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Apple boss takes to the stand in Epic App Store legal battle

By Chris Cooke | Published on Monday 24 May 2021

Apple boss Tim Cook took to the witness stand on Friday as part of the ongoing legal battle between the tech giant and ‘Fortnite’ maker Epic Games over its App Store rules. He insisted that Apple only allowed in-app purchases via its own payments platform because of privacy and security concerns, while arguing that that policy didn’t create any competition law issues, because unhappy users could always shift to an Android phone.

Epic Games, of course, just like Spotify, claims that Apple is using those privacy and security concerns as an excuse to exploit its control over iPhone users to the detriment of app-makers, who are forced to pay the tech giant a 15-30% commission on all in-app purchases. And that constitutes anti-competitive conduct.

Epic has gone legal with those claims in multiple countries, though most attention has fallen on the current legal battle being heard in the Californian courts. Spotify, meanwhile, made a formal complaint to the EU competition regulator. And in the UK, a class action has been filed with the Competition Appeal Tribunal hitting out at Apple’s App Store rules on behalf of iPhone users.

According to Law360, Cook used his testimony last week to present Apple as a relatively small player in the global smart phone market, while playing down reports of the huge profits his company makes from its App Store commissions.

The former is part of efforts to show that consumers have plenty of other devices to choose from via which they can access apps, even more so with games, given players can also opt for consoles over mobile devices. So, while Apple may exert control over iPhone users, that control does not constitute market dominance.

The smartphone market is fiercely competitive, Cook argued, and internationally the iPhone has only a 15% market share. Which may well be true, though within the US Apple is a much bigger player when it comes to smartphone sales.

The profits made by the App Store are relevant because the Epic side have argued that the margins on that side of the Apple business are incredibly high because of its anti-competitive conduct. But one internal Apple document which talked about the high profit margins on the App Store was not “fully loaded”, Cook argued, because it didn’t account for all the costs the company incurs from running the store.

Meanwhile, back on the privacy and security point, the Apple boss insisted that – if Epic Games was to prevail in this case and his company was forced to allow app-makers to directly take payments via iOS apps – “we could no longer make the promise of privacy, safety, and security”. In fact, he added, the App Store would become a “toxic mess”.

Although many legal experts reckoned that Epic’s case against Apple was somewhat optimistic before the court case began, it might be that the judge overseeing the dispute does ultimately require one change to the tech giant’s App Store rules via something of a compromise ruling.

Currently, not only are app makers obliged to use Apple’s payment platform, but they can’t even sign-post users to alternative payment options, for example via a web page. Judge Gonzalez Rogers specifically asked Cook on Friday, “what’s the problem” with giving consumers other purchasing options?

Closing arguments are due to be delivered later today. In terms of when we can expect a judgement, Rogers said last week that she hoped to publish her ruling before 13 Aug.