Thread by @doratki

Good morning from Oakland federal courthouse! The press corps is lined up outside to get a pic of Apple CEO Tim Cook as he enters the building.

Cook will testify at 8:15 am in Epic v Apple. I just got inside and Epic CEO Tim Sweeney is already here waiting to begin.

Cook made it inside! He’s on the fourth floor in the courthouse wearing a white collared shirt. He said “hello” to some attorneys waiting outside the courtroom before walking down the hall to the attorney lounge with someone who appeared to be his assistant.

Sweeney and his posse of attorneys from Cravath just walked down the hall to wait outside the courtroom for the doors to open.

The walk had a real West Side Story, jets v sharks, vibe about it.

Courtroom doors are open. Epic’s legal team is inside the courtroom. Everyone is much more chatty and high energy this morning than the four previous days I’ve been in court.

For the fashion minded, Sweeney is wearing a back suit, red-white-and-blue striped tie, pinstriped collared shirt, black mask, glasses and a small pin on his lapel. Can't tell what the pin is.

The courtroom seems MUCH more packed with attorneys than previous days. Still only two reporters in the house. Myself and @MActon93 are in the house. I'll be on live-tweeting duty, while Michael will be the designated pool reporter.

Cook just entered the courtroom. He's wearing a face-shield now over his glasses, no mask, dark grey suit, grey tie and drinking from a steel thermos sitting in the gallery.

Sweeney is sitting at Epic's counsel table looking down at his pen. His lawyer Gary Bornstein sporadically whispers in his ear. Cook seems relaxed, legs crossed. Just turned to someone sitting next took him, said something and then laughed.

Judge is in the courtroom and said 'good morning.' Everyone stood, including Sweeney and Cook, said a resounding 'good morning, your honor' and Cook buttoned his jacket.

Multiple Apple staffers are in the courtroom who are not typically here, as well as more Epic attorneys. Judge says we're running "a little bit extra on people today, but I'm going to use my discretion and allow it."

Epic's counsel says Epic has 2 hours and 3 minutes left to present their case, and discussing housekeeping issues with the judge. Cook is listening from the gallery, drinking from his steel thermos. Sweeney is still looking at his pen.

Cook uncrossed his legs, and is holding his hands, occasionally lifting his toes with his heels on the floor and placing them down on the ground while he listens to the discussion.

Judge says it'd be interesting to hear about remedies, and "obv the nature of the market. i don't need to hear too much with respect to Epic's approach... it's a tautology, of course they have a monopoly" if she accepts Epic's argument.

Judge says the lack of competition on Apple's 30 percent app commission "is something that is troubling."

Judge tells the attorneys she doesn’t put much weight on litigation moves "so i don’t know if you want to spend time" on that in their closings.

Judge: "This is a dynamic market things are changing rapidly. I have a snapshot. We are at a point of time in a moving stream so understanding what your perspective would be on the court’s roll might be ... interesting [to hear]."

Cook has re-crossed his legs, still holding his hands. Sweeney is looking down. Judge notes that the media line is dead and "i saw the cameras outside, clearly not for me. although I wore a nice coat today."

Epic calls Apple CEO Tim Cook to the stand. He's being sworn in, with his jacket unbuttoned. He states his full name "Timothy Donald Cook, C-O-O-K."

Correction: Apple called Cook, not epic obv.

Apple's counsel Veronica S. Moye of GIbson Dunn is examining Cook. He says he got a call "out of the blew" in 1998 that Steve Jobs wanted to hire new execs & now he is CEO. His career started at IBM and worked there for about a dozen years, then went to a Denver co, and Compact.

He says at Apple "we have a maniacal focus on the user" and "doing the right thing by the customer" plus integration of hardware services and software and "we think we do that better than anyone else."

Cook says privacy is one of Apple's key issues, b/c "It goes to our civil liberties as Americans" and Apple has spent "a ton" on R&D and built systems "from the ground up."

Cook gesticulates with his right hand as he's explaining Apple's new privacy tools to try to protect users.

Cook says in terms of privacy, "sometimes there's a conflict between what the developer wants and what the user wants, and "We listen. we don't have a tin ear.

Sweeney is still looking down at Epic's counsel table as Cook is testifying on the iPhone and App Store development.

Cook says apple's app review is effective in protecting users data, and points to data on iOS is better than others "it's literally an off the chart level difference, and hopefully that's come out in the ...weeks here."

Judge interrupts: Mr. Cook, what do you think the data shows?

Cook: That malware on iOS is 1-2% while it's 30-40% on Android and Windows.

