Apple CEO Tim Cook to Congress: The App Store is in a 'street fight for market share'

Is Tim Cook more of a Ryu or a Ken?

Speaking to the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law via WebEx on Wednesday, Apple CEO Tim Cook defended the company from accusations of anticompetitive behavior when it comes to the App Store.

At one point, Cook downplayed claims of the App Store's alleged anticompetitiveness by arguing that Apple is in a “street fight for market share.” The Apple CEO cited Google's Android, Microsoft's Windows devices, and even video game consoles like Sony's PlayStation and Microsoft’s Xbox as competitors to the company’s apps platform.

Democratic Congressman Hank Johnson of Georgia hit Cook with questions ranging from the App Store approval process to Apple’s cut of third-party developers’ apps during a congressional hearing which included Amazon CEO Jeff Bezos, Facebook CEO Mark Zuckerberg, and Google CEO Sundar Pichai.

Rep. Johnson opened up the exchange with Cook by flatly laying out his argument: Apple decides which apps can be marketed to iPhone users, which is a huge responsibility.

"You wield immense power over small businesses to grow and prosper,” said Rep. Johnson. “Apple is the sole decision maker as to whether an app is made available to app users through Apple's App Store.”

This brought about one of the more interesting moments in the exchange regarding the definition of the App Store:

“The App Store is a feature of the iPhone, much like the camera and chip,” Cook explained, downplaying the notion that it is an online marketplace, which is a bit different from the camera or the chip.

Cook’s “street fight” comment came when Johnson laid into Apple for the 30-percent cut the company takes from developers who charge for their iPhone apps. Currently, there is no way for iPhone app developers who offer paid apps or require in-app subscriptions to skirt this percentage share.

As for Cook's claim that Google Play is a competitor to the App Store — it's valid, although one could argue that an iPhone user and an Android user are fairly different types of consumers. But, aside from a few game apps that can be ported to home consoles, his assertion that Apple is competing with Xbox and Playstation for App Store dominance is dubious. Those platforms exist in completely different ecosystems.

Rep. Johnson also accused Apple of discriminating against app developers with its App Store guidelines and review process. Johnson claimed the company arbitrarily decides how to enforce these rules, which can also change at the company’s whim.

Overall, Cook’s defense boiled down to how Apple only has this power over apps within the App Store and that developers could still create web apps without the required approval process. This is true, but a web app is essentially a mobile website accessible through a mobile web browser. To create a native app, a developer must abide by Apple's App Store rules; to create an offline app, a developer must abide by the App Store rules.

Apple has been accused of monopolizing the app market before. And the company has good reason to fight back against those claims: The App Store has become a primary revenue source for the company. Apple recently reported an all-time revenue record of $13.3 billion in the second quarter of 2020 for its "services" business, which consists of app sales and subscriptions. In fact, the company has even argued that its services represent the current financial state of the company better than number of hardware sold.