Tim Cook doesn't know stuff | This Week in Business

I've been listening to testimony in the Epic v. Apple court case for three weeks now, and while I haven't heard it all, what I have heard has been a frustrating exercise in experts and executives trying their very hardest not to admit basic truths to opposing counsel.

Apple CEO Tim Cook's appearance on the stand today felt like a perfect distillation of that. Sometimes, rather than admit that yes, Apple is a business and makes decisions with that business in mind, Cook resorted to insultingly improbable explanations with some frequency.

QUOTE | "It is the result of feeling like we should do something from a COVID point of view. Of course we had the lawsuits and the other things in the back of our head, but the thing that triggered it was, we were very worried about small businesses." - When asked if Apple cut its revenue share for small developers to 15% because of Epic's lawsuit, Cook insisted it was a response to the pandemic. He gave no indication as to why Apple was unconcerned about the plight of small businesses for the first eight months of the pandemic.

But other times, he resorted to the ever-useful fallback of simply pleading ignorance. To hear him tell it, one of the largest business in the world doesn't know how much money it's making on one of its most crucial businesses.

QUOTE | "No we haven't done that. But, you know, I have a feel, which is we are [profitable]." - Tim Cook, explaining why he believes the App Store is profitable, reasserting that the company doesn't assess profit margins for specific business units.

(When presented with Apple documents showing profit-and-loss statements for various business divisions including the App Store, Cook dismissed them as "not fully burdened.")

He didn't know who Apple competes with.

QUOTE | "We obviously benchmark [against them], but customers don't buy operating systems, they buy devices." - Tim Cook, refusing to concede to Epic's counsel suggestion that Apple does, in fact, compete with Google.

QUOTE | "We compete on the operating system side with Google and Microsoft." - Tim Cook, in an interview at the 2019 Berkshire-Hathaway shareholders meeting, a video clip of which Epic's counsel played for the court immediately after.

He didn't even know what words meant when strung together in a sentence and put in Apple's mandatory iOS developer agreement.

QUOTE | "If at any time, Apple determines or suspects that you, or any developers with which you are affiliated, have engaged in, or encouraged, or participated with other developers to engage in any suspicious, misleading, fraudulent, improper, unlawful, or dishonest act or omission, Apple may withhold payment to you or such other developers." - Language added to Apple's developer agreement, as read in court by Epic's lawyer.

QUOTE | "I don't know." - Tim Cook, when asked by Epic counsel if that meant Apple could withhold payments to developers it suspects of engaging in suspicious behavior.

But for my money, the height of it was when Cook combined ignorance with a shocking lack of imagination, when asked whether it was technically possible for a store to not collect data on its users, as Apple does in order to provide personalized ads on the store.

A WHOLE DANG CONVERSATION | Epic's lawyer: "Somebody else who was going to create an app store could choose to collect less data about its users than Apple does, correct?"

Cook: "I don't know, I think we generally collect the minimum amount that we can."

Epic's lawyer: "And someone else could choose not to collect, for example, information about what content you search for, and the content that you view, and the content that you download, correct?"

Cook: "If they did, they couldn't make recommendations."

Epic's lawyer: "But someone else could make that choice if they value privacy, sir. Right?"

Cook: "It seems very hypothetical."

Epic's lawyer: "But somebody could do that. You've chosen to get this information so that you could make recommendations. Somebody else could make a different choice. Isn't that right?"

Cook: "I don't know."

This debacle is expected to wrap up early next week, with a ruling to follow some time later.

As insightful as the glimpse into various companies' confidential information has been, and as much fun as it's been hearing billionaires forced to spout nonsense under oath, it's been equally frustrating to know that this isn't just a sideshow but a proceeding that could re-shape the industry and impact the fate of untold numbers of developers caught in the middle.

QUOTE | [REDACTED] - An exhibit in the Epic v. Apple case suggesting that Microsoft has at least spoken with Nintendo about getting Game Pass on the Switch platform.

QUOTE | "My prediction is one way or another, where this lands is with lower take rates. And that will benefit companies like ours, as it should. We create the material." - Take-Two CEO Strauss Zelnick offers his take on the Apple-Epic trial at the end of our interview with him.

QUOTE | "If you take metaverse, SPAC, and cryptocurrency put them all together, in five years will any this matter? I'm not sure that it will." - After Take-Two's earnings, Zelnick expresses his skepticism about some recent gaming and financial trends.

STAT | 5 million - Copies of Grand Theft Auto 5 that were sold digitally or shipped to retailers in the first three months of this year.

QUOTE | "It is important that we stay prudent in our M&A strategy and not rush into closing a transaction before it is ready. In M&A as in game development, quality comes first." - In reporting its full-year earnings, the Embracer Group explains that it's all about quality over quantity.

STAT | 150 - The number of companies Embracer Group -- which has acquired more than 25 companies since the beginning of 2020 -- talked with about an acquisition last quarter.

STAT | 160 - The number of games in development at Embracer Group companies.

QUOTE | "That's always a tricky one, but I find that it hasn't been as difficult as one would expect. We ended up finding that people who have nostalgia around Disney IP are willing to try a new thing as long as we don't set the challenge as insurmountable." - Glenn Dphrepaulezz, senior managing producer on Disney's games and interactive experiences group, talks about the challenge of taking beloved characters and putting them in new contexts.

STAT | 59% - The portion of women gamers surveyed who said they hide their gender when playing online to avoid harassment.

QUOTE | "The action-adventure space is a hugely important genre in our industry, and to us at EA. Players and fans of those games are so passionate and it's also one of my personal favorite genres. We've also recently had success with Star Wars Jedi: Fallen Order, and we would love to entertain more fans with similar interests." - EA senior VP and group general manager Samantha Ryan responds to a question about EA's long-running efforts to make a successful open-world action-adventure franchise. That's the type of game that will be made by EA's new Seattle studio, led by Shadows of Mordor veteran Kevin Stephens.

QUOTE | "There will be stuff later this month. And July. And in August. It is no longer a situation where there is this week of video game news, and then nothing either side of it for two months." - Geoff Keighley confirms/threatens that even though E3 has returned, we're still going to get a prolonged summer games gauntlet of publisher showcases.

QUOTE | "Eventually we'll, not phase out, but, eventually Minecraft will have to start going down, then hopefully Scrolls will start to take the pace at that time and cover it up." - 10 Years Ago This Month, Mojang's first employee Daniel Kaplan probably spent a whole lot of time preparing for a post-Minecraft phase of the company that never materialized.

STAT | $108.7 billion - The amount AT&T paid to acquire Time Warner in 2016.

STAT | $43 billion - The amount AT&T is receiving to split from Time Warner (now WarnerMedia) in 2021.