To defend the company’s iPhone app store against charges of illegal monopoly, Apple CEO Tim Cook will take the witness stand Friday.
The company is counting on Cook’s appearance to put the final touches on Apple’s defense against an antitrust case brought by Epic Games, maker of the popular video game Fortnite.
Epic is trying to tumble the so-called “walled garden” for iPhone and iPad apps that welcome users and developers with no competition. It was created by Jobs a year after the iPhone’s 2007 debut. The App Store has become a key revenue source for Apple, a money-making machine that helped power the company to a $57 billion profit in its last fiscal year.
Epic is trying to prove that the store has morphed into a price-gouging vehicle that not only reaps a 15% to 30% commission from in-app transactions but blocks apps from offering other payment alternatives. That extends to just showing a link that would open a web page offering commission-free ways to pay for subscriptions, in-game items, and the like.
Apple fiercely defends the commissions as a fair way for app makers to help pay for innovations and security controls since it has invested more than $100 billion in such features.
Regulators and lawmakers in Europe and the U.S are already investigating Apple’s ironclad control over the App Store.
Epic lawyers are expected to spend several hours grilling Cook on the stand. The questioning is likely to dissect the strategies Cook has drawn up since taking the CEO job nearly a decade ago, just a few months before Jobs died of cancer in October 2011.
Exactly how profitable the App Store is has been a point of contention throughout the three-week trial. Epic’s accounting expert estimated that its profit margins range from 70% to 80%, but Apple has insisted those numbers aren’t accurate.
Phil Schiller, a longtime Apple executive, and former Jobs confidant, conceded earlier this week that the company’s commission system had generated more than $20 billion in revenue through June 2017.
Epic’s questioning of Schiller may foreshadow how Epic’s lawyers intend to go after Cook. Epic’s lawyers have repeatedly referred to internal exchanges involving Jobs and other executives to depict Apple as using its investment in security and personal privacy as an excuse for preserving the huge profits that flow from its app store.