Important testimony coming up in Epic v. Apple Day 4, including our first Apple exec:

- Thomas Ko, Epic senior director
- Matthew Fischer, App Store VP
- Trystan Kosmynka, in charge of app review
- Steven Allison, Epic Game Store chief
- Matthew Weissinger, Epic VP of marketing

Thomas Ko, senior director at Epic, is now on the stand for direct examination from Epic laywer Brent Byars. Ko is head of head of online business strategy and operations and will be speaking to Fortnite distribution across platforms, among other things.

Ko says Epic’s payment system now supports 42 currencies and 100+ countries, with still “room to improve.”

Ko mentions Epic’s use of PayPal and other payment processors to process transactions on the Epic Game Store.

Key here is that Epic doesn’t require you use its system.

Ko asked if Epic’s payment solution every been available on iOS.

"Yes, during Project Liberty,” he says. Liberty is "an attempt to provide developer choices for payment solutions and bring that benefit to the customers in a platform where that choice is not available.”

Ko reveals Epic’s fraud/chargeback rate for its payment system is lower than industry average 1%.

“We are currently undr 0.9%.

We’re currently deep in the weeds talking about payment processing evaluations and negotiations for Epic’s payment system. But Epic has just ended its direct of Thomas Ko and Apple is taking over now.

Ko being asked about Project Liberty. Says he was aware his payment solutions would be a part of it, but he wasn’t aware Epic was doing so without Apple’s permission.

Apple wants to try and establish Project Liberty as a secretive undermining of the App Store, which Epic isn’t really denying given the whole #FreeFortnite campaign. Curious how it will play with the judge though.

“Very few games on the Epic Game Store offer in-app purchases?” Apple lawyer asks. Ko says he’s not sure.

Seems like Apple is trying to paint Epic’s payment processing system as not an IAP competitor so much as a ploy to bypass App Store fees.

Apple ends its questioning of Ko after questioning him about user privacy, and Epic’s lawyers have no redirect. Now the court is sealing the court room before Matthew Fischer takes the stand.

That was quick for Ko!

Nothing like courtroom testimony about online payment processing if you want to totally drain the energy out of something.

But now Matthew Fischer, App Store VP, is taking the stand. This is the first Apple exec witness to testify since the start of the trial.

Fischer confirms he is responsbile for the business growth of the App Store, and that he reported to Eddy Cue and now repors to Phil Schiller, both members of Apple’s exec leadersrhip team. He’s been at Apple for more than a decade.

Epic’s counsel Katherine Forrest quotes an email from another Apple employee: "Matt feels extremely strong about not featuring our competitors on the App Store.”

Looks like Epic is looking to turn the screws on Fischer over App Store competition.

Epic quotes another email they want submitted as evidence saying “there is an epidemic of fraudulent apps in the App Store that attempt to defraud users of large sums of money.”

Not clear to me whether this was an admission of Fischer’s or someone else’s.

More clarifying details on the fraud in the App Store email, which does not appear to have come from Fischer: https://twitter.com/thedextriarchy/status/1390341115002372100

lol the VP of the App Store being asked if he’s ever sideloaded an app onto an iPhone.

This is exactly the kind of amazing question we want to hear an Apple exec answer.

Fischer says no, of course.

It seems kind of weird that Apple execs wouldn’t at least be curious about how processes like sideloading work, on a personal level.

In any case, Fischer being presented with the famous 2008 Jobs quote on how the App Store isn’t expected to be a “big profit generator.”

For context, the App Store is estimated to generate around $72 billion (Sensor Tower) per year. More than two thirds of that comes from gaming, and Apple is estimated to keep a huge chunk of its 30% cut thanks to a 78%+ profit margin.

Fischer now being asked about switching costs on iOS, and whether a lack of competitive pricing on the App Store has sent anybody to Android. Fischer says he’s not aware of any studies on that from Apple.

It’s amazing how much effort is being put in court to proving something that seems obvious to everyone but that Apple will never say outright: the App Store as it is today is designed to make tons of money and the policies it has are there to protect it.

