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 | Fintech

How European fintech startup N26 is preparing for U.S. regulations

"There's a lot more scrutiny being placed on fintech. We are definitely mindful of it."

In an interview with Protocol, Stephanie Balint, N26's U.S. general manager, discussed the company's approach to regulations in the U.S.

Photo: N26

N26's monster $900 million funding round announced Monday underlined the German startup's momentum in the digital banking market.

Stephanie Balint, N26's U.S. general manager, said the funding will be used for expansion and also to improve "our core offering to make this the most reliable bank that our customers can trust," she told Protocol.

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Signal at (510)731-8429.

The way we work has fundamentally changed. COVID-19 upended business dealings and office work processes, putting into hyperdrive a move towards digital collaboration platforms that allow teams to streamline processes and communicate from anywhere. According to the International Data Corporation, the revenue for worldwide collaboration applications increased 32.9 percent from 2019 to 2020, reaching $22.6 billion; it's expected to become a $50.7 billion industry by 2025.

"While consumers and early adopter businesses had widely embraced collaborative applications prior to the pandemic, the market saw five years' worth of new users in the first six months of 2020," said Wayne Kurtzman, research director of social and collaboration at IDC. "This has cemented collaboration, at least to some extent, for every business, large and small."

Keep Reading Show less
Kate Silver

Kate Silver is an award-winning reporter and editor with 15-plus years of journalism experience. Based in Chicago, she specializes in feature and business reporting. Kate's reporting has appeared in the Washington Post, The Chicago Tribune, The Atlantic's CityLab, Atlas Obscura, The Telegraph and many other outlets.

Apple’s new MacBooks are the future — and the past

After years of reinventing the wheel, Apple's back to just building really good ones.

Apple brought back the ports.

Photo: Apple

The 2015 Pro was, by most accounts, one of the best laptops Apple ever made. It was fast and functional, and it had a great screen, a MagSafe charger, plenty of ports, a great keyboard and solid battery life. If you walked around practically any office in Silicon Valley, you'd see Pros everywhere.

Many of those users have been holding on to their increasingly old and dusty 2015 Pros, too, because right about when that computer came out was when Apple seemed to lose its way in the laptop market. It released the 12-inch MacBook, an incredibly thin and light computer that made a bunch of changes — a new keyboard and trackpad design chief among them — that eventually made their way around the rest of the MacBook lineup. Then came the Touch Bar, Apple's attempt to build an entirely new user interface into a laptop.

Keep Reading Show less
David Pierce

David Pierce ( @pierce) is Protocol's editorial director. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Protocol spoke to founders and tech execs who've embraced async and have tips on how to get started.

Image: Christopher T. Fong/Protocol

Imagine a company where there are no meetings — just time for deep, focused work punctuated by short conversations on Slack and project updates on Trello.

Now imagine a company where the no-meeting ethos is so ingrained that it's possible to work there for 10 years without ever speaking face-to-face with a single coworker, and for your boss to not even recognize the sound of your voice.

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.
Protocol | Workplace

#AppleToo activist says Apple fired her for deleting apps from her devices

Janneke Parrish says she was dismissed after deleting Robinhood, Pokemon Go and Google Drive from her work devices during an investigation inside the company.

The Apple Too movement is trying to organize Apple workers into a collective movement.
Photo: Bloomberg via Getty

Unlike most other companies, Apple asks that its employees use their work phones like personal ones — and for five years, Apple program manager Janneke Parrish did as she was told. But last week, when Apple asked Parrish for her devices in an internal investigation, she was afraid Apple would see her personal and private information. She disobeyed orders and deleted apps like Robinhood, Pokemon Go and Google Drive. Then Apple fired her.

Keep Reading Show less
Anna Kramer

Anna Kramer is a reporter at Protocol (Twitter: @ anna_c_kramer, email: akramer@protocol.com), where she writes about labor and workplace issues. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

Latest Stories