(It's unclear if he's gotten this data from the Nokia study, but I'm sure Epic's counsel will clear that up on cross.)

Cook reviews a 2015 note by a developer who complained about the app store's discovery (unsure what that means). Cook replied to the note that it was a "poorly written note but we do need to do much more to improve discovery."

Sweeney is listening to Cook's testimony, looking down at a rubber band that he's stretching and twirling between his fingers in between making notes.

Cook says Apple invested $14.2 billion in R&D in 2018 and $16.2 billion in 2019, increasing 14%, and in 2020 invested $18.8 billion for an annual increase of 16%.

When asked how much R&D Apple invested in the App Store over those years, Cook says "we don't allocate like that," b/c specific app store investment funding isn't broken out.

Cook says its new small business program, which reduces App Store commissions from 30% to 15% for biz under $1M, "probably has its origins several years ago" and it was launched b/c he was concerned about the effect of COVID on small businesses.

Cook says people were "universally pleased" by the small biz program, and Apple's app store impact has been an "economic miracle," in light of the number of the "2 million" jobs it's created in the US and the rise in the number of apps from 500 to 1.8 million.

Cook says App Store policy changes like its small biz program, subscription service and other changes "all of these things drive down the price."

Cook is explaining how the price of software has gone down over the years using both hands. He now turns to Apple's in-app purchase (IAP), which he notes helps Apple "efficiently collect" its 30% commission and IAP isn't a payment processor.

Cook testifies that the purpose of Apple's 30% commission covers a lot of things, like creating developer "tools."

Cook says developers aren't allowed to steer customers in apps away from making purchases on Apple's iOS devices, b/c it would be akin to Apple asking best buy to put a sign in a store advertising iPhones at a rival store across the street.

Cook testifies that the market is "fiercely competitive," and Apple faces competition from Samsung, Google, Huawei and others. (I believe he's talking about the smartphone market.)

Cook says game consoles are competitors to Apple's app store. Looking at a confidential doc now, titled "Kantar ComTech USA Report CQ3'20," which is produced by a third-party.

The doc looks at iOS loyalty among smartphone owners who changed to another smartphone each quarter. Cook says 12%-22% switched from iOS to Android depending on the quarter. "we're making efforts to get Android people to switch to us. that's a very important task for us."

Cook says "it's gotten much easier" for users to switch from iPhone smartphones to other smartphones b/c of streaming services, and Apple and other smartphone makers are trying to make it even easier.

Sweeney hasn't looked up much from counsel table throughout the testimony. He's currently writing a note, and Epic's counsel are passing documents back and forth between each other.

Cook is looking at an October 2010 email from Steve Jobs to him and other Apple executives. The email says Apple's 2011 strategy includes: 'Tie all of our products together so we further lock customers into our ecosystem"

Jobs also wrote "make Apple ecosystem more sticky." (Sweeney is looking at the screen of the email closely and taking notes, along with his attorney Gary Bornstein.) Cook explains it means make Apple customers have a "high rate of satisfaction so that people don't want to leave."

Sweeney has spent most of Cook's testimony looking down at his pen or a rubber band he's been playing with, but he's much more alert reviewing the documents that Cook is testifying about rn.

Cook reviews a March 2016 email (over Epic's objections) complaining that "the number one most difficult [thing?] to leave the Apple universe app is iMessage." Cook disagrees with the email, and says iMessage is "a really good feature."

Cook says total net sales (unclear of what tho) in 2020 is $274.5 billion for a ~20.9 percent profit margin. He says Apple doesn't try to determine the App Store profitability as a standalone business, but he says he believes it's profitable. "I have a feel if you will," he says.

There's more sales data that Apple's counsel wants to ask Cook about, but will go into sealed court later. Attys are switched to another doc, which isn't being shown to the gallery, and there was some confusion. Cook scratched his head.

Sweeney is looking at his attorney's computer screen, and now has his hands in his lap. (An attorney sitting next to him is shuffling papers and blocking my view and i want to yell at him 'for the love of god man, stop fidgeting!')

Cook is going through more documents that are not being shown to the gallery, and he says they don't show the App Store's review margins alone. iPhone App Store revenue margins are lumped in with Mac App Store margins, he says.

Cook is taking sips of water from his steel thermos as he's testifying on App Store's operating margins. Epic's counsel are passing notes and whispering to each other - at one point Gary Bornstein thumbs upped another atty. Sweeney is back to staring at his pen.

Apple's legal team is not interacting with each other. They're listening to Cook's testimony and Apple's atty Richard Doren had his eyes closed and his hand over his forehead for a few moments before jotting down a note.

