Apple isn't expected to start building its official defense in the antitrust fight with Epic Games until the week after next, but one of its key executives at the heart of the dispute began laying the groundwork in court on Thursday.
Matt Fischer, the current App Store vice president who reports directly to longtime executive Phil Schiller, took the stand in Oakland as an Epic witness to answer questions about the App Store business model, as well as its role in the broader iOS operating system. Fischer is arguably the most high-profile Apple employee on the witness list outside Schiller and other members of Apple's executive leadership, and his testimony provides part of the foundation for the company's justification of its App Store commission.
So far, Apple counsel has revealed its strategies through opening arguments and at times aggressive cross-examination of Epic witnesses, including CEO Tim Sweeney and a number of third-party game industry executives. That's involved comparing iOS and the App Store to the console game ecosystems of Microsoft, Sony and Nintendo, and suggesting that game makers are just fine reaching iOS customers through cloud streaming and mobile web browsers if they don't like Apple's policies.
But Fischer provided the company's first robust rationalization for many of the App Store's more controversial policies. He called the store "incredibly unique" in the benefits it provides to consumers and developers and steadfastly defended it against claims that Apple overlooks fraud. That, in turn, justifies the commission Apple collects and the restrictions it imposes.
"We work really hard to make the App Store a marketplace that's attractive to both customers as well as to developers," Fischer testified. "I might be biased, but I certainly l think that what we do is incredibly unique, and I certainly have not seen any marketplace that distributes apps or games do what we're doing in terms of providing marketing and editorial support like this to developers."
The key takeaway from day four is that the future of this trial could very well hinge on how Judge Yvonne Gonzalez Rogers perceives the true purpose of the App Store. Is it a level playing field designed to protect user privacy and security and take only its fair share? Or is it an increasingly byzantine pillar of Apple's walled garden, one preoccupied with chasing profit and marred by inconsistently applied and ever-changing rules? Fischer, and Apple by extension, would very much like it to be seen as the former. Epic, of course, the latter.
Central to this characterization will be how Apple justifies keeping out competing game-streaming and subscription apps, like Microsoft's Xbox Game Pass and Google Stadia. That was the focus of a rather grueling cross-examination of Epic witness and Xbox Vice President Lori Wright on Wednesday. Another factor will be whether Fischer and others at Apple can successfully downplay or dismiss concerns of special treatment, like the deals Apple has cut with Amazon in the past to reduce its commissions for streaming video apps.
Fischer did his part in that regard, when he was asked outright by Apple lawyer Jay Srinivasan whether any developer receives special treatment. "The App Store review guidelines apply equally to all developers," Fischer replied. He also commented on the notion that Apple privileges its own apps over those of competitors, saying, "We have promoted apps that are competitive to Apple apps since before I joined the App Store team in 2010, and we continue to not only distribute but to feature and promote apps that are competitive to Apple apps in the store. We do this all the time."
Epic lawyer Katherine Forrest spent much of her time questioning Fischer by trying to poke holes in Apple's security justification, which the company has used to deny alternative payment processing systems that could, as Epic's did, bypass the App Store's fees. Forrest listed more than a dozen companies that use their own payment processing systems, companies like PayPal-owned Braintree and Amazon, that are allowed to do so because they process transactions of non-digital goods, of which Apple does not take a 30% cut.
Fischer said he could not recall any study Apple conducted on the security or privacy of any third-party payment system relative to Apple's. Later, during cross-examination, Fischer asserted he is in fact not responsible for security, privacy, fraud or app review.
Fischer confirmed to Epic that Apple has in the past given certain developers exclusive access to APIs and other privileges, after use of the term "whitelisted" was shown in emails related to Hulu's use of a not-yet-released API for canceling and refunding consumer subscriptions. During cross examination, Fischer disputed the term whitelisting, going so far as to call it "offensive," and later claimed access to such features was part of an ongoing testing process conducted through its TestFlight program.
"In this particular case, it was something we were testing with a few companies to see how this feature would perform, with the intention that, if it performed well, we would roll it out to all developers," Fischer argued.
Fischer, as the first Apple employee to be cross-examined by Apple counsel, used his time in front of Srinivasan to promote the App Store as a fair marketplace that goes above and beyond what other app stores do to support developers. Fischer described his early relationship with Epic, during the years the developer made the Infinity Blade trilogy of iOS games, and later when Fischer worked with Epic to promote a holiday Fortnite skin in the winter of 2018. He said Apple gave Epic valuable onstage time during its developer conferences to promote the games.
"Did Epic pay Apple for any of that support?" Fischer was asked. "No, they did not," he said. Fischer also said Apple was willing to change its rules at Epic's request, including when it began allowing in-app gifting for Fortnite, a feature Fischer said it enabled for all developers. "When we make a change, we want to make a change that applies equally to all developers," Fischer said.
The App Store chief also shed light on how Apple came to the conclusion it would not charge certain app makers a 30% fee if they produced a physical good or service, compared to a digital one like Epic and other game developers.
"The decision was made that for an app that sells physical goods and services, it didn't make sense for Apple to earn a commission as part of that, because we ultimately didn't know if that good or service would be delivered to the end user," he said, using the example of an Uber ride or an Amazon package ordered through an iPhone. Apple does not take a cut of those purchases and allows those developers to use their own payment systems.
Epic has taken issue with this distinction, saying it unfairly penalizes competing software distributors while exempting companies that make use of much of the same Apple technology and platform benefits. But Fischer cast the decision as another reason Apple keeps tight control over its ecosystem, because it's concerned primarily with whether users are receiving what they paid for when they buy something that is primarily experienced on the iPhone itself, such as an in-game purchase in Fortnite.
"[Apple in-app payment] in its simplest form is a way to sell digital content within an app. But actually it's a lot more complicated than that," Fischer argued, saying it "enables the safe and frictionless delivery of digital goods from a developer to a user."
That argument — that the App Store's control over digital purchases is for the good of the platform and not a profit ploy — will likely be one Apple and its lawyers fall back on as the trial moves forward.
