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.

Policy

How I decided to go all-in on a federal contract — before assignment

Amanda Renteria knew Code for America could help facilitate access to expanded child tax credits. She also knew there was no guarantee her proof of concept would convince others — but tried anyway.

Code for America CEO Amanda Renteria explained how it's helped people claim the Child Tax Credit.

Photo: Code for America

Click banner image for more How I decided series

After the American Rescue Plan Act passed in March 2021, the U.S. government expanded child tax credits to provide relief for American families during the pandemic. The legislation allowed some families to nearly double their tax benefits per child, which was especially critical for low-income families, who disproportionately bore the financial brunt of the pandemic.

Keep Reading Show less
Hirsh Chitkara

Hirsh Chitkara ( @HirshChitkara) is a reporter at Protocol focused on the intersection of politics, technology and society. Before joining Protocol, he helped write a daily newsletter at Insider that covered all things Big Tech. He's based in New York and can be reached at hchitkara@protocol.com.

Sponsored Content

Great products are built on strong patents

Experts say robust intellectual property protection is essential to ensure the long-term R&D required to innovate and maintain America's technology leadership.

Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.

From 5G to artificial intelligence, IP protection offers a powerful incentive for researchers to create ground-breaking products, and governmental leaders say its protection is an essential part of maintaining US technology leadership. To quote Secretary of Commerce Gina Raimondo: "intellectual property protection is vital for American innovation and entrepreneurship.”

Keep Reading Show less
James Daly
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.
Climate

This carbon capture startup wants to clean up the worst polluters

The founder and CEO of point-source carbon capture company Carbon Clean discusses what the startup has learned, the future of carbon capture technology, as well as the role of companies like his in battling the climate crisis.

Carbon Clean CEO Aniruddha Sharma told Protocol that fossil fuels are necessary, at least in the near term, to lift the living standards of those who don’t have access to cars and electricity.

Photo: Carbon Clean

Carbon capture and storage has taken on increasing importance as companies with stubborn emissions look for new ways to meet their net zero goals. For hard-to-abate industries like cement and steel production, it’s one of the few options that exist to help them get there.

Yet it’s proven incredibly challenging to scale the technology, which captures carbon pollution at the source. U.K.-based company Carbon Clean is leading the charge to bring down costs. This year, it raised a $150 million series C round, which the startup said is the largest-ever funding round for a point-source carbon capture company.

Keep Reading Show less
Michelle Ma

Michelle Ma (@himichellema) is a reporter at Protocol covering climate. 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.

Workplace

Why companies cut staff after raising millions

Are tech firms blowing millions in funding just weeks after getting it? Experts say it's more complicated than that.

Bolt, Trade Republic, HomeLight, and Stord all drew attention from funding announcements that happened just weeks or days before layoffs.

Photo: Pulp Photography/Getty Images

Fintech startup Bolt was one of the first tech companies to slash jobs, cutting 250 employees, or a third of its staff, in May. For some workers, the pain of layoffs was a shock not only because they were the first, but also because the cuts came just four months after Bolt had announced a $355 million series E funding round and achieved a peak valuation of $11 billion.

“Bolt employees were blind sided because the CEO was saying just weeks ago how everything is fine,” an anonymous user wrote on the message board Blind. “It has been an extremely rough day for 1/3 of Bolt employees,” another user posted. “Sadly, I was one of them who was let go after getting a pay-raise just a couple of weeks ago.”

Keep Reading Show less
Nat Rubio-Licht

Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.

Climate

The fight to define the carbon offset market's future

The world’s largest carbon offset issuer is fighting a voluntary effort to standardize the industry. And the fate of the climate could hang in the balance.

It has become increasingly clear that scaling the credit market will first require clear standards and transparency.

Kevin Frayer/Getty Images

There’s a major fight brewing over what kind of standards will govern the carbon offset market.

A group of independent experts looking to clean up the market’s checkered record and the biggest carbon credit issuer on the voluntary market is trying to influence efforts to define what counts as a quality credit. The outcome could make or break an industry increasingly central to tech companies meeting their net zero goals.

Keep Reading Show less
Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).

Latest Stories
Bulletins