US federal judge rebukes Apple and Tim Cook, puts core of App Store model at risk

Apple CEO Tim Cook (Courtesy: Reuters photo)

In a rare public rebuke that pierced Apple’s tightly controlled image, a federal judge this week accused CEO Tim Cook and his company of violating a court order meant to curb Apple’s control over app payments—posing the most serious threat yet to the business model that has defined Cook’s tenure, the Wall Street Journal reported.

US District Judge Yvonne Gonzalez Rogers ruled that Apple failed to comply with her 2021 injunction banning so-called anti-steering provisions, which prevented app developers from directing users to alternative payment options outside the App Store. While Apple technically allowed external links after exhausting its appeals, the judge found the company imposed restrictive terms—including a new 27% commission—that effectively undercut her ruling.

“Apple’s response to the Injunction strains credulity,” Gonzalez Rogers wrote in her scathing 80-page order, which referred Apple to the US Department of Justice for potential criminal contempt charges. She also accused an Apple vice president of lying under oath and criticized the company for failing to correct the record.

The move shocked a tech world long accustomed to Apple’s legal dominance and could have deep implications for the company's lucrative services business, which generated nearly $100 billion last year—about 25% of total revenue.

The Walled Garden under siege

For years, Apple has defended its tight control over the App Store as central to ensuring user security and product quality. The store collects up to 30% of all in-app transactions, making it a key source of high-margin revenue. Critics have argued that this “Walled Garden” stifles competition and forces developers to accept onerous fees.

Spotify and Epic Games have been among the most vocal challengers. Epic's 2020 lawsuit against Apple was the catalyst for the 2021 ruling that found the anti-steering rules “illegally stifle consumer choice.” That decision cracked open Apple’s defences and became a cornerstone for similar regulatory battles in Europe and a major antitrust case from the US Department of Justice.

But when Apple responded to the ruling by adding a new 27% commission on purchases made through approved external links—while also placing design and procedural hurdles around those links—Epic went back to court. The latest ruling suggests Apple’s workaround may have backfired.

A turning point for Tim Cook’s legacy

Judge Gonzalez Rogers’s criticism hits at the heart of Tim Cook’s leadership strategy. Though often celebrated for scaling Apple’s global supply chain and managing iPhone production, Cook’s real financial legacy lies in turning Apple into a services powerhouse. In 2017, when iPhone sales began to slow, he set an ambitious goal of doubling services revenue to $50 billion by 2020—a target Apple exceeded.

The App Store played a central role in that growth. But according to court filings, internal Apple projections suggested that truly opening up alternative payment systems—even just allowing users to be steered elsewhere—could cost the company billions.

Records and testimony from Apple executives suggested Cook was deeply involved in resisting changes. Communications shown in court revealed internal frustration over having to comply, including a message from an Apple PR director during a hearing that read, “It’s our F—ING STORE.”

That message became part of the judge’s ruling, cited as evidence of Apple’s “entitlement” mindset. Even though executives warned that the new 27% workaround risked running afoul of the court, Apple pressed ahead—mirroring tactics it had already tried in South Korea and the Netherlands to dodge regulatory demands while preserving profits.

Legal fallout and investor concerns

On Apple’s earnings call Thursday, Cook addressed the ruling briefly, saying, “We’ve complied with the court’s order, and we’re going to appeal.” But the market reaction was swift—Apple shares fell 3.7% amid broader investor anxiety tied to the Trump administration’s new tariffs.

The company now faces escalating legal pressure from regulators on multiple fronts. The DOJ’s antitrust suit, European tech legislation, and global developer unrest are converging into a pivotal moment for Apple’s services strategy.

In trying to preserve the Walled Garden, Cook may have unwittingly invited more aggressive scrutiny—raising questions about whether the foundation of Apple’s next era of growth is beginning to crack.