A few weeks after the Federal Court of Appeal stated that Apple would have to release its grip in the app store, Tim Cook, the CEO of the company, and its best lieutenants debated what to do.
For more than ten years, Apple has requested applications to use app payments and gather 30 % commission for sale of applications. Now, in 2023, the courts have ordered Apple payments to avoid applications and go online to online consumers. Mr. Cook wanted to know: Could Apple still charge a commission for these sales without violating the court order?
Phil Schiller, who supervised the app store, feared that new fees could be illegal. He preferred online sales without the Apple Commission. Luca Maestri, who supervised the finances of the company, disagreed. He preferred to billing commissions of 27 percent for online sales because it would protect the company’s business.
Mr. Cook stood with Mr. Maesti and Apple decided to justify this choice. He “created” an independent economic study that legitimizes its decision, the federal judge said in an angry decision last week. He detained thousands of documents according to claims to the privilege of the legal representative. And at least one of her executives lied at the witness stand.
The judge’s decision, as well as the testimony of this year and the company’s documents published on Thursday, shows the extraordinary measures that Apple has taken to maintain every Penny he collected in the app store. The decision of Judge Yvonne Gonzalez Rogers, who heard an initial action filed with an epic video game in 2020, could cast a shadow over the Apple store for years, weakening its credibility as a legal control of its operations.
The company is also trying to reflect half a dozen other legal challenges, including the Antimonopoly Court of the Ministry of Justice, which accuses it of maintaining the monopoly of the iPhone, Classroom From developers of applications in the United States and anti -competitive investigation of its trade with the European Union, Britain, Spain and potentially China.
“If you burn your credibility with the courts, another judge will be much less willing to forgive,” said Mark A. Lemley, Professor of Stanford University of Antimonopoly and Technology. In future cases, Apple said, “It will be easier for the judges to jump to the conclusion that people are lying.”
Google has shown that the company’s actions can throw a shadow over legal management with a high share. Last month, in the opposite case of its advertising technology, the judge stated that the company’s efforts to cover its communication raised questions about whether to follow corrective measures for its behavior.
Apple is an appealing to Judge Gonzalez Rogers, who held the company in civil contempt. When applying for a delay of the court order to release its grip in the app store on Wednesday, he said that it would show that the contempt for findings was “unfounded”. The company refused to comment on this article.
Epic, Fortnite developer, sued Apple in 2020 and accused him of violating antitrust laws by force developers to use their App Store payment system. Judge Gonzalez Rogers ruled mainly in favor of Apple and found that it was not a monopoly, as Epic claimed. However, she said Apple had violated the California law law and ordered companies to enable applications to include links and buttons to purchase software and services outside the app store.
Apple created a working group named for Wisconsin code to respond to order. He considered two different solutions. The first would allow applications to include links for online purchases at limited places without commission. The second would allow applications to offer these links where they wanted, but forced them to pay 27 % of the commission for sale.
With the links and without Apple’s commission, he estimated that he could lose hundreds of millions of dollars, even more than $ 1 billion. With 27 % of the commission it would lose almost nothing.
Mr. Cook met the team in June 2023. He checked a number of commission options, from 20 to 27 percent. He also evaluated an analysis that shows that few developers would leave Apple’s payment system for its own, if there were 27 % of the commission, they show court records. Finally, he chose this rate and at the same time approved the plan to limit where the applications put links for online purchases.
Then Apple hired an economic consultant, analytical groups to write a message that Apple could use to justify his fees. The report concluded that Apple developers and distribution tools are worth more than 30 percent of the application’s revenue.
Apple has also created screens that discourage online purchases by looking frightening and “dangerous”, showing court documents. Mr. Cook considered and asked the team to revise the warnings to emphasize Apple’s privacy and security. Rather than “you will no longer trade in Apple,” the company said, “Apple is not responsible for the privacy or security of purchases made on the web.”
When Apple revealed its 27 % commission in January 2024, Epic filed in court that Apple had not adhered to the judge’s order. Judge Gonzalez Rogers brought Apple and Epic back to court. Alex Roman, the Vice President of Finance, testified that Apple made his final decision on his commission on January 16, 2024. The executives also testified that the report of the analytical group helped them to determine the commission rate.
Judge Gonzalez Rogers asked if Apple was telling the truth and asked the company to provide documents about its plans. He created 89,000 documents, but claimed that a third of them were confidential. The court stated that these claims were “unfounded” and forced Apple to overturn more than half of the documents.
The documents explained that Mr. Roman lied under the oath that the report on the analytical group was “false” and that Apple “deliberately” ignored the court order, said Judge Gonzalez Rogers. She called it “covers”.
Its decision will provide prosecutors, regulatory bodies and judges with ammunition against Apple’s defense strategies at half a dozen similar cases around the world, several professors and lawyers of anti -monoporal and technical law said.
When the company tries to edit or detain documents, prosecutors and judges can point out how these strategies were “tactics for delay” in the case of epic games, these experts said. When Apple’s managers testify, prosecutors and judges could question their credibility because it was found that society “hides the truth” and “direct lies”.
In the case of an antitrust case of the Ministry of Justice and others against Apple, Colin Kass, an antitrust lawyer in Proskauer Rose, the courts and regulators seeking Apple documents “start the process:” Open the door, and do not dare try the stupid small games in the past. “
Society will face more skepticism about defense, also in the court proceedings of the Ministry of Justice, said Rebecca Haw Allensworth, Professor of the Rights to Vanderbilt University, who studies antitrust. In the past, Apple said it shows green bubbles for Android’s messages, because communication across smartphone systems is less safe. However, she said these statements could be considered less trustworthy after an epic decision.
Mrs. Allensworth said that the judge’s view could also solidify the determination of the European Union, Britain, Spain and others who pushed Apple to change their practices in the app store because regulatory bodies and courts often find security in numbers.
“Apple behaved as if it were above the law,” she said. “It sends an Apple signal.”
