
Apple halved app store fee to get Amazon Prime video on devices - gumby
https://www.bloomberg.com/news/articles/2020-07-29/apple-considered-taking-40-cut-from-subscriptions-emails-show
======
shadowfiend
Bloomberg itself reported in 2016 that fees were halved for all video
streaming services: [https://www.bloomberg.com/news/articles/2016-11-17/apple-
is-...](https://www.bloomberg.com/news/articles/2016-11-17/apple-is-said-to-
cut-fees-video-services-will-pay-for-app-store) . You could take this to mean
that rather than negotiate a special rate for Amazon, they changed App Store
rules for a whole category on the store, informed by discussions with Amazon.

Hard to know if that's actually how it went down based on the info that's out
there right now though.

~~~
wlesieutre
A more recent change (April 2020) is that Amazon lets you buy/rent movies in
their apps, and if you have billing info set up through Amazon it goes through
that instead of Apple, presumably bypassing Apple's cut. If you don't, payment
goes through Apple's system, probably at the reduced 15% cut.

Apple commented to 9to5mac that this is part of a "program for premium
subscription video entertainment providers," and it has some strings attached
- integration with the TV app, AirPlay 2, universal search and single sign-on
integration.

[https://9to5mac.com/2020/04/01/purchases-amazon-prime-
video/](https://9to5mac.com/2020/04/01/purchases-amazon-prime-video/)

From a business perspective I can see why they'd offer this, integration with
the TV app and universal search means that users access content through that,
so you're putting in extra work in order to mix your content in with everyone
else's and give up the chance to upsell whatever else is on offer through your
own app. When they first launched the new Apple TV system with its TV app,
streaming providers didn't seem very keen on the idea of integrating. Cutting
to 15% in exchange lets the providers keep more of their revenue, and lets
Apple create the integrated experience that they want to offer.

~~~
OkGoDoIt
I wish those restrictions would include forcing providers to support AirPlay.
Amazon Prime recently cut off airplay support (last year). ”Due to technical
limitations and to improve the user experience“ but we all know it’s for
business reasons or possibly DRM reasons. Netflix and other video apps
followed shortly thereafter once they saw Apple didn’t retaliate. Now they all
say you should use their official smart TV apps, but that doesn’t work with
older Apple TV set-top boxes and it’s a worse experience all around regardless
(at least in my opinion, I know some people disagree or don’t care one way or
the other, but now it’s no longer an option for people like me who do prefer
the AirPlay experience). AirPlay used to be one of the major selling points of
iPhones for me, but now it’s only useful on pirated media where you have the
.mp4 file...

(and to preempt the counterargument about just using Chromecast, for whatever
reason in my experience across a multitude of devices Chromecast has always
been extremely unstable, and often is more hassle than it’s worth. Nowadays I
just put an iPad on my coffee table and watch that even though I have a huge
TV sitting on the wall a few feet away)

~~~
ehvatum
Trade vape tobacco juice with your teenagers for pirate downloads, and give
them an MBA when they cut you out.

------
taylorhou
interesting how bigger players are able to negotiate discounts/preference when
arguably they are more suited to not need the discount - whereas 15% could be
the difference between bankruptcy and breakeven or ramen profitability for a
small startup/business.

~~~
CubsFan1060
Isn't this pretty average business? Amazon (and the others) are bringing more
business and get a discount.

AWS does this. So does monoprice (volume pricing). My local landscaping place
does this (contractors buying more tons of rock get a better price). Home
depot has "contractor pricing" when you buy multiples of things.

~~~
thephyber
Yes, but it's relevant because Steve Jobs seemed to claim otherwise in his
testimony yesterday:

> During a hearing before the House antitrust subcommittee on Wednesday, Apple
> CEO Tim Cook testified that “we apply the rules to all developers evenly”
> when it comes to the App Store. But documents revealed by the subcommittee’s
> investigation show Apple senior vice president Eddy Cue offered Amazon a
> unique deal in 2016: Apple would only take a 15 percent fee on subscriptions
> that signed up through the app, compared to the standard 30 percent that
> most developers must hand over.[1]

[1] [https://www.theverge.com/2020/7/30/21348108/apple-amazon-
pri...](https://www.theverge.com/2020/7/30/21348108/apple-amazon-prime-video-
app-store-special-treatment-fee-subscriptions)

~~~
roywiggins
Steve Jobs rose from the grave to attend a Congressional committee hearing?

~~~
gumby
He taught Hari Seldon how!

------
ViViDboarder
“... there are many rivals trying to woo mobile developers and consumers.”

Wow. Many? There are only two platforms, Android and iOS. Android barely has
any competition with Play and iOS has no competition for the App Store. So who
are the rivals?

The Play Store and the App Store do not compete as they cater to distinct
audiences.

