Apple CEO Tim Cook defended the company's App Store commission structure in his sworn testimony before the Antitrust Chamber subcommittee on Wednesday. He said that most apps pay no commission, while others pay 15 or 30 percent, based on the specifics of their particular situation. He said the developers were all treated the same way and that Apple would not increase the commissions because it also had to compete for the interest of the developers in its platform.
But documents shared by the Chamber's subcommittee as part of their investigation indicate that exceptions to Apple's rules have been made, particularly with Amazon's Prime Video app. In addition, Apple may never have raised commissions, but the discussions were not off the table. He had once even considered raising commissions to 40% in particular situations.
Lawmakers had come to the hearing armed with Apple's internal emails and interviews from App Store developers who argued that Apple doesn't apply its rules uniformly and play favorites. But their interrogation of Cook's commissions on the App Store, combined with a format that limited executives' ability to respond long, initially seemed to reveal little in the way of new information about Apple's practices.
For example, when asked directly about how the App Store worked, Cook simply reformulated the rules published in the store, i.e. for app developers who have to pay commissions, they only pay 15 or 30 percent. Current guidelines require 30% for apps that sell digital goods or services, with a drop to 15% in the second year for subscription apps. The rules also document a notch for "reader" apps such as apps for audiobooks, streaming services, news publications and other competing products that have the option to opt out of in-app purchases.
Cook also talked about how the vast majority of the App Store apps, 84%, pay nothing to Apple in commissions. It's the remaining 16% who pay, he noted.
And when asked if Apple was the only gatekeeper on what is published on the App Store, Cook accepted that it was - since the App Store was a "feature of the iPhone, very similar to the camera and chip ". He made it clear that Apple's control over apps has only extended to native software applications, not Web apps, but has unfairly denied Apple-treated developers.
"We treat all developers equally. We have open and transparent rules," said Cook in his testimony. "It's a rigorous process, because we care so much about privacy, security and quality. Let's review each app before it continues, "he added.
But emails in 2016 between Apple SVP Eddy Cue and Amazon CEO Jeff Bezos, shared here on the House Judiciary Committee website, indicate that Apple, in fact, appears to have negotiated a special deal with Amazon on its Amazon app. Prime Video for iOS and Apple TV. In an email from November 2016, before the launch of the Prime Video tvOS app in 2017, Apple agreed to take only a 15% revenue share for customers who signed up for the app using the mechanism. payment method. (Typically, subscription apps don't drop from 30% to 15% until the second year.)
Apple confirmed in April that it had a special program for Prime Video and a handful of other apps, which were subscription video entertainment providers. The program allowed these companies to rent or sell movies and TV shows to customers using the payment methods already in use at the companies, as well as to integrate more deeply with Siri. But Apple hadn't said that this special program would include a reduced subscription fee or any other in-app upsell, as these emails confirm that they were talking points.
This would not be the first time that Apple sees its commission structure having some flexibility.
When Cook was questioned that there was something that could prevent Apple from raising commissions to 50%, the CEO replied that Apple had never increased commissions since day one. He also claimed, when asked if something could stop him from doing it, that competition for developer interest would prevent him from increasing his cut.
"There is a competition for developers, just as there is a competition for customers. And so there is competition for developers: they write their apps for Android or Windows or Xbox or Playstation," said Cook. "We have strong competition from developers and customers, which is essentially - it's so competitive, that I would describe it as a street fight for market share in the smartphone sector," he added.
But in 2011 internal emails, Apple discussed raising commissions - up to 40% for the first year of recurring subscriptions. "I think we could leave some money on the table if we only asked about 30% of the first year of submission," Cue had written at the time.
Documents from the hearing on "Online platforms and market power: examining the domain of Amazon, Apple, Facebook and Google" pic.twitter.com/42o2Ye13jI
- House Judiciary Dems (@HouseJudiciary) July 29, 2020
Obviously, Apple hasn't gone far enough to really make that change in the years that have passed. But these emails indicate that there is more to Apple's thinking - and its discussions of the commission's structure - than the uniform playing field that Cook testified to.
