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A U.S. district judge censured Apple’s (NASDAQ:AAPL) move to charge a 27% commission fee on all in-app purchases made through external payment platforms as part of an ongoing judicial review in California this week over the tech giant’s compliance with a 2021 court mandate.
Judge Yvonne Gonzalez Rogers in Oakland, California showed skepticism as Carson Oliver, senior director for business management for the App Store, detailed the company’s rationale for the decision, noting that Apple (AAPL) hired economic consulting firm Analysis Group to set a new rate.
The company offers developers app discovery, distribution, and other services. Analysis Group estimated the value of each service category using fees charged by similar platforms, including Microsoft (MSFT), Alphabet’s (GOOG), Google, Etsy (ETSY), and Shopify (SHOP).
Oliver said that the study estimated the value to be between 12.3% at the low end or 92% at the high end, subject to factors such as the size of the developer.
“And you are charging 27%,” Rogers asked as Oliver contended that the effective rate was lower than that.
“That’s a big assumption,” the judge retorted, adding, “Your assumptions are just that—they are assumptions. There’s no data for it.” “That’s not true,” Oliver replied.
Later on Friday, Philip Schiller, a long-time Apple (AAP) executive who helped develop the App Store, defended the company’s new 27% fee structure, noting that it was an attempt to comply with the law.
“We are trying to enable what the law requires,” said Schiller, who finalized the new fee in January, along with CEO Tim Cook and Luca Maestri. He testified on the fourth day of the hearing, which was part of a judicial review to determine whether the company has complied with a court order issued in 2021 as part of an antitrust lawsuit filed by Fortnite-maker Epic Games Inc.
