Apple's Tim Cook in the courthouse today. Photo by Bloomberg
The Briefing
Apple

Why Apple Execs Lost Credibility During the Epic Trial

Photo: Apple's Tim Cook in the courthouse today. Photo by Bloomberg

Next time Apple reports quarterly profits, pull up your favorite music app and stream the song ‘I’ve got a feeling’. That appears to be what CEO Tim Cook does to assess how each of Apple’s divisions do. He testified today, in his time on the witness stand in the Apple-Epic trial, that while Apple doesn’t track the profitability of the App Store, he has a “feel” for it and believes the store does make money. Maybe he should consult an astrologer and come up with a slightly more precise idea.

In all seriousness, Cook’s “feel” may come from internal documents, discussed in the trial but not shown publicly, that indicate Apple tracks an operating margin percentage for the App Store. Cook testified that this number didn’t reflect the full burden of expenses allocated against the App Store, which means it doesn’t show the App Store’s true profits. Plenty of companies report profit metrics for individual business units before allocation of corporate overhead and other expenses. You can argue whether those numbers are meaningful. But you can’t credibly claim you don’t know how much money the Apple Store makes, on some basic measure.

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