Several weeks after a Federal Court of Appeals said that Apple would have to control its App Store, Tim Cook, executive director of the company, and its main lieutenants discussed what to do.
For more than a decade, Apple had asked the applications to use the application store payment system and collected a commission of up to 30 percent in applications sales. Now, in 2023, the courts ordered him to allow applications to avoid Apple payments and go directly to consumers online. Mr. Cook wanted to know: could Apple still charge a commission for those sales without violating a court order?
Phil Schiller, who supervised the App Store, worried that the new rates could be illegal. The favorite of online sales without an Apple commission. Luca Maestri, who supervised the company’s finances, disagree. Hello, it favored charging a 27 percent commission for online sales because it would protect the company’s businesses.
Mr. Cook put on the side of Mr. Masteri, and Apple set out to justify that choice. “He manufactured” an independent economic study to legitimize his decision, a federal judge said in a ruling angry last week. With the hero thousands of documents under claims of privileges of the lawyer of the lawyer. And at least one of his executive songs in the witness post.
The judge’s ruling, as well as Blancura’s testimony this year and the company’s documents published on Thursday, show the extraordinary measures that Apple to maintain each penny he collected in the App Store. Judge Yvonne González Rogers’s decision, who heard the initial lawsuit filed by the Epic Games video game company in 2020, could throw a shadow on Apple’s business for years, weakening its credibility as legal scrutch.
The company is also trying to defend itself from one half of the legal challenges, including an antimonopoly demand of the Department of Justice that accuses it of maintaining an iPhone monopoly, collective demands of application developers in the United States or active and pertentially China investigations.
“If your credibility with the courts burns, the next judge will be much less willing to forgive,” said Mark A. Lemley, a professor of antimonopoly law and technology at Stanford University. In future cases for Apple, he said: “It will be easier for a judge to conclude that people are lying.”
Google has shown that a company’s shares can throw a shadow on high -risk legal procedures. Last month, in an antitrust case about its advertising technology, a judge said that the company’s efforts to hide their communications had asked questions about whether they would follow the court’s resources for their behavior.
Apple is the decision of Judge González Rogers, who hero that the company despises civil contempt. When requesting a delay of the court order to loosen its control at the Apple app, Apple said Wednesday that it would show that the search for contempt was “unjustified.” The company declined to make more comments for this article.
Epic, the Fortnite developer, sued Apple in 2020, the battery or violating antimonopoly laws by forcing developers to use their payment system payment system. Judge González Rogers greatly ruled in favor of Apple, discovering that it was not a monopoly, as Epic had argued. But he said that Apple had violated the California competition law and ordered the company to allow applications to include links and buttons to buy software and services outside the App Store.
Apple created a working group, with the name of the Wisconsin project, to respond to the order. He considered two different solutions. The first would allow applications to include links for online purchases in restricted locations, without commission. The second would allow applications to sacrifice the links where they wanted, but will force them to pay a 27 percent sales commission.
With links and without commission, Apple estimated that it could lose hundreds of millions of dollars, even more than $ 1 billion. With a 27 percent commission, you would lose almost anything.
Mr. Cook with the team in June 2023. He reviewed a variety of commission options, from 20 to 27 percent. Hello, it also evaluated an analysis that shows that few developers would leave Apple’s payment system on their own if there was a commission of 27 percent, as shown in the judicial records. In all, he chose that rate while approved a plan to restrict where applications put links for online purchases.
Subsequently, Apple hired an economic consultant, Analysis Group, to write a report that Apple could use to justify its rates. The report concluded that Apple developer distribution tools and services were more than 30 percent of an application’s income.
Apple also created screens to discourage online purchase that seem terrifying and “dangerous,” according to judicial documents. Mr. Cook intervened, asking the team to review a warning to emphasize Apple’s privacy and security. Instead of “it will no longer make transactions with Apple,” said the company: “Apple is not responsible for privacy or the safety of purchases made on the web.”
When Apple revealed its 27 percent commission in January 2024, Epic filed a claim in the Court that Apple did not comply with the judge’s order. Judge González Rogers brought Apple and Epic back to court. Alex Roman, vice president of Finance, testified that Apple had made its final decision on its commission on January 16, 2024. Executives also testified that the report of the analysis group had helped them establish the commission rate.
Judge González Rogers questioned whether Apple was the truth and asked the company to provide documents about their plans. He produced 89,000 documents, but said that one third of them were confidential. The court said those claims were “without foundation” and forced Apple to deliver more than half of the documents.
The documents made it clear that Mr. Roman had a song under oath, that the report of the analysis group was a “farce” and that Apple had deliberately “ignored” without taking into account a court order, Judge González Rogers said. She called him a “cover -up.”
His ruling will grant prosecutors, regulators and judges ammunition against Apple’s defense strategies in similar cases worldwide, several antitrust and technology lawyers and lawyers said.
When the company tries to build or retain documents, prosecutors and judges can point out how it was discovered that these strategies are “tactics to delay processing” in the case of epic games, they said thesis experts. When Apple executives testify, prosecutors and judges could question their credibility because it was discovered that the company “hid the truth” and the “direct lie.”
In the antitrust case of the Departments of Justice and others against Apple, said Colin Kass, an antimonopoly lawyer of Proskauer Rose, courts and regulators who seek Apple documents “will begin the process saying:” Open your doors, and do not dare those little fools.
The company will face more skepticism on the defenses, also in the demand of the Department of Justice, said Rebecca Haw Allesworth, a law professor at Vanderbilt University who studies antimonopoly. In the past, Apple has said that it shows green bubbles for the messages of an Android owner because communication between smartphone systems is less safe. But she said that these statements could be considered less credible after the epic ruling.
Mrs. Allesworth said that the judge’s opinion could also harden the resolution of the European Union, Great Britain, Spain and others by pressing Apple to change their App Store practices because regulators and courts to find security in number.
“Apple has been acting as if they were above the law,” he said. “This sends a sign that Apple is not.”
