrust lawsuit?
(Conversely, the court’s finding of what the market is would be a ‘conclusion of fact’, and that’s a lot less appeal-able than a ‘conclusion of law’.)
If I had to guess at a result, it would be a narrow legal ruling on the basis of ‘definition of market’, but with a lot of criticism of Apple.