Apple CEO faces tough questions about app store competition

Apple CEO Tim Cook described the company’s ironclad control over its mobile app store as the best way to serve and protect iPhone users, but he faced tough questions about competition issues from a judge Friday about allegations he oversees an illegal monopoly.

The rare courtroom appearance by one of the world’s best-known executives came during the closing phase of a three-week trial revolving around an antitrust case brought by Epic Games, maker of the popular video game Fortnite.

Epic is trying to topple the so-called “walled garden” for iPhone and iPad apps that welcomes users and developers while locking out competition. Created by Apple co-founder Steve Jobs a year after the iPhone’s 2007 debut, the App Store has become a key revenue source for Apple, helping power the company to a $57 billion profit in its last fiscal year.

The trial focuses on Epic’s contention that Apple has turned its store into a price-gouging vehicle that not only reaps a 15 per cent to 30 per cent commission from in-app transactions, but blocks apps from offering other payment alternatives. That ban extends to showing a link that would open a web page offering commission-free ways to pay for subscriptions, in-game items and the like.

Under friendly questioning from a company lawyer, Cook delivered polished remarks that sometimes sounded like a commercial for the iPhone and other Apple products.

But the normally unflappable CEO occasionally seemed flustered while being grilled by Epic lawyer Gary Bornstein. His unease was particularly evident when pressed about the level of profits in a store that Jobs initially thought would be lucky to break even. He seemed to stumble slightly again when when Bornstein confronted him about a deal in China that could compromise user privacy, even as the company maintains that protecting its customers’ personal information is a top priority.

Cook, though, never wavered during nearly four hours of testimony from his position that Apple’s grip on the app store helps it keep things simple for a loyal customer base that buys iPhones knowing they getting “something that just works.”

“They buy into an entire ecosystem when they buy an iPhone,” said Cook, who wore a face shield, but no mask in an Oakland, California, courtroom that has limited access because of the pandemic.

It wasn’t at all clear that the federal judge who will decide the case was buying everything Cook said on the stand.

After the lawyers were done with their questioning, US District Judge Yvonne Gonzalez Rogers asked why Apple can’t allow rival stores to offer an in-app transaction option on iPhones, iPads and iPods that might charge lower commissions. That is something Epic is fighting to make it happen, partly because it has a still unprofitable store that imposes a 12 per cent commission.