Apple Epic Trial

Judge in Fortnite case holds Tim Cook's feet to the fire over App Store competition

Judge Yvonne Gonzalez Rogers saved the most pointed questioning of the entire trial for Apple CEO Tim Cook.

Judge in Fortnite case holds Tim Cook's feet to the fire over App Store competition

Gonzalez Rogers expressed deep skepticism of Apple's claims that it operates the App Store the way it does out of the goodness of its heart.

Photo: David Paul Morris/Bloomberg via Getty Images

Judge Yvonne Gonzalez Rogers, who is presiding over the Epic v. Apple antitrust trial, saved her best for last. As Apple CEO Tim Cook prepared to leave the stand on Friday afternoon on the 15th and final day of courtroom testimony, Gonzalez Rogers took nearly 10 minutes — the longest singular line of questioning she's put to a witness in the trial — to grill Cook about both the business model of the App Store and the very nature of its relationship with developers.


The end result was the best hint yet how Gonzalez Rogers is thinking about the Fortnite dispute, which one of Epic's many complaints she finds credible and how she may decide to rule when the trial ends. In particular, the judge seems concerned about the rigidness of the 30% cut and Apple's rules against allowing developers to communicate ways to purchase digital goods off-platform.

Subscribe to our Gaming newsletter for even more on the Epic v. Apple trial — and the latest news and analysis on the business of gaming.

At the beginning of her questioning, she got Cook to admit that gaming, and in particular in-app purchases for mobile games on the iPhone, generate the majority of the App Store's revenue. From there, Gonzalez Rogers forced Cook to answer a series of increasingly uncomfortable questions about whether Apple's conduct with regard to game developers is fair and not in fact anticompetitive.

"What is the problem with allowing users to have choice, especially in a gaming context, to find a cheaper option for content?" she asked Cook, who answered that users have "a choice between many different Android models and an iPhone" if they're looking for choice. "If they wanted to go and get a cheaper Battle Pass or V-Bucks, and they don't know they've got that option, what is the problem with Apple giving them that option?" Apple's App Store guidelines forbid developers of notifying users of alternative payment options, and both sides have argued in court about the limits of Apple's restrictions, though Cook has clarified that developers can ask for a user's email address and market to them over email.

Cook, who seemed taken aback at the line of questioning, said Apple needs to get a return on its intellectual property investment, and that's essentially why the App Store takes 30% and why the model has been so rigid over the years. "The gaming industry seems to be generating a disproportionate amount of money relative to the IP you have given them, and everyone else. In a sense, it's almost as if they're subsidizing everybody else," Gonzalez Rogers said.

Read more: Tim Cook argues only Apple can protect iOS users from themselves

Even Cook's rather deft attempts to deflect didn't seem to work out well for Apple. He said that Apple allows free apps on the iPhone, as well as apps selling physical goods without requiring they pay a commission, because "it increases the traffic on the store dramatically." Gonzalez Rogers said that using that logic, the App Store's design is not about a return on investment so much as it is about controlling access to the iPhone customer base. And with regard to games, "You're charging the gamers to subsidize Wells Fargo."

Cook said the gamers transact on the platform, so the game makers owe Apple the cut. "People do lots of things on your platform," Gonzalez Rogers said, to which Cook replied, "There are clearly other ways to monetize, but we chose this one because we think it's the better way." The judge shot back again: "It's also quite lucrative."

"I understand this notion that somehow Apple's bringing the customers to the users. But after that first time, after that first interaction, the [developers] are keeping the customer with the games. Apple's just profiting off that, it seems to me," Gonzalez Rogers said, nearing the end of her questioning. (At that point, Cook simply said, "I view it differently than you do.") The judge added, "It doesn't seem to me you feel any pressure or competition to actually change the manner in which you act to address the concerns of the developers."

Read more: Apple's Craig Federighi throws Mac security under the bus

The judge also hammered Cook over the App Store commission reduction last year, as part of its new small business program, saying it "seemed to be a result of the pressure that you're feeling from investigations, from lawsuits, not competition," and she also took issue with Cook deflecting by using the game console market. "When other stores reduced their price, Steam reduced their price, you felt no pressure to reduce your price," she countered.

