Apple App Store profits appear ‘disproportionate’, US judge told CEO Cook By Reuters

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© Reuters. Apple CEO Tim Cook gestures from the elevator as he arrives to speak in a week-long antitrust lawsuit in federal court in Oakland, California, United States, May 21 2021. REUTERS / Brittany Hosea-Small

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By Stephen Nellis

(Reuters) – Federal judge questioned Apple Inc (NASDAQ 🙂 CEO Tim Cook on Friday on whether the iPhone maker’s app store is taking advantage of developers like “Fortnite” maker Epic Games is justified and if Apple faces real competitive pressure to change its ways.

Cook testified for more than two hours in Oakland, Calif., As the last witness in Apple’s defense against Epic’s accusations that the iPhone maker’s app store checks and commissions created a monopoly that Apple illegally abuses.

App makers, including music service Spotify Technology, European regulators and American politicians wondering if the company that once urged the world to “ think differently ” has now grown too big and too powerful.

At the end of the testimony, Judge Yvonne Gonzalez Rogers questioned Cook, urging him to acknowledge that game developers generate most of the App Store’s revenue and help subsidize other apps in the store that pay no commission.

Gonzalez said Apple’s profits from game developers “seem disproportionate.”

“I understand this notion that Apple brings the customer to the dance,” she said. “But after that first time, after that first interaction, the developers keep the customers with the game. Apple is taking advantage, it seems to me.”

Cook disagreed. “Free apps bring a lot to the table. Only the people who really benefit from them pay 30” percent in commissions, he said.

Epic tried to show that Apple’s iPhone is a lucrative platform that locks down users, pointing to an internal Apple document that Epic said showed the App Store had 78% operating margins. . Cook said the document did not reflect the full costs of operating the App Store.

The testimonial constitutes Cook’s most comprehensive public remarks on the App Store, which anchors Apple’s service business at $ 53.8 billion.

Gonzalez Rogers also cited a survey that found 39% of software developers were unhappy with Apple’s app distribution services.

“It doesn’t seem to me that you feel any pressure or competition to really change the way you deal with developers,” said Gonzalez Rogers.

Cook responded that “we’re turning it around” to respond to complaints from developers, but later admitted that he doesn’t receive regular reports on what developers think about working with Apple.

At the start of the three-week trial, Gonzalez Rogers also pressed Epic CEO Tim Sweeney with tough questions https://www.reuters.com/technology/judge-presses-epic-ceo-during-second -day-apple- antitrust-trial-2021-05-04 on how forcing Apple to change would affect the software world. Sweeney said he hadn’t thought about the problem.

The creator of “Fortnite”, an online game that pits players against each other in heated “Battle Royale” combat to the last survivor, has led a public relations and legal campaign against Apple.

Epic parodied Apple’s iconic “1984” ad and argued in court that it acts anticompetitively by only allowing approved apps on the world’s billion iPhones and forcing developers to use the Apple’s integrated payment system, which charges sales commissions of up to 30%.

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Apple has sought to persuade Gonzalez Rogers that its developer guidelines are aimed at keeping customer information private and free from malware.

“We have a manic focus on the user and doing the right thing for the customer,” Cook said. “Safety and security are the foundations on which privacy is built. Technology has the ability to suck all kinds of data from people, and we like to provide people with tools to get around that.”

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