~~~
nend
Cook said this defensively in regards to a question during the anti trust
hearings. The context makes it even worse, because his additional examples
were the play station and Xbox platforms, which obviously aren't mobile app
competitors.

It was a prepared canned response that barely addressed the question, but
since each rep only gets 5 minutes to ask questions, Cook (and others) could
basically answer however they wanted because there's no time for follow up.

The anti trust laws were designed to prevent exactly this type of action the
article is talking about, but we've given big business so much political sway
I don't have much faith the laws are enforceable at this point.

~~~
rhizome
Even Cook underplayed the mentality these guys are working with. Yesterday,
Zuckerberg essentially said that his definition of Facebook's competition
includes running into a friend at the grocery store.

The wider they can cast the net, the easier it is to fend off antitrust
controls, or at least the threat of them, as far as their stockholders are
concerned.

------
hardtke
This could be the nail in the coffin for Apple with regards to Spotify's
antitrust complaint in Europe.

~~~
scarface74
Spotify reportedly got the same deal.

Spotify hasn’t allowed in app purchases for years.

Spotify’s complaint was that Apple gave Apple Music special treatment when it
came to its platform like how Siri integrates with it and how it was Spotify
couldn’t stream directly over the Apple Watch.

Apple opened up both to third parties over a year ago - and Spotify supports
neither.

~~~
CubsFan1060
Spotify supports siri. "Play AC/DC on Spotify" works just fine.

~~~
watermelon0
But "Play AC/DC" plays them in Apple Music, not your preferred (or currently
used) music player app.

There is no way to set that I prefer Spotify, and I've seen a few occasions
when CarPlay showed Apple Music when I started a car (might be related to not
having Spotify app in the background, but I never digged deeper).

~~~
three_seagrass
This also came up yesterday in the antitrust hearing, wrgt Alexa and Amazon
Basics defaulting.

------
blinding-streak
In my mind, this is basically a form of network peering, but on a biz-dev
level. These two tech giants are peers in many ways, such as customer reach,
developer footprint, company size, global stature, etc. Amazon wasn't able to
get a zero-fee arrangement, but half off is pretty good.

~~~
hinkley
I wonder if that was before or after they banned AppleTVs from amazon.com

------
DoofusOfDeath
Something I'd like to know about antitrust laws around the world:

Suppose two major companies work together, such that their _collaborative
effort_ is monopolistic. Is such a collaboration subject to antitrust
intervention?

~~~
tptacek
You are describing a trust.

~~~
narag
A trust is a group of companies on the same business. But what about an
agreement between a provider and a supplier that gives one of them a huge
advantage to the point of crushing competitors? Would it be also covered by
antitrust laws?

~~~
tptacek
They don't have to be in the same business, just organized to suppress
competition. The original trusts were groups of different companies that
shared board members (trustees).

------
mxd3
The takeaway for me was this:

"The deal, announced in December 2017, also allowed Amazon’s video service to
integrate with Apple’s voice-activated digital assistant, Siri, and the iPhone
maker’s TV app, which launched in 2016."

To me this means that development for Siri is partly bound to whoever's
willing to pay Apple enough money. This is really disappointing from the
accessibility side.

~~~
readams
It's the other way around. Amazon didn't want to be integrated since that
means you're just in a bucket of content that Apple controls and Amazon has no
opportunity to control the user experience or offer additional upsells.

Part of the deal for the reduced cut was that Amazon _had to_ do these
integrations, not that they were allowed to.

~~~
scarface74
Amazon didn’t have to. Netflix doesn’t. Apple is a lot more lenient about
which apps can get on the AppleTV than Roku. Roku wants a cut of ad revenue
and forces each provider to make special deals.