The general takeaway is that Gonzalez Rogers expressed deep skepticism of Apple's claims that it operates the App Store the way it does out of the goodness of its heart. Apple executives have reiterated throughout the trial that they built iOS and the App Store this way out of concern for user security and privacy and for an end-to-end experience. But Gonzalez Rogers says there were also clear financial incentives to do so and that it appears Apple is incapable of responding to any concerns that may threaten the benefits it receives. Her back-and-forth with Cook struck at the heart of the dispute between Apple and Epic Games and what it says about the larger relationship between a platform owner and the developers of its most successful software segment.

Read more: Fortnite made Apple hundreds of millions of dollars

It was also an astonishingly rare moment to see one of the most powerful executives in the country be forced to answer questions without a public relations handler and a well-prepared script, in effect laying bare a fundamental disconnect in how Apple appears to see its business and the reality of its public perception. What happens next could still very well end in Apple's favor, or it could result in a rather minor adjustment to App Store guidelines — perhaps even something more.

Update May 21st, 5:25PM ET: Clarified that Friday, May 21st was the final day of courtroom testimony and the evidentiary portion of the trial. The case will conclude on Monday, May 24th.

Protocol | Workplace

Performance reviews suck. Here's how to fix them.

Slack integrations and keywords and AI, oh my!

Time will tell how smart HR technology has the potential to be, or how smart users want it to be.

Image: Christopher T. Fong/Protocol

Arguably nothing elicits more of a collective groan at work than performance review season. Managers hate giving them. Employees theoretically want them, but dread receiving them. It's as clear how much time and effort they take as it is unclear how useful formal performance reviews actually are in measuring and evaluating performance.

It's an arena ripe for disruption.

Keep Reading Show less
Michelle Ma
Michelle Ma (@himichellema) is a reporter at Protocol, where she writes about management, leadership and workplace issues in tech. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.


Keep Reading Show less
Nasdaq
A technology company reimagining global capital markets and economies.
Protocol | Workplace

This startup will fire unvaxxed workers. Big Tech won’t say the same.

In an industry built for remote work, will companies fire workers who refuse to get vaccinated?

Several big tech companies stopped short of saying whether they would fire workers for not getting vaccinated.

Illustration: simplehappyart via Getty Images

As employers wait for the Department of Labor to issue a new rule requiring employee vaccine mandates, a big question looms: Will companies fire workers who don't comply?

Many of the tech giants won't say. A couple of companies have confirmed that they won't: Both Hewlett Packard Enterprise and Pure Storage said vaccination is not a condition of employment, though it's required to come to the office.

Keep Reading Show less
Allison Levitsky
Allison Levitsky is a reporter at Protocol covering workplace issues in tech. She previously covered big tech companies and the tech workforce for the Silicon Valley Business Journal. Allison grew up in the Bay Area and graduated from UC Berkeley.

With Andrew Bosworth, Facebook just appointed a metaverse CTO

The AR/VR executive isn't just putting a focus on Facebook's hardware efforts, but on a future without the big blue app.

Andrew Bosworth has led Facebook's hardware efforts. As the company's CTO, he's expected to put a major focus on the metaverse.

Photo: Christian Charisius/Getty Images

Facebook is getting ready for the metaverse: The company's decision to replace outgoing CTO Mike "Schrep" Schroepfer with hardware SVP Andrew "Boz" Bosworth is not only a signal that the company is committed to AR and VR for years to come; it also shows that Facebook execs see the metaverse as a foundational technology, with the potential to eventually replace current cash cows like the company's core "big blue" Facebook app.

Bosworth has been with Facebook since 2006 and is among Mark Zuckerberg's closest allies, but he's arguably gotten the most attention for leading the company's AR/VR and consumer hardware efforts.

Keep Reading Show less
Janko Roettgers

Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

Protocol | Fintech

Here’s everything going wrong at Binance

Binance trades far more crypto than rivals like Coinbase and FTX. Its regulatory challenges and legal issues in the U.S., EU and China loom just as large.

Binance CEO Changpeng Zhao is overseeing a global crypto empire with global problems.

Photo: Akio Kon/Bloomberg via Getty Images

Binance, the largest global crypto exchange, has been hit by a raft of regulatory challenges worldwide that only seem to increase.

It's the biggest example of what worries regulators in crypto: unfettered investor access to a range of digital tokens finance officials have never heard of, without the traditional investor protections of regulated markets.

Keep Reading Show less
Tomio Geron

Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. Before that, he worked as a staff writer at Forbes, covering social media and venture capital, and also edited the Midas List of top tech investors. He has also worked at newspapers covering crime, courts, health and other topics. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.

Latest Stories