OAKLAND, Calif. (AP) — A federal judge on Wednesday questioned whether Apple is creating frustrating hurdles to prevent the use of alternative payment options in its iPhone apps despite a court order aimed at creating more ways for consumers to pay. digital services.
The oral argument between Judge Yvonne Gonzalez Rogers and Apple’s app store head kicked off a hearing focused on whether Apple is still directing U.S. consumers to its once-exclusive app payment system. Price: %s.
Gonzalez Rogers’ order requires Apple to allow app developers to display links to other options besides the company’s own payment system in the United States. Apple makes billions of dollars a year from this setup, which charges commissions ranging from 15% to 30% on digital transactions completed within the specified period. most popular iPhone apps.
Apple’s app store and commission system are also targeted in another antitrust lawsuit recently filed by the U.S. Department of Justice, alleging that the iPhone stifles competition in a variety of ways that stifle competition and innovation.
Gonzalez Rogers often sounded frustrated and skeptical when she interjected periodically during the four-hour testimony of Matthew Fischer, the Apple executive in charge of the iPhone app store.
The tone of the judge’s questions suggested he was concerned that efforts to comply with Apple’s decision were designed primarily to protect the company’s profits, rather than, as he intended, to make it easier for iPhone users to switch to other in-app payment options.
Gonzalez Rogers took particular notice when asking Fischer about whether Apple was intentionally making it more cumbersome and confusing for consumers to make digital purchases through alternative services.
“I see no other answer than to stifle competition,” the judge said as he tried to examine the logic of Apple’s design of an alternative payment option system for iPhone apps.
Fischer argued that Apple complied with the judge’s order while trying to protect iPhone users from bad actors on the internet and allowing the Cupertino, California company to generate returns on its investments in its app store and other mobile software.
To this end, Apple has implemented a new commission structure ranging from 12% to 27% on digital transactions initiated within an app and completed with an alternative payment option. After Gonzalez Rogers said Apple still appeared to be making a windfall, Fischer said the company expects the effective commission rate on digital transactions through alternative payment options to be around 18%.
“We’re running a business,” Fischer said.
Apple spent more than two years trying to overturn Gonzalez Rogers’ order as part of a broader antitrust battle that the company won. The measure requiring Apple to allow links to alternative app payments went into effect in January after the U.S. Supreme Court declined to review the case.
But Fischer said Wednesday that Apple has so far received and approved applications from only 38 apps that display links to alternative payment systems — a fraction of the nearly 2 million iPhone apps available in the U.S. Fischer was unable to specify how many of those apps move forward this month. Gonzalez Rogers, who ordered Apple to give the number, said that they could make digital transactions.
Video game Epic Games cites declining interest in using in-app links to alternative payment options as evidence that Apple is still rigging the system to its advantage.
Epic, maker of the popular Fortnite video game, is trying to force Apple to make broader changes to accommodate alternative payment options after failing to convince Gonzalez Rogers that its iPhone app store has become a price-gouging monopoly during a 2021 trial.
The effort is backed by Meta Platforms, which owns Facebook and Instagram, Elon Musk’s X text messaging service, music streaming service Spotify and Apple’s long-time rival Microsoft.
Epic argued in documents leading up to Wednesday’s hearing that Apple’s current alternative payment formula “guarantees that it will continue to charge developers excessive commissions” while also preventing them from directing consumers to other places where they can purchase the same digital services at lower prices.
In pre-trial briefings, Apple accused Epic of trying to persuade Gonzalez Rogers to micromanage its business with methods designed to increase the video game maker’s profits.
“Epic has repeatedly made it clear that what it wants is access to and use of Apple tools and technologies without paying for it,” Apple said.
Court hearings are scheduled to continue Friday, when another senior Apple executive, Phil Schiller, is expected to testify. Gonzalez Rogers hopes to wrap up hearings by May 17, but told attorneys Wednesday it could take longer.