Cook testifies that Epic's requested relief would be forcing Apple to license its IP and "I can't imagine that," and Apple doesn't license it's iOS. He says Apple could no longer "make the promise" of security and privacy, which he says are provided by Apple's app review.

Apple's counsel says they have more q's for Cook but the court needs to be closed to the public. The judge said we'll do that later, and so Apple passes the witness. Epic's counsel Gary Bornstein is up. Cook is adjusting his glasses and facemask. Sweeney is flipping through docs.

Epic atty begins cross examination telling Cook "I understand from the press this is your first time testifying in court."

Cook: "It is."

Atty: "Welcome."

Epic's counsel asks does apple compete against google in operating system?

Tim Cook: Compete against devices. Samsung, Lg...customers don't buy operating systems, they buy devices.

Epic's atty plays a video from 2019 berkshire hathaway in which Cook said "we compete on operating system side with Google and Microsoft..." Atty asks if that's him.

Tim Cook: "It sure looked like me," he said with a small laugh.

Atty: "It sounded like you too."

Epic atty notes Apple was invited to testify before a congressional hearing and plays a clip of Amy Klobuchar asking an Apple exec do you know how much revenue the App Store makes, saying "it's relevant." The Apple exec said they don't calculate the App Store profitability.

Epic's atty points Tim Cook to Apple's financial documents that aren't being shown to the gallery. Sweeney is hunched over staring intently at a black pen that he's holding in both hands.

Epic's atty gets Tim Cook to acknowledge he doesn't know how Epic's accounting expert analyzed Apple's financials to calculate Apple's App Store operating margin (which the Epic expert testified last week were ~79% in 2018 and 2019)

Epic's atty points Tim Cook to financial docs (the public can't see) of Apple iOS and Mac App Store revs. Epic's atty asks what portion comes from Mac store. Apple objects, and wants the court sealed. Atty asks Cook if he knows iOS' 'order of magnitude.' Cook says 'a lot larger.'

Epic atty points Tim Cook to an internal email referring to iPhone profits "as discussed" and a 2019 doc on the profitability of App Store on "a stand alone basis."

Cook says, "no, it's not on a stand alone basis."

Atty says he 'understands' Cook's testimony.

Cook: Thank you.

Epic atty: I assume that as a CEO of a "trillion-dollar-ish company" you don't spend time reviewing documents that aren't important.

Tim Cook: "I spend sometime doing that, but hopefully not a lot," he says and laughs.

Epic's atty points to a doc that he says Tim Cook's financial team put together on App Store's profitability.

Cook: "They're doing an analysis that's not fully loaded."

Atty: They've come up with a profitability analysis that you're saying is not fully loaded.

Cook: Yes.

Epic's atty asks Tim Cook: Apple doesn't want customers to leave apps to make purchases? Cook "we want them to do what they want to do, our focus is on them."

Sweeney is no longer staring at his pen. He has been looking at a laptop screen showing real-time transcript of the examination and occasionally glances over at Tim Cook, who's sitting on the witness stand behind layers of plexiglass.

Epic Attorney: I have an iPhone. I hope it still works after this examination.

::everybody in the courtroom laughs::

Epic's atty says Google has a "lucrative arrangement" w/ Apple in which Google pays over $10B to be the default search engine on the iPhone. Tim Cook says he doesn't remember specific numbers. Atty asks why Google pays billions. Cook: 'It's probably a better question for them.'

Epic's counsel is asking Tim Cook about Apple's decision to kick Fortnite off the App Store. Sweeney is now looking directly at Cook. Cook says "we weren't thinking about the money at all, we were thinking about the user."

"This had nothing to do with money," Tim Cook says of Apple's decision to kick Fortnite off of Apple's App Store.

Tim Cook insists that Apple's decision to kick Fortnite off the app store wasn't retaliation or bullying and it was because Epic broke its contract (by installing a hotfix to skirt Apple's payment system).

Epic's atty points Tim Cook to Apple's new provision in a dev contract, which says Apple can withhold payments if it "suspects" developers engaged in "any suspicious, misleading, fraudulent, improper, unlawful or dishonest act or omission." Cook says isn't aware of the change.

Epic's counsel asks Tim Cook if Apple makes editorial judgments on apps in the app store. Cook says they "feature apps," and "we're not passing a moral judgment on them."

We're taking a 20 minute recess. The judge tells Tim Cook you can't talk to anybody about his examination during the break. Judge tells him: "I'm sure you have plenty to do" that's not related to his examination.

