Judge Grills Tim Cook on App Store Policies as End of of Epic Games v. Apple Trial Approaches

[laptech]

Look at the way Tim Cook replies to the Judges questions, he responds in a manner that he is dealing with competition in the app store which he is not and the Judge responded with such a response back that Apple has no app store competition or competition on in-app purchases.

There is also a good piece written by the UK's BBC https://www.bbc.co.uk/news/technology-57199547 where Tim Cook tells the court he does not know if the app store makes a profit

He also said he did not know if the App Store made a profit, telling the court Apple did not break down the figures.

Facing questions about the level of profit the App Store generates from the 30% commission it takes on sales, he said: "We don't have a separate profit and loss statement for the App Store."

Instead, he said that he had a "feeling" that it was profitable - but could not share figures with the court.

Is the man that naive to think that telling others that him as CEO does no know if sections within the company he runs are not making a profit?

You also saw the testimony of Craig Federighi where he was very cagey about how much money the app store makes.

It is clear the top senior executives at Apple are doing their best to avoid telling the court just how much money the app-store makes.

 

[I7guy]

“Other than” so it does require it.

Nope. but I applaud you for good spin. There is no upfront investment in management and distribution infrastructure. There are a litany of items the $99 buys and it's a tax write-off. An example of an investment would be apple charging $10,000 per app for hosting.

 

[Ethosik]

I do not understand why everyone continues to use gaming consoles as another example

The big difference is if you want a game you can 1)buy it in the console store digitally 2) go to a site like amazon, gamestop etc and buy it digitally from them 3) you can order a physical copy of said game through pretty much any website like amazon, walmart, target, bestbuy, gamestop or even a used copy on ebay. 4) You can legit go to a brick and mortar shop and buy it from 100's of places.

You arent forced to buy games only on the console's game store.

And as for Microsoft and Sony keeping a higher amount for themselves, i'm fine with it and heres why and NOBODY has brought this up.

Game trading and reselling...

You cant trade an iOS game in for money and buy a new game. As much as I love gamestop you have to realize the amount of revenue Microsoft and sony AND the developers of games loose when someone trades a game or buys a used game. That's completely different then what Apple has. Everyone has to pay Apple for every game they purchase where as MS and PS and Developers only get paid for the first purchase and nothing comes to them when gamestop resells it and takes pure profit so they subsidize it with a certain cut of the profit on the digital store.

As far as I'm concerned I think Apple should get a 30% cut but only on the initial purchase of an app or game, after that they shouldn't have anything. Apple says it has to maintain the store... That's true, but it is because of the developers app that they are getting anything in the first place.

If there is a game you want to play and it's not on your console? Buy the other console because no one is stopping you.

As the developer, you still need to pay Sony, Microsoft and Nintendo to get it licensed. Have you noticed all physical games are in a case with the console logo on it? There are no blue Xbox games or green Playstation games (not sure about Greatest Hits, but you get my point). PS4 games were blue, had PS4 on the case, were officially branded and licensed by Sony. I absolutely cannot create a game, burn it to a Verbatim blu ray disc, create my own labels and sell it at a store. As a developer, I do not bypass any fees on consoles selling physically, like the argument is for iOS apps.

And if you really want to get down to it, you are not FORCED to install ANY iOS app. Something that keeps getting brought up as a conversation is this.

"What happens when apps become exclusive to the Epic Games Store on iOS - like what they do on PC"
"Well just don't install that app"

This can also be said about the App Store in general too.

Also, the consoles do charge for the V-Bucks purchases. You don't even have a browser, so you still need to go out and get some V-Bucks card or add it to your account another way. Exactly the same on iOS.

 

[Mindbomb2000]

If you bought a magazine at Walmart and then after you got home decided to get a monthly subscription to that magazine should Walmart get a cut of the monthly subscription? Once I download an app is it still part of Apple’s store?

But, Walmart isn't giving away the magazines. They get paid when you purchase the magazine. If you bought a magazine at Walmart, that's one thing, but if Walmart gave you the magazine for free and said to the publisher, hey we can't make anything from giving away free magazines, so, how about you give us a cut of any subscriptions you get from us supplying you a venue to get subscribers, that's different.

 

[I7guy]

[...]
Is the man that naive to think that telling others that him as CEO does no know if sections within the company he runs are not making a profit?

