by OAKLAND, Calif. (AP) – A federal judge questioned Wednesday whether Apple has set up a barrier to block the use of alternative payment options in iPhone apps, despite a court order seeking to create more ways for consumers to pay. digital services.
The verbal sparring between Judge Yvonne Gonzalez Rogers and the head of Apple’s app store kicked off a hearing focused on whether Apple is still steering US consumers to its app-only payment system against an injunction aimed at promoting more options. that could help lower. prices.
Gonzalez Rogers’ order requires Apple to allow app developers to display links to alternatives to the company’s own payment system in the U.S. Apple makes billions of dollars a year from that arrangement, which charges a 15% to 30% commission on transactions digital that is completed within. the most popular iPhone apps.
Apple’s app store and its commission system are also being targeted in another antitrust case recently filed by the US Department of Justice in a case that alleges the iPhone walloped competition in various ways that stifled competition and innovation.
Gonzalez Rogers was often frustrated and skeptical as she called in periodically during four hours of testimony from Matthew Fischer, the Apple executive who was in charge of the iPhone app store.
The tone of the judge’s questions reflected her concern that Apple’s efforts to comply with her order are designed primarily to protect the company’s profits rather than make it easier for iPhone users to switch to other in-app payment options, as she intended.
Gonzalez Rogers was particularly pointed in her prodding of Fischer on whether Apple intentionally made it more difficult and confusing for consumers to make digital purchases through other services.
“Other than inhibiting competition, I see no other answer,” the judge said as she sought to set aside Apple’s rationale for designing a system of alternative payment options for iPhone apps.
Fischer confirmed that Apple is complying with the judge’s order while still trying to protect iPhone users from bad actors on the internet and enable the Cupertino, California company to reap a return on its investments in the app store and other mobile software.
To that end, Apple has introduced a new commission structure ranging from 12% to 27% on digital transactions initiated within an app and completed on another payment option. After Gonzalez Rogers said it appeared Apple was still collecting “windfall,” Fischer said the company expected its effective commission rate on digital transactions processed by alternative payment options to be around 18%.
“We’re running a business,” Fischer said.
Apple spent more than two years trying to overturn the order issued by Gonzalez Rogers as part of a broader antitrust battle the company won. The injunction requiring Apple to allow links to alternative app payments came in January after the US Supreme Court declined to review the case.
But Fischer revealed Wednesday that Apple has only received and approved requests to show links to other payment systems from 38 apps so far — a fraction of the roughly 2 million iPhone apps available in the U.S. He couldn’t specify how many. those apps. engage in digital transactions when asked by Gonzalez Rogers, who ordered Apple to provide the number as the proceedings continue this month.
Video gamer Epic Games cites the waning interest in requesting in-app links to other payment options as evidence that Apple was still rigging the system in its favor.
Epic, the maker of the popular Fortnite video game, is trying to force Apple to make faster changes to accommodate alternative payment options after unsuccessfully trying to convince Gonzalez Rogers that the iPhone app store has turned into a monopoly price goug during trial in 2021. .
The effort is backed by Facebook and Instagram owner Meta Platforms, Elon Musk’s X short messaging service, music streaming service Spotify and longtime Apple rival Microsoft.
Apple’s current alternative payment formula is “guaranteed to continue to extract excessive commissions from developers” while also preventing them from directing consumers to other places where they could buy the same digital services at lower prices, Epic asserted in documents before Wednesday’s hearing.
In its own pre-hearing briefs, Apple accused Epic of trying to get Gonzalez Rogers to micromanage its business in ways designed to increase the video game maker’s profits.
“Epic has made it clear time and time again that what it wants is access to and use of Apple’s tools and technologies without paying for them,” Apple argued.
The court hearings are scheduled to resume on Friday when Apple’s other chief executive, Phil Schiller, is expected to testify. Gonzalez Rogers hopes to wrap up the hearings by May 17, but told lawyers Wednesday it could take longer than that.
