By Tim Higgins

In a career full of rosy superlatives, the public rebuke of Tim Cook this week was a stunner.

Cook chose poorly.

A federal judge -- fed up with Apple's shenanigans -- wrote those words in a new ruling that blew a hole in the company's vaunted Walled Garden.

So much attention these days is on how Cook developed the China supply chain to help churn out hundreds of millions of iPhones a year. But his real legacy may lie in his ability to squeeze more and more profits out of the digital ecosystem built on top of the hardware.

This is the garden that is key to Apple's growth. At its center sits the App Store. It collects as much as 30% of in-app purchases made in third-party apps.

Now that legacy is at risk -- perhaps an even greater threat to the company's business than the trade war.

U.S. District Judge Yvonne Gonzalez Rogers in 2021 had ordered Apple to stop prohibiting developers from linking out of their apps to provide an alternative way to pay for digital content. She essentially left it to Apple to figure out how -- a small crack in the Walled Garden that would grow larger over time.

After running through the appeals process, Apple early last year finally allowed the so-called steering of customers, but with caveats. Developers who linked out didn't have to pay 30% to Apple. But they had to pay a 27% commission on purchases made outside of the App Store by users clicking on those newly allowed links.

Those links also came with a bunch of rules seemingly aimed at making it unlikely that users would, in fact, go through with the purchases.

To Gonzalez Rogers, those decisions by Apple violated her original injunction. Not only that, but she also said Wednesday that one of Cook's vice presidents had lied on the witness stand and the company didn't even try to amend the record. And she referred Apple's violation of her order to the Justice Department to investigate whether the company should be charged with criminal contempt.

"Apple's response to the Injunction strains credulity," Gonzalez Rogers wrote in her 80-page order.

Speaking on Apple's quarterly earnings call late Thursday, Cook briefly addressed the matter. "We've complied with the court's order, and we're going to appeal," he said. And Apple has vigorously defended its practices throughout the years of litigation.

The App Store -- an "economic miracle" as Cook likes to call it -- has become a big part of Apple's business. It has created billions in so-called services revenue while helping spawn entire new ways of doing business from Uber to Instagram.

Back in 2017, after a period in which iPhone sales failed to excite, Cook set the goal of doubling the services revenue to $50 billion by 2020. Much of this would come from the high-margin App Store commission.

In Apple's most recent fiscal year, that services revenue was almost $100 billion, about 25% of the company's total sales.

How much Apple should reap from app sales is a central question in a global campaign by rivals and regulators accusing the tech giant of using anticompetitive business practices to help fuel its outsized results.

Companies, such as Epic Games and Spotify, have long complained that Apple was using its power over the App Economy to take an unfair cut. Spotify long ago stopped accepting new paying subscribers through its popular iPhone app. A key part of Spotify's complaints had revolved around the anti-steering rule.

In 2020, Epic Games CEO Tim Sweeney wanted to blow it all up and filed lawsuits against Apple and Google over the control of their stores. He imagined a world in which a court would order Apple to allow third-party app stores and alternative payment systems within the app.

The anti-steering provision wasn't at the heart of the original fight. During the 16-day bench trial in the spring of 2021, Cook defended the rule. He suggested Best Buy wouldn't hang a sign in its stores to advertise buying iPhones elsewhere.

"If the effort goes in to transacting with the customer, it seems like it ought to happen within the app," Cook testified.

Still, Cook faced sharp questions from the judge. Ultimately, she ruled mostly in Apple's favor -- except on the anti-steering matter. "The Court concludes that Apple's anti-steering provisions hide critical information from consumers and illegally stifle consumer choice," Gonzalez Rogers wrote in September 2021.

It would take time to fully appreciate how influential that decision would be.

The finding of fault with the anti-steering provision by a U.S. judge gave geopolitical cover to European officials who passed hallmark tech legislation. It would also become grist in two European regulatory actions and a sweeping U.S. Justice Department antitrust case against Apple.

Meanwhile, matters had been proceeding in Gonzalez Rogers court in northern California. Epic in 2024 challenged the new rules Apple had put in place around steering in response to the judge's earlier order.

That led Gonzalez Rogers to question how Apple had come to its decision on addressing the steering issue -- and ultimately her decision this week.

Anyone who listened through rounds of hearings heard that Apple insiders weren't happy with the judge's perceived meddling. Testimony and records showed that Cook and Apple didn't want to give any ground.

Cook was even warned against the new fee -- which was similar to how Apple had addressed regulators' demands in the Netherlands and South Korea -- amid concerns the U.S. judge would object, evidence showed. But Apple beancounters estimated that allowing developers to simply link out for an alternative payment method could cost Apple billions of dollars.

"It's our F -- ING STORE," an Apple PR director texted a colleague during a hearing. (The communications person testified that she couldn't recall sending the message.) The text eventually became evidence itself, something the judge used as an example of how "Apple's 'entitlement' perspective and mantra persisted beyond the Injunction."

Now, all those efforts to keep the Walled Garden strong may, in fact, have weakened it -- cutting into Apple's profits and upending Cook's masterplan.