You also saw the testimony of Craig Federighi where he was very cagey about how much money the app store makes.

It is clear the top senior executives at Apple are doing their best to avoid telling the court just how much money the app-store makes.

There was a blurb about p&l being sealed. That probably meant Tim and Craig didn't have to answer to give away business confidential information that didn't have a bearing with respect to the merits of the case.

It's clear senior executives at Apple are doing their best to win the case without lying on the stand. How much net profit the app store makes is probably not within the scope of the trial. Or if it is, it is for the judges eyes only.

 

[Ethosik]

If you bought a magazine at Walmart and then after you got home decided to get a monthly subscription to that magazine should Walmart get a cut of the monthly subscription? Once I download an app is it still part of Apple’s store?

If I buy Xbox All Access subscription THROUGH Gamestop, they get a cut on the subscription cost. If I pay it directly through Microsoft, they do not get the cut.

 

[I7guy]

Uber, Amazon, Best Buy, etc not having to pay is clearly an issue.
[...]

An issue for who? The app store only collects fees on the ultimate delivery of digital goods if goods were bought within the app.

 

[Phone Junky]

Look at the way Tim Cook replies to the Judges questions, he responds in a manner that he is dealing with competition in the app store which he is not and the Judge responded with such a response back that Apple has no app store competition or competition on in-app purchases.

There is also a good piece written by the UK's BBC https://www.bbc.co.uk/news/technology-57199547 where Tim Cook tells the court he does not know if the app store makes a profit



Is the man that naive to think that telling others that him as CEO does no know if sections within the company he runs are not making a profit?

You also saw the testimony of Craig Federighi where he was very cagey about how much money the app store makes.

It is clear the top senior executives at Apple are doing their best to avoid telling the court just how much money the app-store makes.

I get it that many see Apple as the big, greedy, money making monster. It may very well be. But who's to say how much money/profit a company can make?

Contrary to some opinions here, I don't see an iPhone, or any smartphone, or any apps on them as necessities. Can they make certain things easier for you or add enjoyment to your life? Sure. But to say that everyone needs a smartphone is not true.

Now going with the idea that a smartphone isn't a necessity, people can choose to buy one and any apps they like. Nobody is forcing them. Just as developers can choose to develop for whatever platform they want. Nobody is holding a gun to any phone buyer or developer to buy or develop Apple products.

With that being said, if you think Apple's terms aren't agreeable, do business elsewhere. And if enough people think this way, it will affect Apple's business. So far, it doesn't seem enough people feel this way.

 

[Mindbomb2000]

That is not really the right analogy. That would be more akin to a developer advertising the lower price or web download within the App Store.

The more analogous question would be: should Walmart be allowed to keep a Bread company from advertising a lower price by buying directly from the bakery, or adding a coupon, inside the packaging that you only see after you open the bread?

But in this case, Walmart (Apple) is giving the customer the bread for free. Their expectation is that if the bread company makes further sales, Walmart gets a cut for renting the building, and stocking the bread.

 

[kiv.atso]

If this goes in Epic’s favor, users still won’t have any choice. Because they will still be forced to download an app only from a specific store. I would hate to be in such position when I’m forced to download an app from a shady app store or website because it’s the only place where it’s available. And developers will force users to install their apps that way. What a mess…

 

[Rogifan]

But, Walmart isn't giving away the magazines. They get paid when you purchase the magazine. If you bought a magazine at Walmart, that's one thing, but if Walmart gave you the magazine for free and said to the publisher, hey we can't make anything from giving away free magazines, so, how about you give us a cut of any subscriptions you get from us supplying you a venue to get subscribers, that's different.

Except many apps on my iPhone are “free” and I have not bought anything in-app. Is Apple getting a cut of the ads inside The Weather Channel app? Tim Cook basically said Apple has all these free apps in the store because that’s how they get customers. Meaning, people wouldn’t be buying an iPhone if all it had were Apple’s first party apps. And people don’t want to pay for apps. On and that a small percentage of apps (mostly games) are subsidizing Facebook, YouTube, Netflix, Spotify etc.

If Apple wanted to they could make every app cost something rather than having consumers think software should be free. Or if this was really about the cost of running the App Store and providing all the developer tools they could come up with a different system for charging app developers. But this isn’t about that. Tim Cook promised Wall Street that ‘services’ would be a big growth driver and the App Store is the biggest component of ‘services’. The easiest way to make money off the App Store is to take a cut of other businesses revenue streams. Unless of course they’re massive and might leave. Then they get a special category so they don’t have to give Apple anything.