Epic now asking Fischer about App Store fraud, a lot of which has come to light recently in threads from @keleftheriou, who is suing Apple over App Store scams. https://www.theverge.com/2021/3/18/22336380/apple-app-store-scam-lawsuit-kosta-eleftheriou-flicktype-ios-developer

"We would certainly never approve an app in App Review knowing that the app was a ripoff,” says App Store VP Matt Fischer.

Epic’s lawyer continuing to grill Fischer on fraud, money laundering and related issues.

"App Store review guidelines prohibit stores within stores. It’s because of that rule that Apple does not allow Epic to have the Epic Game Store in the Apple App Store?”

Yes, Fischer says. Epic lawyer now bringing up Apple Arcade.

Fischer says Apple Arcade is not an app, but a “featrure of the App Store.”

Fischer now dodging whether Arcade competes with other game stores. Says he wouldn’t characterize it that way.

"Would you consider Google Stadia to be a failed attempt at a streaming app?"

Fischer says, "I don’t know enough about the current state of Google Stadia to make a definitive statement about that. I’ve head they’ve had some struggles.”

Ouch.

Epic lawyer seems to be implying Google Stadia recently shut down. That’s not true. It shut down its in-house development studios. Fischer did correct that in his response.

Epic’s lawyer is basically asking Fischer slightly diff version of the same quesiton about more than a dozen companies that use their own paymwent processing, like Braintree, Amazon, and others. Fischer says Apple has not conducted any studies into security and privacy of those.

"You’re not aware of any study … indicating any payment processor app used by an enterprise app is less secure than IAP?"

I don’t recall something like that,” Fischer says.

Epic is trying to poke holes in Apple’s security justification. Argunig they’ve not even studed it.

Here’s are the documents where Apple employees talks about white-listing companies like Hulu for privelaged use of App Store APIs, like the cancel/refund API.

Apple lawyer, now on cross, asks Fischer to define the App Store.

"The App Store is a curated store where Apple works with developers to sell and distribute their apps...,” he says. Says they “work really hard” to make it attractive to devs and customers.

Apple lawyer asking Fischer if he’s responsible for security, privacy, fraud of the App Store?

He says he’s not.

Apple lawyer references the “master plan” to change the App Store into a locked-in ecosystem Epic mentioned in its opening argument.

Fischer says he’s not heard of this plan, and that he couldn’t “execute” on it if he did.

"How does the apple App Store team editorial efforts compare?”

Fischer says App Store is “incredible unique” in its marketing and editorial support. He prefaces it by saying he “might be bias.”

Fischer said Apple and Epic worked closely on Infinity Blade in 2010.

"We worked very closely with them and invited them to join us onstage fro the iPhone event for the fall of 2010.” He says game did so well they were invited back the next year for the sequel.

Apple lawyer now having Fischer describe the iOS-specific holiday skin for Fortnite in 2018.

"Did Epic pay Apple for any of that support?” No, they did not, Fischer said.

Fischer talks about working with Epic on in-app gifting.

"When we make a change, we want to make a change that applies equally to all developers,” Fischer says.

That… does not seem to track with a lot of the deals Apple has cut with Amazon and others.

Now for the juicy stuff. Fischer says he was “blindsided” by Epic’s hotfix to include its own payment system in Fortnite.

Fischer asked a series of questions about exemptions to App Store rules.

Do the app store review guidelines apply equally to all developers? Yes, he says.

Are the rules applied the same way to all developers? Yes. Do any developers receive a special break? No.

"We have promoted apps that are competitive to Apple apps before I joined the App Store team in 2010.

:We continued to not only distribute and feature and promote apps that are competitive to Apple’s apps on the store and we do this all the time,” Fischer says.

Fischer says some time after 2008, but before he joined, “the decision was made that for an app that sells physical goods and services, it didn’t make sense for Apple to earn a commission.”

He argues Apple didn’t want to take 30% of, say, an Uber ride or Amazon purchase because Apple couldn’t guarentee / had no insight into whehter the product or service was delivered as ordered.