Tim Cook takes the stand to defend the 'Apple Tax' in the Epic Games battle

The news: Tim Cook took the witness stand in the Epic Games v. Apple antitrust trial on Friday. Cook's appearance wasn't nearly as entertaining as bananas in tuxedos, but he brought some Fortnite-worthy evasive moves when it came to pinning down Apple's financials.

More on this: Epic's primary claim against Apple is that its 30% App Store cut constitutes an illegal monopoly, so prosecutors circled back to profitability multiple times throughout questioning, per the Washington Post's liveblog. Cook evaded with an anecdote about Steve Jobs and saying he "feels" the App Store is profitable, but wouldn't point to a number.

Why it's worth watching: The high-stakes trial addresses Big Tech's grip over the mobile app economy. At issue are some fundamental questions about:

• Security: Apple's stance is that commissions maintain the security and trust of its ecosystem. For the 100,000 app submissions reviewed a week, 40,000 are rejected. Cook claimed turning off app review would be a "toxic mess." The judge's questioning suggested games' fees subsidized the oversight for free apps: "You’re charging the gamers to subsidize Wells Fargo."
• Profitability: Apple has always been cagey on App Store profits, lumping App Store's margins into its reported "Services" revenues. Expert witnesses estimated operating profits between 70–80%, but Cook deflected by focusing on P&L accounting technicalities.
• Rates: Cook testified that the commission rate cut for smaller developers making under $1 million was due to COVID-19, rather than a response to antitrust scrutiny. Apple maintains its commissions match industry standards.
• Market: The case hinges on categorizing what market the App Store operates in. Epic wants to make it about the entire mobile app market, but Apple would like to consider Epic's claims in a more expansive gaming market alongside Sony's PlayStation and Microsoft's Xbox.

What's next: Closing arguments are scheduled for this week, but a final verdict could take months. It's been an uphill battle for Epic to prove Apple's commission is not only an illegal monopoly, but that Apple also uses its power to hurt competitors and distort the market in its own favor. The judge's own questioning on Friday hints that it may come down to whether Apple's terms serve users' best interests.

Regardless of the trial's outcome, Apple still faces scrutiny for its App Store fees from EU and US regulators. This is just the first epic battle in Big Tech's escalating antitrust wars ahead.