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Judge Yvonne Gonzalez-Rogers remains unconvinced of Apple's claims to comply with its original order, following testimony from Apple employee Phil Schiller.
As part of an ongoing complaint from Epic Games questioning Apple's compliance with the judge's original rulings, Schiller and another executive sought to explain how the company achieved its recent 27 percent commission change.
They also rejected the judge's assertion that there was “no evidence” that the effective commission rate for developers is lower on average. Apple has a number of exceptions, including ongoing subscriptions and no fees at all for free apps, resulting in an overall lower commission burden.
Phil Schiller testifies
Shiller defended the tariff, saying the change was a good faith effort an attempt to carry out the order, Bloomberg reports. He reminded the judge that the original order established that Apple had the right to charge fees even if developers opted out of Apple's own in-app payment system.
Schiller was one of three executives, including CEO Tim Cook and CFO Luca Maestri, who agreed on a 27 percent commission for developers who chose to use other payment systems. This amount is down slightly from the original fee of 30 percent.
Schiller also said that he personally is not opposed to the outbound link requirement. His point contradicts Apple's previous defense that outbound links would “degrade the user experience.”
He noted that “the world has changed and unification is required” in the EU and other regions. “I have no preference regarding communication. I want to make the decision safe for our clients, that's what I'm focused on,” he told the court.
Head of App Store admits outside analysts' opinions mattered
After Schiller's first day of testimony, senior director of App Store business management Carson Oliver noticed that the judge had become more skeptical about Apple's commission rate. Under questioning, Oliver admitted that Apple hired an outside firm, Analysis Group, to recommend a new base fee.
Gonzalez-Rogers noted that Analysis Group found that the lowest acceptable rate would be just 12.3 percent. “And yet you charge 27 percent,” the judge noted. “How do you justify the other 15 percent you charge?” she added.
Oliver said this is partly justified by the additional services Apple provides. According to him, this includes application discovery, distribution, development tools and platform technologies — along with additional privacy and data security measures — which cannot be compared with other online application markets.
He added that Apple's lowest average would actually be about 17 percent. Apple's overall average, taking into account all developers — including those who pay nothing — below 27 percent, he said.
App stores in many countries are feeling the effects of recent decisions by US and EU courts
Oliver also told the judge that the review team was looking at another app and digital markets services to help them determine the range. These included storefronts for Microsoft developers, Alphabet's Google, Etsy and Shopify, among others. The average commission charged by other merchants varied widely, from 12.3 percent to 92 percent, depending on various factors.
The judge did not seem to agree that the overall lower average commission for all developers was a valid basis for charging 27 percent on initial in-app purchases. She said the executive team's claim of a lower effective rate was “a big guess” and not supported by the data. Carson responded that the accusation was “not true.”
Schiller will be called back to the stand to resume his testimony if the hearing resumes on May 22.
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