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Apple’s preferential treatment in App Store, coercive practices: 8 key takeaways from Cook’s deposition before the antitrust subcommittee

Tim Cook

Apple’s App Store policies are such that at one point even Facebook’s CFO Sheryl Sandberg thought that Apple could lock out Facebook’s apps, the Big Tech CEOs’ hearing before the House subcommittee on antitrust on July 29 (available to watch here) revealed. Questions to Apple CEO Tim Cook largely focussed on the company’s App Store policies.

“I am concerned that Apple’s policies are also picking winners and losers in the app economy, and that Apple rules mean Apple apps always win.” — Representative Val Demings (D-FL)

1. Apple gives preferential treatment to certain app developers:

  • Referring to an email from Cook, dated August 6, 2014, Representative Henry C. Johnson (D-GA) said that Apple had assigned two key contacts for Baidu that would help Baidu “manage through Apple” — one person in Apple Beijing office and other at Apple’s headquarters in Cupertino. Cook claimed ignorance about it.
  • Johnson also pointed out that Apple offered a a reduced rate of commission to Amazon Prime, citing a Verge article.

Apple commission policy:
Amidst numerous questions about the App Store’s commission policy, Cook said that for 84% of the apps, there is no commission. For the remaining 16%, developers are charged 30% of their collections in the first year and 15% second year onwards.

2. Apple permits itself to copy third party apps and has access to confidential information about the apps: Representative Joe Neguse (D-CO), who is also the vice-chair of the subcommittee on antritrust, pointed out that the guidelines for developers forbid them from copying other apps, but the Apple Developer Agreement (Section 11), that every developer must agree to, gives Apple the right to copy other apps since it allows the company to use any information that an app developer providers to it for any purpose.

  • Neguse cited the case of Tile, that said that Apple had access to confidential information about the apps distributed by the App Store. Cook claimed a moral high ground and said that “we would never steal someone’s IP”. Neguse said that this was a problem across both Apple and Google.

3. Apple targeted competing parental control apps that used mobile device management (MDM): Representative Lucy McBath (D-GA) pointed out that after Apple introduced Screen Time in 2018, Apple removed apps like OurPact and KidsLox that helped parents control their kids’ screen time. Cook argued that it was done to preserve the privacy and security of kids because the technology used at the time, mobile device management (MDM, could allow a third party to see a kid’s screen). But McBath pointed out that these apps were allowed back in the store six months after Screen Time was launched without requiring any significant privacy changes. Apple’s Phillip Schiller, the senior vice president of marketing, promoted Screen Time to disgruntled parents. Demings pointed out that while parental control apps were removed due to MDM, Saudi government’s Absher was not.

4. Apple retaliates against developers who publicly complain against Apple: Johnson asked Cook if Apple had ever retaliated against a developer who went public with their frustrations about the App Store. Cook said that retaliating and bullying were against Apple’s culture.

5. Apple uses data collected via Apple Payment Processes to create competing apps: Johnson asked Cook if Apple uses data collected via its Apple Payment Process to build competing apps but Cook did not respond to the question.

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6. Apple coerced Random House to join its own iBookstore: McBath pointed out that in 2010, Apple did not permit Random House to introduce its own app to sell ebooks. This was done to bring Random House within the fold of Apple’s own iBookstore.

7. Apple has changed its interpretation of its own rules: Citing the case of Hey, the subscription email app, Chairperson of the Judiciary Committee Representative Jerrold Nadler (D-NY) said that the COO of Basecamp, its developer, testified before the subcommittee that Apple threatened to remove Hey from the App Store if they didn’t change their model. As per Nadler, Apple didn’t use to interpret its own rules this way earlier. Cook did not address this specific concern and instead said that Hey is now in the App Store and a version of their product is free, for which they pay Apple nothing.

8. Apple may have engaged in ‘pandemic profiteering’, doesn’t clarify if commission would be sought from educational apps as well: Nadler said that businesses had reached out to his office, saying that Apple was canvassing the App Store to identify sources of commissions now that businesses have moved online due to COVID-19. Cook revealed that there are two such cases where the developers would need to go through Apple’s commission model and that Apple was working with the developers. He, however, did not specify how Apple identified such apps/developers.

  • In response to Nadler’s question about whether Apple would charge parents and students for attending school online a commission, Cook grandstanded about Apple’s contributions in the fight against COVID-19 but did not specifically answer the question.

Cook on China, using slave labour, and social media

Does China steal American technology? In response to Representative Gregory Steube’s (R-FL) question on whether the Chinese government steals technology from US companies, Cook seemingly evaded the question by saying that he had no first-hand knowledge of any such theft.

Slave labour: In response to Representative Ken Buck’s (R-CO) question that none of the platforms would tolerate slave labour “in manufacturing your products or in products that are sold on your platforms”, Cook said that forced labour is “abhorrent” and would not be tolerated at Apple. He further said that the company would “terminate a supplier relationship if it were found”.  Interesting position for Cook to take given its supplier Foxconn’s chequered history with labour rights, including a series of deaths by suicide at some of Foxconn’s manufacturing plants, and reports of forced labour by Uighur Muslims.

‘Cancel culture’: In response to Representative Jim Jordan’s (R-OH) question whether “cancel culture mob” was “dangerous”, Cook claimed ignorance (“I am not all the way up to speed on that”) but said that it was not good to not have different points of view.

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