Testimony on External Purchase Fee and Scare Screens
Apple Fellow Phil Schiller testified in court on Monday that he initially opposed the 27% commission Apple now charges on purchases made outside the App Store, citing compliance risks and potential developer backlash (via AP News).
Schiller, who oversees the App Store, said he had concerns that the fee would create an “antagonistic relationship” between Apple and developers, and worried about Apple becoming “some kind of collection agency” that might need to audit developers who didn’t pay.
[…]
The current hearings are scheduled to continue until Wednesday, and are focused on determining whether Apple has violated the original court order. Judge Gonzalez Rogers has expressed frustration with Apple witnesses’ hazy recollections about how they developed rules for the alternative payment system.
According to court documents, Apple extensively analyzed how the “less seamless experience” of external purchases would affect transaction completion rates, which helped the company work out when developers would likely return to using Apple’s in-app purchase system.
Long-time Apple executive Phil Schiller admitted in court that the 27 percent fee Apple imposed likely violated a court order in Epic v. Apple. In effect, he simply confirmed what everyone already knows about Apple’s bad faith compliance with antitrust rulings around the globe: It is doing as little as possible to meet the letter of the law to forestall actual compliance for as long as possible.
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Schiller said he opposed the fee initially, and that multiple Apple executives, including CEO Tim Cook, were involved in the process of determining the fee structure for web-based fees. He also admitted that the fee structure it came up with was “antagonistic,” though he did sign off on it.
The Judge was already unimpressed by Apple’s behavior before this week. “All this does is maintain the non-competitive environment that exists,” she told Schiller last year. Since then, the only thing that’s changed is that Apple hasn’t complied with the court order for a longer period of time. What’s left is for Judge Gonzalez-Rogers to hold Apple in contempt of the court and order it to make more meaningful changes that address her original ruling. From four years ago.
Schiller has been a particularly bad witness for Apple, as he’s claimed to forget almost anything related to Epic Games each time he’s testified. But Epic’s lawyers are using evidence to “refresh” his memory during this week’s hearings.
And it wasn’t explicitly said, but the testimony had the vibe that Phil didn’t want to do any of this - not even charging the commission - but was overruled by the “revenue committee” (CEO Tim Cook and then-CFO Luca Maestri).
He wasn’t sure it would even be legal, and this lines up with the previous reporting that Schiller wanted to cap the App Store profits at $1 billion per year, in the interest of ecosystem health. Obviously, the buck stops at Tim Cook.
Exhibit 225 shows that Apple CEO Tim Cook PERSONALLY directed the App Store team to add misleading security warnings to undermine developers and users transacting directly. This is one of the critical points in the Contempt of Court proceeding.
Perhaps he will testify, too, and tell the court that Apple has to deal with the same fees and warnings as developers.
Now we’re in court reading Apple’s internal emails on making the third-party payment scare screens as scary and intimidating as possible. “It raises questions and hesitancy, ha ha!”, one writes of the latest scare screen.
Now this witness, a UX designer, is on the stand being examined by a friendly Apple lawyer, redefining the English word “scare” as some sort of benign benevolent gesture. 🙄
Previously:
- 2024 Six Colors Apple Report Card
- App Store Profit Margin
- Epic Challenges External Link Rules and Commission
- DMA Compliance: Custom External Link Designs
- StoreKit Purchase Link Entitlement for United States
- Epic Anti-Steering Stay and Supreme Court Petition
- App Store External Purchase Fee: 27%
- Tim Cook’s App Store Testimony
Update (2025-02-28): Josh Sisco (via Tim Sweeney):
Carson Oliver, who oversees the App Store, said he and other executives weighed the judge’s directive to provide “competitive pressure” on pricing against revenue considerations before they introduced “link outs” that allow app developers to collect payments outside the store.
While charging no commission at all “would be an extremely attractive option” for developers, Oliver said, some of his colleagues didn’t want to forgo compensation completely, including then-Chief Financial Officer Luca Maestri.
There was also an internal debate about how much to charge. Oliver said setting the fee at 20% for outside payments would make it hard to justify preserving the store’s standard 30% on most payments made in apps.
