CEO Faces Scrutiny Over Claims of Monopoly as App Store’s Profits Surge Beyond Original Expectations
Apple CEO Tim Cook is set to take the stand on Friday as part of an antitrust lawsuit brought by Epic Games, the developer of the popular video game Fortnite. The case challenges whether Apple’s iPhone app store has developed into an illegal monopoly, with profits far exceeding the initial vision of former CEO Steve Jobs when the store launched 13 years ago.
Epic Games argues that Apple’s so-called “walled garden” limits competition by enforcing a commission structure that takes 15% to 30% from in-app transactions while preventing developers from directing users to alternative payment options. The App Store has become a vital revenue stream for Apple, contributing to the company’s impressive $57 billion profit in the last fiscal year.
In defense of its practices, Apple claims that the commissions support ongoing innovations and security enhancements that benefit both app developers and users. The company has invested over $100 billion into these features, and it contends that its fee structure is comparable to that of major gaming consoles, including Sony’s PlayStation and Microsoft’s Xbox, as well as Google’s app store for Android devices.
Cook’s testimony is anticipated to delve into strategies he has implemented since taking over as CEO nearly a decade ago, shortly before Jobs’ passing in 2011. The App Store has flourished under Cook’s leadership, expanding from 500 apps at its inception to 1.8 million today, significantly boosting Apple’s services revenue from $24 billion in fiscal 2016 to $54 billion last year.
Epic’s legal team is expected to rigorously question Cook, citing Jobs’ early remarks that the App Store wouldn’t be particularly lucrative as evidence that Apple adjusted its approach to maximize profits amid the growing popularity of mobile applications. The ongoing scrutiny of Apple’s control over the App Store has also drawn the attention of regulators and lawmakers in both Europe and the U.S.
