Although the trial came to a conclusion on Monday, its true climax was late last week, when Gonzalez Rogers — who is not expected to render her verdict for months, peppered Cook with a series of pointed queries about Apple’s golden-goose business model.
Apple has long maintained that it wants to empower users with control over their digital lives. So if it cares so deeply about users’ agency, the judge asked Cook, why not allow people to have a choice in how they pay for digital goods?
The question seemed to catch the C.E.O. off guard, and he answered with unusual frankness. If Apple allowed app developers to link to alternative payment methods, he said, “we would in essence give up our total return on our” intellectual property. Apple spends a lot of money building and maintaining the App Store, Cook said, and it’s also giving app developers access to a lot of customers. That’s worth the 30 percent cut, he suggested.
The judge kept pushing. Even if Apple brings iPhone users to Epic’s yard, after that first interaction, isn’t Apple effectively just collecting an ongoing profit by virtue of its position as a middleman?
Here’s where things get tricky. Apple argues that it isn’t really a restrictive monopolist because Fortnite can be downloaded on lots of different systems — Android phones, video game consoles and personal computers. Some of those platforms also charge developers a cut of purchases. For instance, gaming systems like Microsoft’s Xbox and Sony’s PlayStation take a 30 percent cut on purchases of digital games, though unlike Apple, they tend to sell their hardware at a loss. Apple makes a hefty profit on its hardware and in recent years has even raised its prices. In some ways, the problem with Apple’s App Store rules isn’t that they’re uniquely onerous; it’s that the store is so huge, its harms are more widespread. The App Store’s revenue in 2020 was $72 billion, according to Sensor Tower, an app analytics firm, nearly twice that of Google’s app store.
Gonzalez Rogers also pointed out the various ways Apple seems inured to competition. It has maintained the 30 percent fee almost unchanged since the App Store’s launch in 2008. Only late last year did it offer a price break for small-time developers. But “that really wasn’t the result of competition,” the judge said. “That seemed to be a result of the pressure that you’re feeling from investigations, from lawsuits — not competition.”
Other evidence in the case underlined the thesis that Apple acts with impunity in the app market, as if it has little to fear from competitors. In 2018, when Netflix was considering disallowing users to subscribe to its service from their iPhones, one Apple manager floated imposing “punitive measures” on Netflix for its temerity in looking to escape the Apple tax. (Netflix and other streaming services did eventually prevent users from subscribing through their iPhone apps.)