Apple Begins App Store Defense in Epic Antitrust Fight

·3 min read

(Bloomberg) -- Apple Inc. began Monday to present its case in the closely watched antitrust trial with Epic Games Inc. -- a defense that will include testimony from Chief Executive Officer Tim Cook.

Epic already has presented witnesses for two weeks in federal court in Oakland, California. First up on the witness stand for Apple is Phil Schiller, an Apple Fellow who runs the App Store and previously was its senior vice president of worldwide marketing for decades.

Schiller is a smooth, technologically-savvy speaker who made his mark as Apple’s top spokesman for product announcements. He’s known as Apple’s chief defender and guards the company’s brand with passion. Aside from Steve Jobs and Cook, Schiller has been one of the most important assets at Apple since its resurgence in the late 1990s.

Schiller, who previously testified in Apple’s 2011 suit accusing Samsung of copying patented designs for mobile devices, took on responsibility for the App Store business in 2015, and last year moved out of his former marketing chief role. Despite taking on the App Store officially only 6 years ago, he was a critical part of its development and launch in 2008 and was typically involved in key decisions regarding developers, app review and new features.

The most anticipated witness will be Apple’s closer: Cook. When Apple introduces new products, Cook’s typical strategy is to come on stage, discuss the company’s values, and then hand-off the stage to his lieutenants. This time, Cook plans to discuss the company’s business model and why the App Store operates as it does. It will also mark Cook’s first testimony in court, as he bypassed earlier trials with Samsung and Qualcomm Inc.

In filings with the court, Apple said that Schiller will discuss the development and launch of the App Store, policies and guidelines, the company’s business model, and competition faced by the company.

How Apple’s App Store Sparked an Epic Trial: QuickTake

In his first minutes on the stand Monday, Schiller answered questions about how Apple stopped having separate profit and loss statements for different units after the company was reorganized under Jobs’ watch in 1997. How much Apple makes from the App Store is central to Epic’s case that the marketplace for apps for mobile devices is run like a monopoly.

Epic sued Apple last year amid a backlash against the technology giant-- with billions of dollars in revenue on the line -- from global regulators and some app developers who say its standard App Store fee of 30% and other policies are unjust and self-serving.

The Apple-Epic fight blew up in August when the game maker told customers it would replace Apple’s in-app purchase system with its own, circumventing Apple’s commissions from add-ons inside of Fortnite. Apple then removed the game, cutting off access for more than a billion customers.

Over the past two weeks, Epic executives including CEO Tim Sweeney and representatives from Apple rivals including Microsoft Corp. and Nvidia Corp. took the stand to help the North Carolina-based Fortnite maker present its argument. Apple’s lawyers tried to punch holes in Epic’s case with cross-examination questions to witnesses aimed at showing how the iPhone maker competes with video game consoles and Google Android devices in a large game distribution market.

After Schiller, Apple software chief Craig Federighi is expected to take the stand to discuss engineering and security in the App Store and Apple’s products. Federighi re-joined Apple in the late 2000s as a senior executive on its Mac software engineering group.

In 2011, he was promoted to the head of Mac software engineering, and, a year later, was tapped to replace Apple’s iPhone and iPad software chief. He now oversees software for both platforms as well as underlying technology for Apple’s other operating systems. He’s also a key decision maker for the App Store.

(Updates with recap of Epic’s case)

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