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Apple Trial With Epic Threatens To Reveal App Store’s Commission Bounty

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Apple’s Phil Schiller gives Epic iPhone testimony

What does ‘locked in’ mean, though?

We’ve gotten through the expert witnesses of Epic v. Apple, and as a reward, Phil Schiller — currently an “Apple Fellow,” whatever that is, and previously the senior vice president of worldwide marketing — took the stand like a twinkly App Store St. Nick. To hear him tell it, Apple is a wonderful partner to developers, selflessly improving dev tools and responding to their needs. At times the testimony feels like a prolonged ad for iOS.

The goal of the testimony is to paint the App Store as a part of the iPhone that can’t be removed or replaced by a competing alternative. To this end, we heard in exhaustive detail about the improvements made to the iPhone that benefit the developers in the App Store. The chips. The Retina display. The accelerometer. The wireless upgrades. It’s practically an Apple event on the stand.

Among the exhaustive list, Schiller identified Metal, one of the developer tools Apple created. (Metal is a play on “close to the metal,” or writing code that’s close to the computer’s guts.) Apple’s counsel says the lawyer version of “roll tape!” and we’re treated to a 20 second clip of Tim Sweeney on stage at WWDC, praising Metal as a wonderful tool that will allow developers like Epic Games to create the next generation of improvements. Solid burn!

The overall impression I get from the list of improvements is, essentially, that Fortnite absolutely could not have launched on the first generation of iPhones — the hardware and chips couldn’t have handled the game. That is true! Also: Fortnite didn’t exist yet, so that’s a pretty good reason it couldn’t have been on those early iPhones. But there is another reason a time-traveling Fortnite couldn’t have launched on the first iPhones in 2007: the App Store didn’t exist yet, either. This particular fact is somewhat inconvenient for Apple’s argument that the iPhone and the App Store are inseparable.

Schiller’s testimony spends some quality time back in 2007, to explain the origin of the App Store. When the iPhone launched, the only apps on it were Apple’s own; all other apps were web apps. In response, there was a spate of “jailbreaking” — essentially, hacking the iPhone so you could put your own apps on it. This was the genesis of the App Store: Apple realizing that people were going to put their own apps on the iPhone no matter what it did. If it wanted control of the process, it was going to have to create an official route.

From the jump, security was going to be a concern, Schiller said. After all, the point of the phone was that you could carry it around — which involved collecting location data. So iOS was built from the ground up with this in mind, Schiller says. (This line of testimony is a rebuttal to Epic’s argument that MacOS allows side-loading, and it is therefore anticompetitive that iOS does not.) To put a stop to the jailbreaking, Apple did something unusual: rather than showing the world a finished product, it announced it was working on something. That something was the App Store.

The Steve Jobs line that Epic has touted — ”We don’t intend to make money off the App Store” — comes from these early days. At the time of this announcement, Apple didn’t know if it would make money, Schiller testified. He also suggests that the line was not a promise that Apple would not make money. The App Store was a “huge” risk, Schiller said. “We’re taking our hot new product and putting something we’ve never done before on it, and we have no apps yet! So we have no idea how this is going to do.” This is credible. What is less convincing is Schiller’s attempt to redefine what it means to “lock customers into our ecosystem,” a phrase that comes from a Jobs email entered into evidence earlier in the trial.

Look, “locked in” has an accepted meaning, and it’s not a very friendly one: prisoners, for example, are locked in. Schiller gives this the old college try anyhow, telling the court that the idea behind “locked in” was just to make services more attractive, so that customers wouldn’t want to leave. Later in the email, Jobs talks about making the ecosystem even more “sticky,” which is less menacing, but — glue traps are sticky. So are flystrips. When was the last time that being stuck to something was positive for you?

But hey, Schiller’s a marketer. He was Apple’s marketing guy for actual decades! Always be closing, baby. And so if it at times seemed like he presented Apple as though it were a selfless do-gooder, responding to devs’ requests for in-app payments — which was a then-nascent business — by building capability for that into the store, well, that’s his job. Still, presenting one of the most ruthlessly efficient cash machines in tech as a helpful friend of small developers is kind of like painting a whale shark orange and calling it a goldfish who feeds other goldfish.

Despite Schiller’s friendly demeanor, some of his testimony is a stretch. For instance, he says he doesn’t see mobile as a duopoly. He lists Samsung, Microsoft, Google, and Amazon as competition. The Amazon Fire phone was discontinued in 2015, as was the Windows Phone. Perhaps they haunt his dreams, but they certainly don’t haunt the market.

But Schiller mostly does what he needs to do for Apple — as I suppose he has for 30-odd years. He’s cheerful, pleasant to listen to, and at times, very convincing. The question in this case, though, is if marketing to a judge is as easy as marketing to Apple customers.

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