Bombshell from Schiller testimony: If just 5% of in-app purchases from top 200 apps shifted to web payments, 🍏 would lose “hundreds of millions of dollars” - and this was their “most conservative” estimate.
Even more telling: This 5% shift scenario was the FLOOR in Apple’s internal analysis. Other scenarios showed potential losses in the billions. But apparently they never analyzed what their IP is actually worth…
The smoking gun: “Option 3” - allowing links without commission - was extensively modeled by the team, showing exactly how much 🍏 stood to lose.
Yet mysteriously, before presentation, “Option 3" disappeared. Schiller claims neither he nor Cook ever saw it, despite financial teams doing detailed analysis.
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The fish really does rot from the head down... Time to give DEI Timmy the boot. Maybe then Apple could concentrate again on excelling in combining art and engineering? Extracting more money and building more rainbow arches is not the recipe for delighted customers or devs.
Tim Cook is a strong advocate for DEI throughout Apple, hence the solid rainbow in their spaceship's garden.
It would not be surprising if Apple feels entitled to take what is not theirs, if they do not believe that competence is rare and needs to be encouraged. DEI, when it is about viewing jobs as rewards for "good behavior", or ensuring the right "representation of groups", is also not about cherishing competence, but about considering other things ("social justice") as more important.
I would like Apple to concentrate on excellence and merit. As such, I'd like it not to rely on its market power to compete unfairly, thereby raking in the dollars, keeping the short sighted shareholders happy, but destroying potential. There's a reason nothing impressive has been developed for at least a decade now.
LOL. Ah, yes. People with long enough memories will remember that old Billy G also used the "I do not recall" defence to comical excess during the US-v-MS case. These psychopaths really think they're *it*, don't they?
And it's sad, but entirely unsurprising, to find that Apple do indeed use "dark patterns" to scare people. Isn't it gratifying to find that your conspiracy theories are actually correct, even occasionally?
Confirms my belief that a lot of alerts are deliberately worded to scare users into the App Store or otherwise away from becoming Power Users (Apple security theater, etc.).
"What does DEI have to do with Tim Apple?"
Nothing. It's DEI Derangement Syndrome.
"is also not about cherishing competence, but about considering other things"
The goal of DEI in hiring is to make the hiring pipeline less discriminatory, not to lower standards.
Correlating corporate greed with DEI is such a peculiar thing to do.
@Plume: "The goal of DEI in hiring is to make the hiring pipeline less discriminatory, not to lower standards"
Not true. That's the Motte.
Some companies do implement it that way, and perhaps that's all you have experienced. I have had to go through a class explaining to me that all human beings equally deserve to be treated respectfully. Perhaps some people need to be told that, but I found it degradingly stupid.
On the other hand, another employer required books that proselytize to be read. The ones I remember were "White Fragility" and "Courageous Conversations". They were unreadable because they were completely illogical, but one couldn't point that out. It also has quotas for the number of people hired with different, in my view superficial, characteristics... what I consider racism. This is not about the "I care not for the color of your skin, only for the character of your soul" that I consider to be the gold standard.
Since it is mathematically impossible to sort along 2 dimensions, if one truly cares about competence, there is no need for the second dimension: discrimination against someone who is better qualified is the problem, whatever the reason. If it were simply "we want the best person for the job", there would be no quotas, or celebration that we employed another such-and-such person.
I have explained why I believe there is a correlation: a cargo cult view of the world, where merit doesn't matter, only getting into a good position where you get the goodies. While we do that, China is actually building new things, the way we used to do when we still believed in competence.
Surely you all can find somewhere else to argue about DEI. I don’t see what it has to do with the App Store testimony.
So weird that Phil couldn't remember so many important points. I thought the reason Apple execs didn't take notes was because they had to "be smart enough to remember" things?
DEI includes 'age', which certainly makes sense in tech. Someone should design a special flag for old people.
@Michael Tsai
Apologies for posting on this topic. I actually agree 100% this is the most ridiculous place to engage in the culture war.
