Apple CEO Tim Cook faces sharp questioning from judge in Epic Games trial – CNBC7 min read

https://www.cnbc.com/2021/05/21/apple-ceo-tim-cook-testifies-in-epic-games-trial.html

Getty ImagesApple CEO Tim Cook dealt with sharp questioning on Friday from Judge Yvonne Gonzalez Rogers about Apples App Store business model at the end of his testament in the Epic Games v. Apple trial.The questioning gave a preview into Judge Rogers thinking before she decides whether Epic Games argument is strong enough to force Apple to permit it to set up alternative app shops on the iPhone and prevent the App Stores 30% charge on in-app purchases.Rogers asked Cook what his issue was with allowing iPhone users the option of a lower cost, particularly for video games. Cook said that users have a choice in between iPhones or Android devices.She followed up by asking about whether Apple has a problem with providing users information to get the exact same in-app purchases through a web browser, bypassing Apples 30% fee, suggesting a compromise where Apple would enable a business like Epic Games to link app users to a web internet browser to make deals, rather of requiring them to use Apples in-app purchase mechanism. Apple subsequently removed the app from the App Store.Cook evades App Store earnings and Google licensing questionsMuch of Cooks testimony on Friday surrounded a non-public, internal Apple document that was sent out to him describing profitability trends for various Apple divisions, consisting of the App Store. Epics lawyers said it revealed that Apples App Store is really lucrative, trying to strengthen its argument that Apple uses its control to enhance its own profits.Cook said that the document was not “completely loaded” with all the costs Apple invests on the App Store and that it was a “benchmarking” exercise. Cook stated he did not keep in mind how much Google pays.Cook was also questioned by Apple lawyers about iMessage, Apples messaging program that is developed into iPhones and special to Apple products.

Getty ImagesApple CEO Tim Cook dealt with sharp questioning on Friday from Judge Yvonne Gonzalez Rogers about Apples App Store organization model at the end of his statement in the Epic Games v. Apple trial.The questioning offered a sneak peek into Judge Rogers thinking before she chooses whether Epic Games argument is strong enough to require Apple to allow it to install alternative app shops on the iPhone and avoid the App Stores 30% cost on in-app purchases.Rogers asked Cook what his issue was with permitting iPhone users the option of a lower charge, particularly for games. Cook said that users have an option between iPhones or Android devices.She followed up by inquiring about whether Apple has a problem with providing users details to get the same in-app purchases through a web browser, bypassing Apples 30% fee, suggesting a compromise where Apple would permit a business like Epic Games to link app users to a web internet browser to make transactions, rather of forcing them to use Apples in-app purchase mechanism.” The gaming industry appears to be generating a disproportionate amount of money to the IP youre offering them and everyone else,” Rogers said to Cook. “In essence, its nearly like they are funding everybody else.” Cook stated that Apple dealt with intense competitors for developers and users.” You dont have competition in those in-app purchases, however,” Rogers replied.Rogers likewise revealed doubt that Apples Small Business Program, which cut App Store charges in half for little developers, was constructed of concern for small companies throughout the Covid pandemic, as Cook testified on Friday.” That appeared to be the result of the pressure accrued because of examinations, of lawsuits,” Rogers said.Cook stated that suits remained in the back of his head, however what set off the program was worry over small companies throughout Covid.Rogers mentioned that she had actually seen a survey that 39% of Apple designers are disappointed with the App Store.” It does not seem to me that you feel any pressure or competition to in fact alter the way in which you act to address the issues of developers,” Rogers said.Cook stated and disagreed that Apple “turns the location upside down for developers.” Friday was the very first time Cook has actually affirmed in court, he said.The three-week trial will conclude on Monday, however Judge Rogers alerted this week it may take weeks or months until she makes a choice. After that, the disagreement is likely to be appealed, she said.Fierce competitionBefore Cook was questioned by Rogers, he testified on Friday that Apple deals with fierce competitors in smart devices and in the United States, the iPhone only has “high 30s” percent of market share. Worldwide, the iPhone has about 15% market share, Cook said.The market share figures mentioned by Cook are an uncommon example of Apple talking about the market share of its crucial item, the iPhone, in an effort to state it does not dominate the mobile phone market.” Theres a whole list of various handset competitors. Its increasingly competitive,” Cook said.Apples U.S. share mentioned by Cook is lower than many external estimates. A current report from Counterpoint Research pegged it between 40% to 65% depending on the quarter because 2019. Apple has argued that its control of its App Store, the only method for consumers to install software on iPhones, is necessary for the businesss security and personal privacy guarantees to its users, and a crucial differentiating function in a competitive market for mobile phones.” We could no longer make the guarantee of security, safety, and personal privacy” if Epic Games prevails, Cook affirmed, saying that the App Store would be a “hazardous mess” without Apples guidelines and policies that Epic is fighting in court.Epic Games argues security is a reason to extract fees and manage what software makers do, and that Apple could safely open up its platform to contending app stores.Cook discussed Samsung, Vivo, Oppo, Huawei and Google as handset competitors, all of which utilize a version of Googles Android. He stated Apple also faces competition from other app stores, including Google Play, and consoles like Microsoft Xbox and Sony PlayStation.Apple CEO Tim Cook testifying in Epic Games trialVicki BehringerWhen questioned by Epic Games lawyers, Cook decreased to address a concern about whether Apples iPhone takes on Googles Android in the operating system market.” Customers dont purchase operating systems. They buy devices,” Cook said.Cook said that Apple utilizes surveys to track whether iPhone users switch to Android gadgets. “Making efforts to get Android individuals to change to iPhone, thats a very important job for us,” Cook said.Cook stated on Friday that Epic Games relocation in 2015 to bypass Apples 30% in-app purchase fees on Fortnite, its shooter video game, was “malicious.” Apple consequently got rid of the app from the App Store.Cook evades App Store earnings and Google licensing questionsMuch of Cooks testimony on Friday surrounded a non-public, internal Apple file that was sent out to him describing profitability trends for different Apple divisions, including the App Store. Epics legal representatives stated it revealed that Apples App Store is very rewarding, trying to strengthen its argument that Apple utilizes its control to improve its own profits.Cook said that the document was not “completely filled” with all the costs Apple spends on the App Store which it was a “benchmarking” workout. He stated that he has a “feel” for the App Stores profitability, however did not offer a number. An accounting professional employed by Epic Games previously affirmed that Apple had an operating earnings margin of 77.8% in 2019. Legendary Games legal representatives also asked Cook about Apples deal with Google to be the default search on the iPhone browser, which was approximated at $10 billion each year by a Congressional report citing a Wall Street research study note. Cook stated he did not remember how much Google pays.Cook was likewise questioned by Apple legal representatives about iMessage, Apples messaging program that is developed into iPhones and exclusive to Apple products. Cook said that he didnt think the absence of iMessage on Android has actually avoided iPhone users from switching to competitors.Cook dismissed issues that people changing from an iPhone to an Android device may miss out on text, stating that “you can easily shut off your iMessage.”

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