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The biggest problem I see with this is Apple won't even allow them to raise prices. So they are knowingly taking them out of the business when they take their 30% cut. If they are going to charge 30% for this, they might as well allow them to raise prices to remain profitable.

Why aren't these service companies switching to a HTML5 web app though? Wouldn't that allow them to continue their business untouched by Apple?

Untouched by Apple and untouched by customers...

You're talking about a company that named itself using Apple's product naming convention. They went all-in on the iOS model. They probably hired strictly ObjC programmers, they probably have no business experience with the web either. I'm not saying they couldn't switch, it just doesn't sound like this is the company with the chops to easily do so.

OK, that makes sense. But if Apple does the same to Amazon or Netflix I can see them going the web app route if they are not allowed to raise prices, because it would eat all their profits, too. Amazon has already showed a web app version of their store, and Netflix is experienced with HTML5, too.

Amazon was working on the HTML5 version well before this decision came about (they previewed it during the Chrome Web Store launch). What they showed doesn't looked optimized for touch use. That could change, of course. I imagine their strategy is to stay quiet and hope Apple doesn't go after them; and when/if that happens they'll adjust. They could be one of the few companies capable of eating the cost to stay on the platform but that would mean strengthening a direct competitor. I'm very interested to see how they handle it.

As for Netflix.. if you're talking about their HTML5 player that was in the news a few days ago to be on Chrome OS, that requires a plugin. <video> doesn't support DRM -- and never will/can. I think Netflix may be the one company that is given an exception due to their influence over Apple TV sales.

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