Schiller doesn’t know whether the App Store is profitable; no notes

Phil Schiller has told a court in an antitrust case that he doesn’t know for sure whether the App Store is profitable, and never considered the return on investment when launching it.

He’s also explained the reason that there are very few written records of decisions made around the launch of the store is because Apple co-founder Steve Jobs felt that meeting notes were unnecessary – and the company still doesn’t record minutes for meetings between senior execs …

Schiller doesn’t know whether the App Store is profitable

The court battle between Apple and Epic Games ended in the US when the Supreme Court declined to hear the case – though the same issue will likely be revisited in the Department of Justice antitrust case against Apple.

But an identical case is being heard in Australia, and Apple is again being accused of using its monopoly control over the sale of iPhone apps to maximize its own profits at the expense of developers.

Apple Fellow and former marketing chief Phil Schiller has been giving evidence in the case. He says that the company isn’t motivated by profit, and he doesn’t know how much money the App Store makes – indeed, he says he doesn’t even know whether it makes a profit, though he “believes” it does.

Financial Review reports on the rather surreal cross-examination of a senior exec at one of the world’s largest companies.

“Are you telling His Honour that you have no idea whether … the App Store has been profitable?” asked an incredulous Neil Young, KC, leading the cross-examination on behalf of Epic Games.

“I believe it is [profitable],” replied Mr Schiller, who has been in charge of the App Store since the beginning.

“I’m simply saying ‘profit’ as a specific financial metric is not a report I get and spend time on. It’s not how we measure our performance as a team,” he said.

(“Billings, accounts, subscriptions. Those are the metrics the team carefully watches and manages,” he later testified.)

Likewise, cashflow forecasts, ROI, net present value “and the like” were not specific metrics Apple paid too much attention to when it decided to charge the 30 per cent commission on the revenues of many app developers selling their apps and services through the App Store, Mr Schiller agreed.

“Did you ascertain what your return on investment would be?” Mr Young asked.

“Not that I recall.”

“Did you look at any financial measures such as forecast profitability of charging a commission rate of 30 per cent?”

“Not that I recall.”

“Are you telling His Honour you made the decision without any investigation into what stream of revenue would be produced by imposing a commission of 30 per cent?” Mr Young asked.

“Correct.”

Apple doesn’t record minutes of meetings

Schiller was also questioned about the fact that there are very few written records of decisions made by senior exec, with the implication that the company was hiding something.

Not so, he said. Not taking notes during meetings goes back to a Steve Jobs comment when he returned to the company in 1997, and Apple still doesn’t record minutes of meetings between senior execs to this day.

“When Mr Jobs came back in 1997, in one of the earliest meetings someone was taking notes, writing down what [Mr Jobs] was saying about what we’re doing.

“He stopped and said ‘Why are you writing this down? You should be smart enough to remember this. If you’re not smart enough to remember this you shouldn’t be in this meeting’.

“We all stopped taking notes and learnt to just listen and be part of the conversation and remember what we were supposed to do. And that became how we worked,” Mr Schiller testified […]

The practice continues at Apple’s most senior levels, he said.

“We’ll usually have an agenda, and we’ll have discussions, and we’ll leave that discussion with a plan of what we all need to do and work on, but I’m not aware of any ‘minutes’ or record after the meeting.”

Via Daring Fireball. Photo by Benjamin Child on Unsplash.