Tim Cook Takes The Stand To Defend Apple Against Monopoly Accusations

Tim Cook Takes The Stand To Defend Apple Against Monopoly Accusations

As tech regulators in Europe and the US work to challenge the monopolistic market power of American tech giants like Apple, Google, Facebook and Amazon, a key moment in one of the most closely watched corporate court battles in recent memory is about to arrive: Apple is summoning CEO Tim Cook to take the stand Friday to defend the company from accusations of price gouging levied by Epic Games.

Epic Games sued Apple after it barred Fortnite, its hit game, from the app store after the company introduced a payment workaround to avoid what it claimed were Apple’s onerous commissions. For the past two weeks, a judge has been hearing arguments from both sides. But Cook is expected to lay out the company’s most comprehensive defense against a rival’s allegations that it has grown into an illegal monopoly, the AP said.

Epic’s ultimate aim is to toppled the “walled garden” for iPhone and Pad apps that allows users and developers to lock out the competition. The App store, which was first introduced one year after the iPhone’s 2007 launch, helped power the company to a $57 billion profit in the last fiscal year. The store charges commissions of between 15% and 30% on in-app transactions. Apple says it has invested more than $100 billion into its app store, and that these fees are essential to pay for security and upkeep.

Since beginning with just 500 apps in 2008 the store has ballooned to 1.8 million apps, most of which are free. Apple has drawn upon its commissions and exclusive in-app payment system to help more than double the annual revenue of its services division from $24 billion in fiscal 2016 to $54 billion last year.

Lawyers for Epic are expected to grill Cook about the company’s corporate strategy surrounding the app store. Apple is hoping that Cook, who didn’t end up testifying during the company’s earlier court battles with Samsung and Qualcomm, will persuade the judge that Apple’s policies are designed to benefit developers and customers. Epic, on the other hand, has argued that Apple’s commissions exploit the developers who have made the app store so successful.

Unlike his other public appearances, Cook won’t be speaking to a group: he will only have to convince a single judge. Legal experts say this setup could help Apple’s case:

“The ‘David versus Goliath’ narrative — where Epic is the ‘good guy’ and Apple is the ‘bad guy’ – is something that I imagine would normally play better with a jury than a sophisticated judge,” said David Kesselman, a Los Angeles-based antitrust litigator and partner at Kesselman Brantly Stockinger, who’s not involved in the case. — he will only have to convince the single judge overseeing the case.

It won’t be immediately clear how much of an impact Cook makes at the trial because the judge may take weeks or months to write a decision, so investors can relax going into the weekend, Bloomberg reports.

But there is another wrinkle that’s also intriguing: earlier this week, Apple accused Epic of essentially being a stalking horse for corporate rival Microsoft in a filing asking the court to ignore testimony from Xbox executive Lori Wright. Apple asked for such a ruling earlier, but upped its accusations in the new filing. “A reasonable observer might wonder whether Epic is serving as a stalking horse for Microsoft,” Apple said. “Microsoft shielded itself from meaningful discovery in this litigation by not appearing as a party or sending a corporate representative to testify.”

Cook is expected to take the stand at around 1130ET.

Tyler Durden
Fri, 05/21/2021 – 10:21

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