OAKLAND, Calif. — On Monday, a key Apple executive, Phil Schiller, publicly acknowledged his initial reluctance towards the fees associated with in-app transactions using payment methods other than Apple’s own system. Schiller expressed concern over potentially breaching a court directive meant to increase competitive practices.
Schiller, who has significant oversight of Apple’s App Store, shared these sentiments during an extensive testimony session in an Oakland federal courtroom. This venue is no stranger to him, as it housed his previous testimony nearly nine months prior amid ongoing litigation with Epic Games, the creators of the widely-played Fortnite.
The legal clash began over four years ago when Epic Games filed an antitrust lawsuit. The developers claimed that Apple had constructed an unlawful monopoly around its highly profitable App Store, which a mandatory proprietary payment system drives. This system collected commissions between 15% and 30% on all in-app purchases.
Despite the rejection of these monopoly charges by U.S. District Judge Yvonne Gonzalez Rogers, Apple was mandated to ease its previously exclusive in-app payment system. The judgment allowed developers the opportunity to present alternative payment links. Although Apple endeavored for over two years to counteract Rogers’ mandate, its appeals concluded 13 months ago, forcing it to permit other payment options.
Nevertheless, Apple continues to demand a significant commission ranging from 12% to 27% on transactions conducted via alternative systems. Epic maintains that these requirements serve as deterrents to adopting other payment avenues. The judge is currently assessing whether Apple should face contempt charges and potentially further alterations.
Judge Gonzalez Rogers has demonstrated visible frustration over the ambiguities surrounding Apple’s revised payment policies. Her dissatisfaction has prompted delays in the proceedings, while the judiciary sought efficacy in Apple’s submission of internal documents for additional insight into their deliberative processes.
These supplementary documents have assisted Epic’s legal counsel, Gary Bornstein, in refreshing Schiller’s memory regarding his initial apprehensions about levying fees on alternative payments. Schiller articulated his concern over “what was allowed under the injunction” and explained the potential “compliance risk” these fees heralded.
In addition, Schiller spoke about the “collection risk,” highlighting the reliance Apple would have on developers to remit the due amounts. He contrasted this with their internal payment system, which facilitates Apple’s deduction of fees preceding developer payouts. “What happens if a developer doesn’t pay, and what is the process for that?” Schiller questioned, citing his initial hesitancy.
Despite these concerns, Schiller authorized the commission framework in January 2024 alongside a pricing committee that included high-profile figures like Apple CEO Tim Cook and then-chief financial officer Luca Maestri. Cook also advocated for a notification system that would alert consumers of potential security risks with non-Apple payment methods.
The current session of hearings is set to continue over the next couple of days, featuring testimonies from several witnesses, including Carson Oliver, one of Schiller’s key associates, who previously provided evidence last year.
