Apple Chief Tim Cook Takes Stand In Epic Games Trial

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Apple chief executive Tim Cook at WWDC 2020. Image credit: Apple

Apple chief executive Tim Cook takes stand in legal dispute with Epic Games over whether App Store constitutes an illegal monopoly

Apple chief executive Tim Cook testified on Friday that the privacy and security of iPhone users requires tight control over the App Store, as the company’s legal battle with Epic Games over alleged anti-competitive behaviour continues.

Cook said iPhones required greater attention to security than Apple’s Mac computers.

“You have a phone in your pocket most of the time and you want instant service,” he said.

“We felt both the use cases and the threat profile would eventually be much greater because of the number of iPhones on the market.”

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Epic has argued that Apple’s mandatory App Store transaction fees of up to 30 percent are abusive and that Mac computers are secure without such extensive controls.

Apple’s head of software, Craig Federighi, disputed that claim in testimony earlier last week, saying the level of security of Mac computers was not “acceptable” and was far inferior to than that of iOS devices.

“Today, we have a level of malware on the Mac that we don’t find acceptable and that is much worse than iOS,” he said.

Cook also argued Apple plays an essential role in protecting users’ privacy that could not be carried out by developers.

“We are making decisions in the best interests of the users, and sometimes there is a conflict in what the developer wants and what the consumer wants,” Cook said.

Profitability

The App Store is the cornerstone of Apple’s $53.8 billion (£38bn) services business, but Cook said he didn’t know whether the store was profitable as its figures are not broken out.

He said an Apple document produced in the trial that showed a 78 percent profit margin for the store didn’t take several costs into account and was meant to show trends, rather than the bottom line.

“We don’t have a separate profit and loss statement for the App Store,” Cook said, adding that he had a “feeling” that it was profitable.

App Store chief Phil Schiller conceded in his testimony that the company had taken in at least $20bn from the store through June 2017, based on calculations from figures publicly released at the time.

It has emerged that Apple has debated lowering the 30 percent fee in response to competition, with Schiller writing to Steve Jobs as long ago as 2011.

‘Metaverse’

Epic chief executive Tim Sweeney took the stand himself two weeks ago and has attended every day of the trial.

He said the company’s popular game Fortnite is not so much a game as a “metaverse” providing an array of experiences, and argued Apple is taking an outsized cut for providing simple payment processing technology.

The company is looking to provide an app store of its own for iOS and Android devices, as it does on Macs and PCs, but its attempt to do so in contravention of Apple and Google’s rules caused Fortnite’s expulsion from the Apple App Store and Google Play.

Apple has framed Epic’s actions as a simple grab for more profits.

But US District Judge Yvonne Gonzalez Rogers, who is overseeing the case, said on Friday that she found the lack of competition around Apple’s 30 percent fees “troubling”.

Regulatory overhaul

The high-profile case comes amidst broader scrutiny of the power of large tech companies such as Amazon, Apple, Facebook and Google, along with proposed regulatory changes to curb that power.

Apple’s App Store controls and fees have been criticised by competitors such as Spotify, as well as EU regulators and US politicians.

Cook responded to questions on the App Store in testimony before Congress last year, but has largely remained silent on the issue.

His remarks on Friday, in federal court in Oakland, California, are his most extensive public comments on the issue to date.

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