My guess is at some point Apple will be forced to allow 3rd party IAP inside apps. Cook & Co. can’t complain about privacy and security because people are already buying non-digital goods inside apps using non-Apple payment methods. And of course anyone can buy anything on the web using a browser. That also doesn’t go through Apple’s IAP. Apple should get ahead of it by allowing 3rd party IAP along side their IAP. If the company thinks their IAP is better and worth 30% more they can list all the reasons why and then consumers can choose. I’m sure many will continue to use Apple’s IAP.

 

[laptech]

I get it that many see Apple as the big, greedy, money making monster. It may very well be. But who's to say how much money/profit a company can make?

Contrary to some opinions here, I don't see an iPhone, or any smartphone, or any apps on them as necessities. Can they make certain things easier for you or add enjoyment to your life? Sure. But to say that everyone needs a smartphone is not true.

Now going with the idea that a smartphone isn't a necessity, people can choose to buy one and any apps they like. Nobody is forcing them. Just as developers can choose to develop for whatever platform they want. Nobody is holding a gun to any phone buyer or developer to buy or develop Apple products.

With that being said, if you think Apple's terms aren't agreeable, do business elsewhere. And if enough people think this way, it will affect Apple's business. So far, it doesn't seem enough people feel this way.

Blah Blah Blah...your post has absolutely nothing to do with what I've raised in my post, therefore do not quote it unless your prepared to debate the content of what I wrote. We do not need to see another 'but Apple is right and everyone else is wrong' post.

 

[quarkysg]

Except many apps on my iPhone are “free” and I have not bought anything in-app. Is Apple getting a cut of the ads inside The Weather Channel app? Tim Cook basically said Apple has all these free apps in the store because that’s how they get customers. Meaning, people wouldn’t be buying an iPhone if all it had were Apple’s first party apps. And people don’t want to pay for apps. On and that a small percentage of apps (mostly games) are subsidizing Facebook, YouTube, Netflix, Spotify etc.

The iOS App Store started life with this model in 2008, where we either have paid or free apps. No IAP then. The IAP and subscription model was later add due to requests from developers if I'm not wrong.

If Apple wanted to they could make every app cost something rather than having consumers think software should be free.

IMHO, we have to all thank Google and Facebook (and probably Fortnite) for consumers expecting software to be free. If Apple were to change the iOS App Store model to force all iOS Apps to be paid apps, I'm sure they will get sued as well. I guess its a damed if you do or damed if you don't situation?

Or if this was really about the cost of running the App Store and providing all the developer tools they could come up with a different system for charging app developers. But this isn’t about that. Tim Cook promised Wall Street that ‘services’ would be a big growth driver and the App Store is the biggest component of ‘services’. The easiest way to make money off the App Store is to take a cut of other businesses revenue streams. Unless of course they’re massive and might leave. Then they get a special category so they don’t have to give Apple anything.

I don't think anybody knows for sure how much the iOS App Store contributes to the Services LOB. You should also consider the iTunes Music and Movie stores, which should also be considerable. Also in recent years Apple added a lot more services such as Apple Card, Apple Music, Apple Fitness, Apple One, etc. I would give Tim Cook the benefit of the doubts that he's talking about recent and future Apple subscription services. The world is moving to subscription services, whether we like it or not. If you asked me, having a consistent base of subscribers is a much better business plan compared to the fluctuating revenue streams of iOS App Store revenues. IMHO, IAP is a form of subscription services cum gambling.

My guess is at some point Apple will be forced to allow 3rd party IAP inside apps. Cook & Co. can’t complain about privacy and security because people are already buying non-digital goods inside apps using non-Apple payment methods. And of course anyone can buy anything on the web using a browser. That also doesn’t go through Apple’s IAP. Apple should get ahead of it by allowing 3rd party IAP along side their IAP. If the company thinks their IAP is better and worth 30% more they can list all the reasons why and then consumers can choose. I’m sure many will continue to use Apple’s IAP.

Somehow I don't see Apple being forced to allow third party IAP, as what they are doing is not illegal. If this come to pass, the entire industry will be impacted.

