Apple vs Fortnite: Full Exchange Between Rogers and Cook
Have a look at the full argument between Cook and Rogers below:
Judge Rogers: At the starting of your testimony, you unfolded that you wanted to focus on consumers. I’ve watched evidence that a majority of the revenue from in-app purchases comes from gamers. Have you watched evidence to that effect?
Apple CEO Tim Cook: Yes, I have, your honor.
Judge Rogers: And it’s incredibly crucial, compared to all other consumers, revenue is generating from gamers more than any other users. Am I right in my present understanding?
Cook: The significant part of the revenue on the App Store generates from games.
Rogers: And in-app purchases in particular, correct?
Cook: Right.
Rogers: The other thing you told is that you want to give users control.
Cook: Correct. For their data.
Rogers: So, what is the issue with letting users have options? Particularly in a gaming context, to have a cost-effective choice for content?
Cook: I think they have an option today. They have a choice between several different Android versions and models of a smartphone or an iPhone. But the iPhone comprises a set of principles for it, from security and safety to privacy.
Rogers: But if users wanted to buy a cost-effective Battle Pass or V-Bucks? And suppose they don’t know they have that option. So, what is the issue with Apple providing them that option? At least Apple can give them information that they can have another option for making purchases.
Cook: If Apple enabled users to link out this way, we would in essence lost our overall return on our IP.
Rogers: But Apple could also monetize it another way, couldn’t it? I mean the gaming industry looks to be making a disproportionate amount of money relative to the IP that you and everybody else are providing them. I mean, it’s close as if they’re subsidizing everybody else out there.
Cook: Most of the applications on the App Store are free of cost. So, you’re right that there is some kind of subsidy there. But as I see, comprising a huge number of free apps, increases the traffic to the store incredibly. So, the advantage somebody getting is much higher. The benefit wouldn’t be higher if there weren’t any free apps there.
Rogers: So, you’re saying that it’s more of a user base, not an IP, then?
Cook: It’s both, as we require revenue on our IP. We own 150,000 APIs that we make and maintain and several developer tools. Also, the customer service that deals with all transactions.
Rogers: Okay, but let me ask you, so banking apps. I have several banking apps, and I never paid for them. But I suspect other than the $99, you don’t levy on Wells Fargo, correct? Or Bank of America? So, why you’re charging the gamers to subsidize Wells Fargo.
Cook: In the gamers instance, they make transactions on our platform.
Rogers: Users are doing many things on your platform.
Cook: Agree, but this is an online transaction with a notable change in currency.
Rogers: It’s just a preference of a model.
Cook: We have made a choice. There are other options to monetize, but we picked this one. Because we think this choice is the best way.
Rogers: Well, it’s pretty lucrative. But it looks to be profitable and intended on purchases that are being made on an impulse basis. I know, that’s a completely different query, about whether that’s good or not. It’s not suitable for antitrust law, but it appears to be excessive. I got this concept that somehow Apple’s taking the customers to the consumers. But post that first time, after that first conversation, the [developers] are bringing the customer with the games. Apple’s just benefiting from that, it looks to me.
Cook: Well, I see it disparately than you do, Your Honor. I see that we are making the whole amount of money on the App Store. And we’re doing that by centralizing on making the largest audience there. It happens through free apps, so, despite, we don’t ask them for a commission, they bring so much to the table. Then we have a major portion of users that pay around 15 percent. And only the people that are notably profiting significantly are those paying 30 percent.
Rogers: Yes, but the 15 percent, correct, you would agree with the basic proposal that competition is good?
Cook: I think the competition is great and we have competed intensely.
Rogers: Yeah, you don’t have any competition in those in-app purchases, though.
Cook: Sure, if somebody is a gamer, could buy it on the Sony PlayStation. Also, on the Nintendo Switch or the Microsoft Xbox.
Rogers: But only if they know about it, right?
Cook: Correct, but that’s up to the developer to interact.
Rogers: And only if somebody willing to switch in views of how they do things, correct?
Cook: Generally, people have both.
Rogers: The problem with Apple, at least from what I’ve seen thus far: that wasn’t the outcome of the competition. That looked to be an outcome of the pressure. The pressure you’re experiencing from lawsuits, from investigations.
Cook: It was the outcome of feeling like we should do everything from a pandemic (COVID) point of view. Then electing, instead of doing something temporary, of doing something permanent. And yes, we had the lawsuits and everything in the back of our heads. But the thing that prompted us was, we were very hassled about small business.
Rogers: Okay, but it wasn’t a competition, right?
Cook: It was, post we did our 15, it was the competition that compelled Google to put off theirs to 15 percent.
Rogers: I understand probably that when Google dropped its price, but your reaction wasn’t the outcome of the competition.
Cook: It was the outcome of feeling that we should take action for small businesses.
Rogers: So, when some stores dropped their price, Steam also dropped the price, you experienced no pressure to decrease your price.
Cook: I don’t know about Steam and its financial business concept. The thing that’s unnoticed here is that there’s a big competition for developers. It’s not merely competition on the consumer end, it’s from the developer end, in users’ addition. You can figure out if we had any above-market sort of commission, developers wouldn’t work for us.
Rogers: Let’s have a word about developers. I’m watching evidence in a survey on developers. I am going to reveal the results of this graph that was shown to me. I’m not sure how accurate it is, as I looked for the source document but unable to find it. This survey showed that 39% of developers were either strongly dissatisfied or somewhat dissatisfied with Apple’s distribution services. However, 36% were somewhat satisfied or strongly satisfied. And 19% of developers didn’t go either way. So, with 39% of your developers are not satisfied, is that acceptable. Is it fair to assume those figures are true, and you’re working towards addressing their requirements?
Cook: I don’t know which document you’re referencing about, so it’s tough to comment on particular specifics. But weekly, we reject 40% of apps that came for review, so there’s surely some rigidity in the system. But this rigidity is what generates a curated experience for users. And they love and can be assured that it’s trusted and safe. So, at times the developer and the user, their demands don’t intersect.
Rogers: But it doesn’t feel like you experience competition or pressure to change the way you acted to address the developers’ concerns. Again, if these figures are right.
Cook: I would view it in a disparate way. We made the space upside down for developers. View at a complaint that I might receive, and at the required time for a change to be made in the company. It’s amazing, literally.
Rogers: We have looked at many profit and loss statements. I don’t remember any other survey records or business documents showing that you regularly conduct surveys. I’m asking for aggregates. Do you do that?
Cook: I have no idea if we do that. This is something that Phil [Schiller] would know better.
Rogers: You being the CEO don’t get regular reports on that?
Cook: That’s correct.
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At the trial, Apple Vs Fortnite, Cook presented his views in front of Judge Rogers. In this article, you will get a full exchange between Cook and Judge Rogers.
Source :- Apple vs Fortnite: Full Exchange Between Rogers and Cook
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