Apple executive ‘concerned about Epic’s trustworthiness’

An Apple executive has told a court Epic Games’ chief Tim Sweeney’s response to a feud was ‘unacceptable’, after the Fortnite creator attempted to launch its app in Europe.

Apple executive Phill Schiller leaves the Federal Court in Melbourne. Picture: David Crosling

An Apple executive has told an Australian court that Epic Games chief Tim Sweeney’s response to an escalating feud was “unacceptable”, after the Fortnite creator attempted to launch its own app store in Europe under fresh digital protections.

California-based Phil Schiller on Tuesday told the Federal Court in Melbourne that he invited Mr Sweeney to convince Apple it was “acting in good faith”, after moves by the games developer to launch a competing app store on iOS devices in Sweden under the Digital Markets Act were blocked but then reversed this year.

Mr Schiller told Epic’s Australian trial he was not involved in the decision to block Epic’s developer account in Sweden, but said he was not convinced by Mr Sweeney’s email on February 23 in which he agreed to comply with Apple’s terms.

“It was wholly unacceptable. It was not an attempt to convince us,” Mr Schiller said.

Epic founder Tim Sweeney.

“I truly wanted them to have them approved. I was hoping to get something more fulsome … to say here is why they should be reinstated,” he said.

“I have lots of concerns about Epic and their trustworthiness.”

The court heard Epic could used its Swedish app store to distribute games in Australia.

Earlier, Mr Schiller was cross examined about Apple agreeing to cut its 30 per cent commission rate for Netflix and Amazon, and reducing the fee in South Korea and the Netherlands.

Epic is suing Apple and Google over allegations of market abuse. It claims Apple is forcing developers to hand over a 30 per cent commission on in-app transactions because it will not allow it to use alternative payment methods.

The fee, which Epic claims is not competitive compared with other payment services like PayPal and Stripe, generally charges a commission of 3 per cent, but iOS app developers must use Apple’s payment service to charge for digital purchases within an app.

The court heard former Amazon CEO and billionaire Jeff Bezos discussed with Apple senior vice-president Eddy Cue in an email a deal for a 15 per cent revenue sharing arrangement for customers who signed up using the app, and the Apple payment system.

Another part of the arrangement was there was no revenue share for customers who were already subscribers, and they could view their video app in iOS without that attracting any revenue to Apple.

Other apps like Netflix were “proceeding on the basis content purchased elsewhere could be read inside the app”, the court heard.

Match, a creator of dating apps, contacted Apple in 2019 to raise that it had “come to their attention” Netflix and Apple had agreed on a revenue share deal of 15 per cent.

Barrister Neil Young, KC, for Epic asked Mr Schiller if it were correct that Netflix had been “cycling in and out of using IAP (in-app payment)”.

“In other words, they were using alternative payments services,” Mr Young said.

But Mr Schiller rejected that, and responded: “I’m sorry, that wasn’t correct.”

The court also heard developers distributing dating apps in the Netherlands can use a third party payment purchasing system, and they pay Apple a 27 per cent commission rate.

As well, in South Korea alternative payment methods are permitted under its legislation and app developers in that jurisdiction are charged a 26 per cent commission rate.

Mr Schiller was also asked about an email sent by Apple’s late co-founder and former CEO, Steve Jobs, in 2010 in which he said under the heading “year of the cloud” that the company should “tie all our products together so we further lock customers into our ecosystem”.

The court heard Mr Jobs said the company needed to “make (the) Apple ecosystem even more sticky”.

Apple senior vice-president Craig Federighi is expected to appear on Wednesday.