Apple is only concerned about privacy and security when it comes to their products and services. I don't think that what a users does on the open Internet is of any concern to Apple, and frankly Apple can't do anything about that. If a user prefers to provide their personal information such as their credit card number to a website for a purchase, which later resulted in the website system getting hacked and the user's credit card information being stolen, Apple can't help in this case.

It is easy to say to allow third party IAP and be done with it. To allow that to happen in a secure manner probably requires a lot of study and software engineering, and maintenance. Why should Apple invest in such an endeavour with no potential for return on investment?

 

[Stunning_Sense4712]

I suspect the decision in this case will be appealed once a verdict is reached.

 

[ksj1]

Lot's of people appear to be making the claim that Apple makes plenty of profit on the iPhone. Those people are looking at the comparison of the bill of material costs versus the selling price. That is not taking into account a myriad of other costs like engineering, support, operations, manufacturing, marketing, etc. I have no idea if, after taking into account all of it's costs, an iPhone sale makes Apple a huge profit, or if App store sales subsidize the overall costs.

Something else people seem to misconstrue is that a monopoly is illegal. A monopoly is not illegal if it was not illegally obtained and is not illegally maintained. Apple may have a monopoly on the App store (a dubious argument imo), but they didn't obtain it illegally. And as far as I know they are not maintaining it illegally somehow. If they were raising rates then there would be an argument, but as far as I know they have really only reduced rates, regardless of the reason (regulatory fear or competition).

 

[bsamcash]

No it’s not . A judge weighs evidence . Does NOT cross examine. Thats for the advocate and defence to provide.

This is a civil case, not criminal.

 

[ChromeAce]

Dear Yvonne,

After careful review, your Apple ID will be deactivated within 7 days. This decision is final.

Tim

 

[bsamcash]

no a Judge is there to judge on base of the laws and not based on wat side thay are on

As I keep telling others, this is a civil case, not a criminal one. This is more an issue of contracts. The judge is absolutely within her right to ask questions and take sides. That is the point of the lawsuit.

 

[ChromeAce]

The solution is simple. The iPhone E. All it does is run Epic games just as Epic wants. No other apps. No other functionality. That’s all Epic paid for, that’s all they deserve.

 

[grandM]

So Apple develops API’s for a one time $99 fee for these apps but other apps have to pay 30% just because they have transactions… makes sense.

We have the quotes from Apple saying why they charge 30%. Because of the resources to develop and maintain API’s. If it’s because of the API, then the judge should rightfully call bs on arbitrarily picking who foots the bill.

Actually it would make sense dropping the 99 USD and charging upon financial success. Every threshold lifted is a plus.

 

[grandM]

Welcome to America.

Never met an impartial judge. Having a billion company's faith determined by 1 person should scare everybody.

 

[mnsportsgeek]

The app store only collects fees on the ultimate delivery of digital goods if goods were bought within the app

You mean like all those digital goods you can buy in the PlayStation app and play on your iOS device via remote play without giving Apple a 30% cut?

 

[I7guy]

You mean like all those digital goods you can buy in the PlayStation app and play on your iOS device via remote play without giving Apple a 30% cut?

No. Didn’t mean that at all. Meant those goods bought within an app on the iOS App Store that are digital in nature but does not apply to goods that are physical in nature.

 

[Rogifan]

Apple is only concerned about privacy and security when it comes to their products and services. I don't think that what a users does on the open Internet is of any concern to Apple, and frankly Apple can't do anything about that. If a user prefers to provide their personal information such as their credit card number to a website for a purchase, which later resulted in the website system getting hacked and the user's credit card information being stolen, Apple can't help in this case.

It is easy to say to allow third party IAP and be done with it. To allow that to happen in a secure manner probably requires a lot of study and software engineering, and maintenance. Why should Apple invest in such an endeavour with no potential for return on investment?

But it’s already happening. I can buy things in the Target app using the card I have on file with them. Same with Panera and all sorts of other apps. Apple charging 30% for digital only goods isn‘t about privacy and security it’s about Apple believing they’re delivering the customers to these developers and thus deserve a cut of their revenue streams. Maybe that was the case initially but can we really say that now? Can you name the last app you installed because of Apple marketing?

 

[fbr$]

Problem is, once I download an app from the App Store to my iPhone, the app is running on my iPhone, not on the App Store, and it's not Apple's business what I do on an app on my iPhone.