Apple CEO Tim Cook defended App Store business practices and said his company treats all software developers equally as he faced questioning Wednesday in front of the House Judiciary antitrust subcommittee.
Cook said it’s in Apple’s best interest to treat devs fairly. The company wants the best and brightest to write iOS apps, he said, because killer software proves essential for a company engaged in a “street fight for market share in the smartphone business.”
During Wednesday’s hearing, Cook and top execs from Facebook, Google and Amazon appeared via streaming video in front of the antitrust subcommittee. The high point of a year-long investigation into Big Tech’s business practices, the hearing gave lawmakers a chance to confront the leaders of the country’s most valuable companies.
Antitrust questions for Big Tech execs
After their five-minute opening statements, the execs answered questions from members of the subcommittee. As expected, Facebook, Google and Amazon faced the most intense scrutiny early on.
Rep. David Cicelli (D-Rhode Island) grilled Google CEO Sundar Pichai over accusations that Google steals content and threatens to effectively eliminate anyone who complain from the internet. Facebook CEO Mark Zuckerberg faced questioning from Rep. Jerrold Nadler (D-New York) regarding Facebook’s purchase of Instagram.
For Apple, the early questioning revolved around the App Store. Rep. Hank Thompson (D-Georgia) first established that Apple “is the sole decision maker as to whether an app is made available to app users through the Apple Store.”
Controversial App Store rules
Then Thompson hit Cook with questions about Apple’s controversial handling of the App Store review process.
“Throughout our investigation, we’ve heard concerns that rules governing the App Store review process are not available to app developers,” Thompson said. “The rules are made up as you go. They are arbitrarily interpreted and enforced, and are subject to change whenever Apple sees fit to change and developers have no choice but to go along with the changes, or they must leave the App Store. That’s an enormous amount of power.
“Also, the rules get changed to benefit Apple at the expense of app developers and the App Store is said to also discriminate between app developers with similar apps on the app platform…. Does Apple not treat all app developers equally?”
“Sir, we treat every developer the same,” Cook answered. “We have open and transparent rules. It’s a rigorous process. Because we care so deeply about privacy and security and quality, we do look at every app before it goes on. But those apps, those rules apply evenly to everyone.”
Does Apple play favorites with devs?
Thompson then asked if Apple plays favorites with big developers. He said, for instance, that Baidu reportedly benefits from two dedicated App Store employees that help the Chinese powerhouse to “navigate the App Store bureaucracy.”
“I don’t know about that, sir,” Cook replied, before saying that Apple helps developers large and small as their apps go through beta testing.
When Thompson asked about Apple’s 30% cut of App Store sales, and the reduced commission charged for subscriptions, Cook explained the pricing policy. He also said “84% of the apps are charged nothing.”
Thompson then asked, “What’s to stop Apple from increasing its commission to 50%?”
Cook said the company never increased its 30% cut established at the App Store’s launch in 2008. And he made it sound like Apple would not think of boosting its cut. That would conflict with Apple’s efforts to woo the best and brightest devs to make its products better.
“There is a competition for developers just like there’s a competition for customers,” Cook said. “And so the competition for developers, they write their apps for Android or Windows or Xbox or PlayStation. So we have fierce competition out the developer side and the customer side.”
Finally, Thompson asked if Apple punishes developers who complain about its App Store practices.
“Sir, we do not retaliate or bully people,” Cook said. “It’s strongly against our company culture.” At the outset of the hearing, Cook defended Apple’s App Store policies as well.
App Store endures more scrutiny
Later in the hearing, Rep. Lucy McBath (D-Georgia) accused Apple of strategically sidelining parental controls apps as Cupertino rolled out its competing Screen Time feature with the release of iOS 12. The removal of certain apps caused an outcry at the time. (Apple updated its App Store Review Guidelines in 2019 to address the situation.)
Cook said the moves — removing the apps from the store, and launching Screen Time — revolved around protecting children. “We were concerned, congresswoman, about the privacy and security of kids,” he said.
Then McBath alleged that Apple benefited from Screen Time’s six months without competition.
“I see Screen Time as just an alternative,” Cook said. “There are over 30 parental control apps that are in the App Store today. So there is vibrant competition.”
App Store as negotiation tool
McBath also keyed in on an alleged Apple negotiating tactic. Going back to the 2010 launch of Apple’s iBook Store, she said Cupertino used the threat of keeping a rival’s app out of the App Store as a bargaining chip. She cited Random House, saying the potential app ban convinced the publisher to join Apple’s iBook initiative.
Cook said apps get denied for a wide variety of reasons. However, he pointed to the App Store’s sprawling nature and “over $138 billion of commerce, just in the United States.”
“On a macro basis, the gate to the App Store is very wide,” he said. “We have 1.7 million apps in it — it’s become an economic miracle.”
McBath wrapped up her five minutes of questioning with perhaps the strongest anti-Apple statement of the day. She said even the largest companies in the country fear Apple’s enormous power to control which apps reach consumers.
“Our evidence suggests that your company has used its power to harm your rivals and boost your own business,” she said. “This is fundamentally unfair and harms small businesses that rely on you to reach customers and stifles innovation. That is the lifeblood of our economy. Ultimately it reduces the competition and choices that are made available to consumers. And that is a great concern to all of us.”
Note: The hearing is ongoing. You can watch a live stream. This post will be updated.