Tim Cook leaves the courtroom with his hands in his pockets along with his legal team and they walk down the hall to the attorneys’ lounge. Sweeney has stayed sitting at counsel table next to his attorney Gary Bornstein and they’re talking.

Sweeney also just stepped out of the courtroom and is chatting with his attorneys. Can confirm now the pin on his lapel is an American flag.

From the windows of the courthouse you can see press hanging out in front of the courthouse hoping to get a shot of Tim Cook on his way out.

Tim Cook is back in the courtroom, walking slowly to the witness stand with his hand in his pockets. He paused for a moment, un-bottoned his jacket and checked his Apple watch before taking a seat on the stand.

Tim Cook is staring out across the courtroom. Epic's attorneys are whispering to each other and Tim Sweeney is staring at a computer screen. Everyone else is quietly waiting for the judge to come back.

Judge is back. Epic's counsel begins by asking Tim Cook if he believes users pay Apple to make decisions for them.

Cook: It’s probably not exactly the way I would say it or are you taking something out of context?

Epic atty asks Tim Cook if users can tell difference between different app stores if rival stores were allowed.

Cook: 'They’ve never had to do it before, they’ve bought into something that’s an ecosystem that just works.'

Epic's atty asks Tim Cook if Apple’s ‘vast marketing machine’ couldn’t educate users of the difference b/w app stores.

Cook: It seems like a complexity they shouldn’t have to worry with... It’s an experiment I wouldn’t want to run.

Epic's atty says Apple hasn't given other cos the opportunity to develop safe app stores.

Tim Cook says customers like Apple's commitment to safety, security and privacy, and some developers like the way that it is, and others don't and "you obviously have one that doesn’t."

Epic's counsel asks "just one?"

Tim Cook replies "there’s a few."

Atty: "just a few?"

Cook: Those are the only ones I know.

Atty asks Cook if he'd be surprised no developers testified on behalf of Apple in trial. Cook says no, not necessarily.

Epic’s counsel points to Apple’s website and says “apple would love” users to open its App Store because it collects the data.

Tim Cook: “I think we generally collect the minimum amount that we can.”

Tim Cook acknowledges that in China Apple uses a state-owned cloud service provider GCDB and users' content is automatically sent to GCDB and stored. He agrees that "occasionally we have apps in the App Store that are illegal that we have to remove," including news apps in China.

Tim Cook says "we have to comply with the laws that each jurisdiction that we operate in," but "I know of nobody in the smartphone business that is not selling in China" and it's in the interest of consumers' for Apple to comply with local laws.

The judge notes that Epic's team has less than an hour left on the clock. (Each side has 45 hours to present their case.)

Epic's counsel shows Tim Sweeney's 2019 email saying Epic won't operate in Vietnam, because complying with local censorship laws would violate "basic human rights of our users." Tim Cook says he doesn't take a position on other businesses' decisions in that regards.

Sweeney has been glancing back and forth between Tim Cook on the stand and the screen on his computer showing the live transcript.

Epic's attorney asks Tim Cook if Apple has expanded the scope of who must pay 30% commissions. Cook appeared confused by the q. The atty points him to a doc that purportedly shows users could buy stuff in apps w/o the commission before Apple launched its in-app purchase feature.

Epic's counsel points to another email, but Tim Cook says "it doesn’t refresh my memory" that users could make payments in-apps without paying commissions before IAP launched. Sweeney is staring at Cook at this point and writing notes.

Epic's counsel probed Tim Cook on Apple's anti-steering policy, which Cook noted allows for mass marketing, but not targeting Apple users. Epic only has 33 mins left so the atty says he's going to "save some time" for the sealed portion. He passed the witness.

Tim Cook took a sip of water from his steel container, and Apple's counsel is back up on redirect. Tim Sweeney is passing notes with his attorney Gary Bornstein.

Apple's counsel asks Tim Cook who is more truthful - himself or Epic's accounting Expert - in providing testimony on Apple's financial documents regarding App Store profitability.

Tim Cook: "I am, I was in the meeting."

Tim Cook says Epic's conduct (ie. installing hotfix to skirt Apple 30% fee) was "malicious" and it "was a terrible thing to do from the beginning" for users & "we thought the biz dispute should be settled in court, if we had to, but that the user shouldn't be put in the middle."

Tim Cook says Apple doesn't have "the option" to defy Chinese law, and notes that "other than the cloud piece," Apple's encryption on iPhones is the same in China as in the U.S.

Tim Cook: "We have to follow the law in each jurisdiction" and "yes, of course" Apple takes the same consumer protection measures in China as it does other places.

