Barry Diller: Apple’s App Store ‘overcharged in a disgusting manner’

Apple CEO Tim Cook is set to take the witness stand Friday to defend the company’s App Store against charges that it has grown into an illegal monopoly. Barry Diller, IAC and Expedia chairman, joined “Squawk Box” on Friday to…

Barry Diller: Apple's App Store 'overcharged in a disgusting manner'

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Apple CEO Tim Cook is set to take the witness stand Friday to defend the company’s App Store against charges that it has grown into an illegal monopoly. Barry Diller, IAC and Expedia chairman, joined “Squawk Box” on Friday to give his take on the legal battle. For access to live and exclusive video from CNBC subscribe to CNBC PRO: dvd.lol cnb.cx/2NGeIvi

Business mogul Barry Diller ripped into Apple on Friday over the fees it charges companies that have applications on the iPhone maker’s App Store.

In an interview on CNBC’s “Squawk Box,” the chairman of IAC and Expedia said his companies, and others like them, are “overcharged in a disgusting manner.”

For large companies, Apple takes a commission rate of 30% on in-app transactions; for certain smaller developers, the company recently lowered it to 15% after facing criticism.

Apple did not respond to a CNBC request for comment about Diller’s remarks, but it has steadfastly defended its policies, saying the money it gets from commission fees goes into maintaining and securing the App Store in a way that ultimately benefits app makers.

“The idea that they actually justify it by saying, ‘We spend all this money protecting our little App Store,’” Diller said. “I mean, it’s criminal. Well, it will be criminal.”

Diller’s comments came on the same day that Apple CEO Tim Cook is set to testify in an antirust case focused on the App Store brought by Epic Games, which makes the widely popular video game Fortnite.

Diller said Apple has a “quasi-monopoly” along with Alphabet’s Google, which runs the Google Play app store for Android devices.

Diller took aim at the way Apple forces in-app transactions to flow through the App Store’s payments system. Because Apple provides the payment system, he said, the best comparison for Apple is a credit card company, which typically takes around a 2% fee on transactions.

“It’s irrational, 30%. I mean, it makes no sense,” Diller said.

“Match, little Match.com, pays $500 million a year to Apple to go through their store. Does that seem rational to you?” Diller said, referring to the dating company that Diller’s IAC spun out into a separate entity last year.

Diller said Apple needs to be regulated in order to preserve competition, but he stressed he was not calling for the tech giant to be broken up.

“I believe that, when you get to sufficient size, regulation is good. I grew up in the television business, which was regulated completely by the FCC and really tight regulations. Everybody, by the way, prospered to say the least,” said Diller, the former CEO of Fox and Paramount Pictures.

“I think regulation, proper regulation, makes sense. I don’t want to bust them up. I don’t think that that’s such a smart idea, but when you have size and power, you’ve got to have regulation,” he said.

Diller also told CNBC he feels Netflix has an insurmountable advantage in streaming video, a business that’s seen an explosion of new entrants, including Disney+, Apple TV+ and NBCUniversal’s Peacock.

“Netflix won this several years ago, they’re the only ones who have the scale and momentum to keep making these somewhat lunatic investments in programming,” he said.

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