Apple CEO Tim Cook will defend Apple’s App Store policies, and identify Google and Huawei as “fierce” rivals to the iPhone in his antitrust congressional testimony on late Wednesday. In particular, he’ll submit that the 30% commission that Apple charges from developers on in-app purchases — which has been heavily criticised — is “comparable” to some of its competitors, according to a prepared testimony.
Cook won’t be alone at the congressional hearing, as CEOs of the other three Big Tech companies: Amazon’s Jeff Bezos, Facebook’s Mark Zuckerberg, and Google’s Sundar Pichai will join him in testifying in front of the House Judiciary Committee’s antitrust panel.
Highlights from Cook’s prepared testimony
App Store policies aren’t anti-competitive: “Apple’s commissions are comparable to or lower than commissions charged by the majority of our competitors. And they are vastly lower than the 50 to 70 percent that software developers paid to distribute their work before we launched the App Store,” Cook will say, according to a prepared testimony.
He says that for the “vast majority” of apps on the App Store, developers keep 100% of the money they make. “The only apps that are subject to a commission are those where the developer acquires a customer on an Apple device and where the features or services would be experienced and consumed on an Apple device,” Cook will say. However, he doesn’t specify why Apple doesn’t allow apps to redirect users to an external source to purchase subscriptions etc. (more on that below)
When the EU had initiated an antitrust probe in Apple over allegedly anti-competitive practices, it had said that “we can’t let Apple be the gatekeeper”. In his prepared testimony, Cook says: “After beginning with 500 apps, today the App Store hosts more than 1.7 million—only 60 of which are Apple software. Clearly, if Apple is a gatekeeper, what we have done is open the gate wider. We want to get every app we can on the Store, not keep them off”.
Google, Huawei are ‘fierce’ competitors: “As much as we believe the iPhone provides the best user experience, we know it is far from the only choice available to consumers,” Cook says in his testimony. “The smartphone market is fiercely competitive, and companies like Samsung, LG, Huawei and Google have built very successful smartphone businesses offering different approaches,” he adds.
‘The App Store creates jobs’: More than 1.9 million American jobs in all 50 states are attributable to the App Store ecosystem — from Fortune 500 companies that got their start on the iPhone, to small independent developers and students bringing the next big idea to life. Amazon’s Jeff Bezos also had a similar “job creator” argument in his prepared remarks.
What’s missing from Cook’s testimony
Cook doesn’t explain why some of App Store’s policies don’t apply equally to all developers. First, Apple has been allowing big developers like Amazon and Netflix to onboard customers outside of the iOS app, however, Apple was at odds, for a very long time, with subscription email service Hey, which was doing something very similar. Hey was allowing users buy a subscription on a website to not share 30% of its revenue from subscriptions from Apple.
His testimony also doesn’t explain why developers can’t indicate customers on the app, or redirect them to their websites to purchase an additional service. (Open Spotify’s app on iOS and Android, and try purchasing a Premium subscription on the apps. Unlike on Android, neither can you buy it on the iOS app, nor does the app link a website to an external source).
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