Tim Cook says his "understanding" is that in-app payments weren't allowed before Apple launched its IAP in 2009.

Oh boy, come on. Apple's counsel points to a news article that was published this morning. Epic objects saying they've never seen the article and it was published while Mr. Cook was on the witness stand. The judge sustains the objection, saying the doc is hearsay.

They never read the name of the article. (Which one of you journos has already filed copy while we're frantically tweeting in here? Y'all owe me and @MActon93 a drink lol.)

Back on re-cross. Epic's counsel presses Tim Cook on profitability docs and Apple's contract change. Cook admits he only remembered Apple made the contract change after Apple's atty mentioned it was due to a regulatory issue in Japan.

Folks are telling me this is probably the article that Apple's counsel wanted to show Tim Cook. But the judge rejected it as hearsay. The timing of it seems highly susp-ishy. cnbc.com/2021/05/21/sna…

The parties wrapped the public portion of Tim Cook's examination. Cook doesn't look like he's sweating (but I def am).

Judge tells Tim Cook it was "odd to me" that he didn’t remember Apple's contract change until his attorney prompted him. He said he only remembered that something happened in Japan that made Apple have to add to the termination of the clause, & that's the extent of his knowledge.

Judge asks Tim Cook "what is the problem with allowing users to have choice especially in the gaming context."

Cook: I think they have a choice today, they have many different models of android or iphone and iphone have certain safety privacy principles behidng it.

Judge: But users don't know they have the option, what is the problem with Apple giving that option and Information for making purchases?

Tim Cook: If we allowed people to link out on then we would be in essence giving up Apple's IAP.

Judge tells Tim Cook that the gaming industry seems to be generating a disproportionate amount of money in exchange for Apple's IAP. "In a sense it seems like they are almost subsidizing everybody else."

Cook says they also get a larger audience than they would otherwise have.

Judge says app games are "quite lucrative" for Apple and "frankly impulse based" but she added that that's a completely different question and "not really right for antitrust law"

Judge: "I understand notion that somehow apple is bringing customers to the games .. but after that first time, after that first interaction the gamers are keeping the customers with the games. Apple’s just profiting off of that it seems to me."

Tim Cook: I view it dif than you

Tim Cook tells the judge that Apple is creating a large amount of commerce on the store by offering free apps and that drives traffic to the App Store, which app gamers profit off of.

Judge: "The issue with [Apple's] $1 million small biz program" is it wasn’t the result of competition - it seems to be the result of litigation and antitrust probes.

Tim Cook says It was result of covid, but "of course we had other stuff in the back of our head"

Judge points to Epic's evidence showing 39% of all Apple app developers dissatisfied. 'how is that acceptable assuming those numbers are true?'

Tim Cook says he's not familar w/ the data but there's a "friction" bc Apple rejects 40% of apps weekly.

Judge: You agree competition is good.

Tim Cook: We have fierce competition.

Judge: You don't have comp in gaming app distribution.

Cook: We compete with game consoles like xbox, switch.

Judge: 'Only if they know, right?'

Cook: But that’s up to the developer to communicate.

The judge sealed the court for questioning on confidential docs and kicked us sweaty reporters out. There'll be a 40 min lunch break at 12:35 p.m. as usual. Unclear if we'll be allowed back inside before then.

The parties wrapped Tim Cook’s examination in closed court and he’s done for the day. Now we’re on a lunch break. Back at 1:15 with a few more witnesses before evidence wraps.

Cook is outside the courtroom with his hands in his pockets looking at the courthouse artist’s watercolor of him on the stand. “I love it he says.”

He thanks her for her work. Tim Cook has a politician vibe about him right now. Thanks her for his work, she thanks him and he heads out where a crowd of cameras are waiting for him.

The courtroom artist says it was nice that Tim Cook chatted with her, and she realized his eyes are blue. “Needless to say his eyes aren’t blue in this sketch,” she says.

We're back from lunch. Rubin is back on the stand to wrap his examination on Apple's security. (Vibe in the courtroom is bit deflated since Cook's testimony wrapped tbh)

I'm going to limit my live tweets, since this cross/redirect is a little inside baseball and I didn't live tweet Rubin's direct.

Rubin's examination wrapped. Epic and Apple both rest! (hallelujah) Closings will be Monday, where each side will basically give point/counter-point arguments based on the judge's questions for 3 hours.

Cook is no longer in the courtroom, but Sweeney is still here, as he's been throughout the trial. Judge says it'll take some time to get a decision out and she gives "no promises on exact days," but "hopefully before Aug. 13."