Written by Michael LiedtkeOAKLAND: A federal judge on Wednesday will consider whether Apple has set up frustrating hurdles to prevent consumers from using alternative payment options in its iPhone apps, despite a court order requiring consumers to pay for digital services with more options. I questioned it.
The verbal spat between Judge Yvonne Gonzalez Rogers and Apple's app store chief goes against an injunction aimed at forcing Apple to promote more options that could lead to lower prices. has begun hearings focused on whether it is still steering U.S. consumers to its once-exclusive app payment system. price.
Continued below
Under Gonzalez-Rogers' order, Apple requires app developers to allow links to other options other than its own payment system in the United States. Apple makes billions of dollars a year with its setup, the most popular iPhone app, and charges fees ranging from 15% to 30% for digital transactions completed within its system.
Apple's app store and its fee system are also the subject of a separate antitrust lawsuit recently filed by the U.S. Department of Justice, alleging that the iPhone stifles competition and innovation in a variety of ways. It is claimed that there is.
Gonzalez-Rogers sounded irritated and skeptical during periodic rebuttals during four hours of testimony from Matthew Fisher, the Apple executive in charge of the iPhone app store.
The tone of the judge's questions suggests that Apple's efforts to comply with her order primarily focus on the company, rather than allowing iPhone users to easily switch to other in-app payment options, as she intended. It showed that she was concerned that it was designed to protect the interests of
Mr. Gonzalez-Rogers was particularly pointed when he accused Mr. Fisher of allegedly making Apple intentionally more complicated and confusing for consumers to buy digital goods through alternative services.
“I don't see an answer other than stifling competition,” the judge said as he tried to elaborate on Apple's rationale for designing its alternative payment options system for iPhone apps.
Fischer said Apple is following the judge's order while working to protect iPhone users from bad actors on the Internet and ensure the Cupertino, Calif., company benefits from its investments in its app store and other mobile software. he claimed.
To this end, Apple has introduced a new fee structure ranging from 12% to 27% for digital transactions initiated within apps and completed with alternative payment options. After Gonzalez-Rogers said it appears Apple is still collecting a “windfall,” Fisher said the company expects its effective commission rate for digital transactions processed through alternative payment options to be around 18%. He said that
“We're running a business,” Fisher said.
Apple spent more than two years trying to overturn Gonzalez Rogers' order as part of a broader antitrust battle, and the company won. The injunction forcing Apple to allow links to alternative app payments went into effect in January after the U.S. Supreme Court declined to review the case.
But Fisher revealed Wednesday that Apple has so far only received and approved applications from 38 apps to display links to alternative payment systems. Fisher could not specify how many of the roughly 2 million iPhone apps available in the United States. At Gonzalez-Rogers' request, he was asked to engage in digital transactions and this month ordered Apple to provide the numbers as the case progresses.
Video game company Epic Games cited waning interest in applying for in-app links to alternative payment options as evidence that Apple was still manipulating the system in its favor.
Epic, the maker of the popular video game Fortnite, is offering alternative payment options after Gonzalez-Rogers unsuccessfully tried to convince him that the iPhone app store had become a price-gouging monopoly during a 2021 trial. They are trying to force Apple to make more drastic changes in order to do so. .
The effort is backed by Facebook and Instagram owner Meta Platforms, Elon Musk's short messaging service X, music streaming service Spotify and Apple's longtime rival Microsoft.
Apple's current alternative payment methods are “guaranteed to continue collecting excessive fees from developers,” while also preventing consumers from going elsewhere where they can buy the same digital services at lower prices. Epic argued in documents for Wednesday's hearing.
In its own pre-hearing brief, Apple accused Epic of trying to force Gonzalez-Rogers to micromanage its business in ways aimed at increasing the video game maker's profits.
“Epic has repeatedly made clear that what it wants is access to and use of Apple's tools and technology without paying,” Apple argued.
The court hearing is scheduled to resume Friday, when another Apple executive, Phil Schiller, is also expected to testify. Gonzalez-Rogers hopes to finish the hearing by May 17, but told lawyers Wednesday it may take longer.
Most Read in MVAS/Apps
Join a community of over 2 million industry professionals
Subscribe to our newsletter for the latest insights and analysis.
Download the ETTelecom app
- Get real-time updates
- Save your favorite articles