~~~
readams
Amazon agreed to do it in in exchange for a lower revenue share with Apple.
This is in the article. All I did was summarize what was said in the emails.

~~~
scarface74
It was a mutual deal. Netflix chose not to. Other streaming providers choose
not to have in app purchases at all and still integrate. Either way it’s the
provider’s choice.

Apple really wanted Prime so it made a deal.

------
jb775
The crazy thing is that Apple not only gets a 30% cut of app revenue, but the
development work comes at essentially no cost to them.

Would be interesting if a bunch of powerful app makers banded together and
threatened to pull their apps. If there's a way to impact iPhone sales, which
is typically the entry point to buying other Apple products and services),
maybe Apple would lower fees.

~~~
nerpderp82
Clones would immediately take their place. If done publicly, Apple would not
capitulate. iOS users are still the premium ARPUs

------
scarface74
It’s an open secret that they did the same for Netflix, Hulu and Spotify.

~~~
philwelch
And Amazon, I’m pretty sure, gives AWS discounts to Netflix despite directly
competing with them. And Apple gives a lot of these companies discounts to buy
Macs for their employees.

------
pluc
Why is everyone acting like Apple's App Store is this democratic place that
should abide by some arbitrary rule of equality? They own the thing _and_ they
make the rules that govern it. They can do whatever they like and really don't
have to answer to anyone.

~~~
shados
Because antitrust laws are a thing.

If you make a new phone OS tomorrow and lock it down to a single store with a
99.99% cut, no one cares and it's not illegal. You don't have oligopoly.

When Apple or Google get a little too strict with their app stores, things get
a lot more ambiguous.

~~~
ryanseys
But the 30% cut by Apple has been standard from the beginning. Why does that
suddenly come into question once they have been successful? Serious question,
I'm not an expert in antitrust laws.

~~~
inopinatus
It isn't the size of the cut that's the problem. Focusing on that is
misdirection.

The problem is that Apple require vendors not to advertise, link to, or even
mention that other payment methods are available outside of the walled garden.

That's the stunning uppercut. The size of the fee is merely a follow-up kick
to the nuts.

No doubt Apple's PR team have been feeding Bloomberg background that pulls
them towards only thinking about percentages, because "high prices bad" is an
much easier story for lazy hacks to write than "Apple's T&Cs are distorting a
marketplace and forcing vendors to mislead consumers", and much easier for
Apple to leak about and subsequently respond to without addressing the core
problem, especially when they're eventually forced to sit down and haggle with
consumer/anti-trust regulators.

------
rydre
Context for those who missed yesterday's anti-trust hearings:

Tim Cook, the CEO of Apple said that Apple treats developers equally - under
oath. The problem is that Amazon got a special deal. Baidu (the Chinese
Google) got a special deal where Apple fast tracks App Store approval for them
and have special assigned Apple employees for their app(s). This might be one
of the evidence that Apple's CEO lied under oath.

~~~
ghshephard
Does Apple treat other video streamers differently than Amazon?

~~~
rydre
> _Does Apple treat other video streamers differently than Amazon?_

Apple changed it's rules for everyone in this category to get Amazon onboard
with their video service.

Why should it take another Amazon in another industry to change rules for that
industry? Why did Apple change it's rules in an entire category so that they
can get Amazon onboard? Because Amazon is too big and has leverage over Apple?
Isn't it?

Well this is precisely why good democracies and competitive countries have
anti trust laws.

