Early in his testimony for Epic Games v. Apple on Friday, Apple CEO Tim Cook described his company’s mission: “To make the best products in the world that really enrich people’s lives.” For the rest of the day, Epic’s lawyers sought to demonstrate that what Apple most wanted to enrich was itself, at the expense of consumers.
What does greed prove? For the past three weeks, Epic has doubled down on its allegations of Apple’s monopoly power over the iOS ecosystem. The Fortnite publisher is desperate to show that Apple’s core is rotten and that its business practices are too.
Apple is worth over $2 trillion today, and one reason is the structure of that ecosystem: It manufactures and owns Apple devices, the iOS operating system, the Apple App Store, and the payment system consumers use for those apps. In defending itself from Epic’s lawsuit, Apple insists that its iron grip on the iOS market isn’t a simple play for massive profits; rather, it’s all in the service of keeping its customers safe, its user experience simple, and its developers happy. As Apple’s highest ambassador, Cook had a big job ahead of him.
Cook spent today on the defensive, fielding pointed questions both from Epic’s lawyers and US District Judge Yvonne Gonzalez Rogers. A key issue in the case has been the commission Apple collects from the App Store, up to 30 percent on in-app digital purchases. In its lawsuit, Epic is framing that 30 percent commission as a “monopoly tax.” Just before Cook took the stand, Judge Rogers said, “The lack of competition on the 30 percent is something that is troubling.”
Digital marketplaces have taken 30 percent commissions for decades. Cable companies charged it for pay-per-view movies in the 1990s. In the mid-2000s, Apple convinced record labels that it deserved a 30 percent commission from song sales on the iTunes Store. The labels, desperate to cut down on rampant online music piracy, went along. Today, Apple makes a similar argument for its App Store commission—only instead of fighting off Napster, it’s iOS’s relatively low rate of malware infection.
The commission is standard in games too. Now that the lion’s share of video game sales have migrated online, digital game marketplaces like Steam, the Nintendo Online Store, the Microsoft Store on Xbox, and the PlayStation Store all charge 30 percent on game sales.