This also shows that for some arbitrary categories to please companies that
have leverage over Apple, Apple will change rules at whim. This also
indirectly indicates that Apple does not treat all developers equally - if you
look at this in good faith.

~~~
tptacek
Probably because there are other, more popular app stores. You can draw a line
around anything --- the icon that appears when you boot a Macbook, for
instance --- and claim that Apple has a "monopoly" over it. You have to
persuasively connect it to harm to consumers, which is difficult given the
vibrancy of competition in mobile apps.

------
gpapilion
I wonder how much of this is the mode being based around low value one time
purchases, that have now been replaced with subscription models.

.30 cents on a single purchase makes sense from a marketing cost perspective,
it just seems like apple isn’t bringing enough to the table to justify the 30%
cut after the initial sign up.

------
ziddoap
Edit: Users below have helped provide context, thanks.

Maybe I'm missing the news here -- I'd be happy if someone could correct me or
point out what I'm missing for why this is a big headline.

If you replace the company names with "Ma & Pa's Pizza" making a deal with
"Dad & Sons Grocery", but keep the article the same (Ma & Pa pay 50% less of a
fee for shelf space, Dad & Sons Grocery benefits from the great pizza Ma & Pa
make), I don't see it being a Bloomberg story. My analogy might not quite line
up (I have 0 clue how grocery shelf space is allocated), but the sentiment
remains. Two companies negotiated, they had things to offer in lieu of the
standard monetary compensation, and they came to an agreement.

If I am able to leverage assets other than money (intangibles like reach,
brand, etc.) to lower the cost of something I am purchasing/becoming involved
with, and the other company agrees to lower their cost because they will reap
the benefits of the intangibles I offer, why is that wrong? Is it because of
the scale involved here?

Two companies negotiated fees. What am I missing here?

~~~
ocdtrekkie
That yesterday Tim Cook stated a bunch of times _under oath_ that they treat
every company the same with regards to App Store policy and fees. Except Jeff
Bezos got a special deal directly from Tim Cook.

So this is potentially evidence of perjury.

~~~
ziddoap
That's fair, he probably shouldn't lie under oath I agree.

The article has a very small paragraph about that, and the remaining 95% was
just discussing that a deal was made. I guess since Bloomberg gave much more
weight to the fact a deal was struck (rather than weighting the fact that Cook
potentially lied under oath), I was focusing on the wrong thing.

~~~
ocdtrekkie
It's pretty risky for a news organization to directly accuse one of the most
powerful men in America of a crime. It's much easier for them to present facts
and let people read that out of it. (And I nearly guarantee you the
Congresspeople who spoke with him yesterday will see this article.)

~~~
ziddoap
Agree. Thanks for providing the context, I have not been watching the hearings
live.

------
WalterBright
Effectively competing against Amazon:

[https://www.inc.com/justin-bariso/amazon-almost-killed-
best-...](https://www.inc.com/justin-bariso/amazon-almost-killed-best-buy-
then-best-buy-did-something-completely-brilliant.html)

------
WalterBright
Amazon could say 30% commission on selling all Apple products on Amazon!

Or reduce the app store cut.

~~~
sdinsn
But they didn't say that. I don't understand why you are making up fantasies.

~~~
WalterBright
I said "could say" not "did say".

------
monadic2
Wow so all I need to do to make the app store viable is have a brand worth
more than anything else on the app store.

------
wy35
For people running into a paywall:
[https://web.archive.org/web/20200730155558/https://www.bloom...](https://web.archive.org/web/20200730155558/https://www.bloomberg.com/news/articles/2020-07-29/apple-
considered-taking-40-cut-from-subscriptions-emails-show)

------
dannyw
This is really, really bad for Apple.

~~~
xilni
How is this different than volume discounts for anything else?

~~~
rurp
Giving a discount to a big spender is normal, but lying about it to Congress
and elsewhere is not.

~~~
tptacek
Cook didn't lie about it at all. People who didn't watch the whole session are
taking one line of his out of context, and ignoring the followup that dealt
specifically with this issue.

That, of course, is the problem with these open testimony sessions.
Legislators get 5 minutes to pursue random agendas, and everyone knows that
the sole purpose of the enterprise is to generate sound bites for people to
argue about later on. The real fact-finding is done in writing, and by
staffers, not legislators themselves.

~~~
innagadadavida
Worth watching the scenes from The Aviator:
[https://www.youtube.com/watch?v=KMYSaImuIgo](https://www.youtube.com/watch?v=KMYSaImuIgo)

The real hearing of Mr. Hughes:
[https://www.youtube.com/watch?v=GDkTkpoyfL0](https://www.youtube.com/watch?v=GDkTkpoyfL0)

I'd be very surprised if Tim Cook lied in his testimony. Politicians seem to
have a major problem with big tech,. They just don't understand any of this
and hopefully they don't make the same mistakes they made with Bell, that
basically fragmented the OS stack and caused more problems than it solved.

~~~
vaxman
Not worth.

