Apple Discussed 'Punitive Measures' Against Netflix for Dropping In-App Purchases

[tkaravou]

Companies see what Netflix is doing (or was going to do) and start selling their apps / games for $0 on the App Store. Apple gets no cut. Companies offer unlocking the full versions of their app/games via a purchase or subscription on their site effectively bypassing the 30% payout. Apple gets no cut. If you run a trillion+ dollar company, you discuss this. If you don't discuss this, you're not running a trillion+ dollar company.

 

[rjp1]

I'd be okay with Apple taking 30% and being the only app store if they sold their hardware at a loss (like video game consoles). They are trying to have their cake and eat it too.

 

[Unregistered 4U]

What about some other small app maker that isn't already a household name?

Is there a small app maker that isn’t already a household name that commands the ability to broker multi-million dollar content contracts with major Hollywood studios in order to have their content streamed by their app? Oh AND that are creating their own original content such that the usage of the App Store is as a delivery mechanism for the streaming app?

Because I’d be willing to bet that “small app maker” and “multi-million dollar contracts” don’t generally show up in the same sentence… with the exception of the above. Oh, and when the “small app maker” is selling their app to a large one!

 

[Rogifan]

Ok, so you have an app in the AppStore, which people can download but can not sign up for!! Forcing users to join from some backdoor, removing the choice for consumers who perhaps want all subscriptions in one place. But hey.... at least Netflix knows it is a hassle so that's OK.

So it’s Netflix’s fault because they don’t think Apple deserves 30% or 15% of monthly Netflix subscriptions? Nobody is signing up for Netflix because of Apple. Why does Apple deserve a cut of their business?

 

[Unregistered 4U]

I'd be okay with Apple taking 30% and being the only app store if they sold their hardware at a loss (like video game consoles). They are trying to have their cake and eat it too.

Nintendo does not and has never sold their hardware for a loss. Their hardware is usually underpowered because it’s what the technology of the day will allow and still provide a profit.

 

[cmaier]

That's only one aspect. The other is that Netflix is popular enough that its absence on Apple products would probably hurt Apple's sales. You can see from the email exchange quoted in the article that the execs were spending a lot of effort not to lose them.

Besides, I don't think a company like Protonmail has to "rely on apple’s infrastructure to attract customers".

Well they seemed to think they did, otherwise they would have stuck to off-app subscriptions.

 

[Rogifan]

The reason Netflix saw a higher churn rate on iOS vs web is that Apple makes it easier to track and manage subscriptions on their platform. On web, it is easier to snatch someone's credit card and charge it for a year without them remembering they have a subscription.

In this scenario, in-app purchases/subscriptions are a benefit to the consumer.

Ah so this is why Apple created the reader app category which allows the likes of Netflix, Spotify and Amazon to offer content without having to include IAP?

 

[Unregistered 4U]

Why does Apple deserve a cut of their business?

Because when they initially negotiated with Netflix they both agreed that was what Apple deserved. Until of course Netflix thought it wasn’t what they deserved, they re-negotiated and ended up with what they have now.

If there’s a contract involved, the contract defines between the two parties what each party “deserves”. If I get you to sign a contract for me to send you 1 Apple a week for $600 a month, and you think that’s a deal you want to take and sign the contract, then I deserve to receive what you agreed to. Nothing more, nothing less.

 

[Rigby]

Well they seemed to think they did, otherwise they would have stuck to off-app subscriptions.

You mean Protonmail? They happily used off-app subscriptions only for years, before Apple threatened to de-platform them.

 

[ScottHammet]

It's like you don't know that MacOS exists. Or do you just believe that it's riddled with malware and fraud? Not to mention the countless scam apps that already exist on the App Store which Apple is slow to remove because they generate a lot of revenue.

Apple already sells devices that allow you to install software from outside of its App Store. This is a solved problem.

Desktop is a different argument, where the browser is the weakest point of entry. Very different attack vector dynamics.

 

[I7guy]

That cuts both ways. Where would Apple be without the vibrant app developer community?

The reason there is a vibrant developer community is because for $99, labor and no hosting fees one can earn a tidy living from an app. Only pay 15-30% commission. It's the best deal in town.

Besides, people forget that the original iPhone didn't have an app store when it came out. Jobs envisioned that everyone would use web applications at the time, which wouldn't allow Apple to play these games.

What Jobs envisioned is irrelevant, didn't come to pass by his own hand.

 

[Rigby]

Companies see what Netflix is doing (or was going to do) and start selling their apps / games for $0 on the App Store. Apple gets no cut. Companies offer unlocking the full versions of their app/games via a purchase or subscription on their site effectively bypassing the 30% payout. Apple gets no cut. If you run a trillion+ dollar company, you discuss this. If you don't discuss this, you're not running a trillion+ dollar company.

Should Netflix get a cut from, say, sales proceeds of the Apple TV box? Pretty sure they would sell far less if Netflix wasn't on it.

 

[citysnaps]

Netflix should simply drop their app from the App Store. Easy.

 

[I7guy]

Should Netflix get a cut from, say, sales proceeds of the Apple TV box? Pretty sure they would sell far less if Netflix wasn't on it.

That would be fair as long as netflix dropped the app from every other hardware device as well and/or took the same cut. Else they would open themselves for anti-trust legislation. However, the flip side is the Apple TV may help sell netflix subscriptions, so there is that.

 

[hot-gril]

And here you go.. Apple has no right to ask this, I think Epic Games deserve to win! to stop some of the shady stuff apple is doing.

As scummy as it is, they have the right still. They decided not to exercise it in this case but have done similar things in other cases. This is why I avoid developing for iOS. I don't trust Apple not to screw me over.

 

[BvizioN]

So it’s Netflix’s fault because they don’t think Apple deserves 30% or 15% of monthly Netflix subscriptions? Nobody is signing up for Netflix because of Apple. Why does Apple deserve a cut of their business?

Well, there is a pretty simple solution if they think Apple does not deserve 30% or 15% (or anything at all) They can just take their business on web site and remove the App from the store, since they don't agree anymore to the agreement that they once agreed (when they were not as big as they think they are now) How about that? Or even better, make a smartphone (like once Facebook did try) and have their own store in it? But of course we all know that it all costs a mount of money and they would rather have a free ride on a platform that they did NOT spend billions on R&D etc to build.

 

[hot-gril]

Apple is the greediest company in the world. They take extracting money out of others to ridiculous levels in every product they sell.

Then don't buy it, easy

 

[Rigby]

That would be fair as long as netflix dropped the app from every other hardware device as well and/or took the same cut. Else they would open themselves for anti-trust legislation.

Huh? Android doesn't try to force companies to offer in-app subscriptions. Doesn't seem to stop Apple.

 

[hot-gril]

So it’s Netflix’s fault because they don’t think Apple deserves 30% or 15% of monthly Netflix subscriptions? Nobody is signing up for Netflix because of Apple. Why does Apple deserve a cut of their business?

Why does anyone deserve a cut of anything? The market.

 

[Realityck]

Netflix was concerned about voluntary churn levels on iOS because it was higher than those who signed up via the web. In a nutshell, iOS users who subscribed to Netflix through in-app purchases were cancelling their Netflix accounts at a greater rate, an issue that Apple worked to solve for Netflix.

Other Netflix concerns included free trial abuse (which Apple addressed), un-grandfathering (raising prices on users locked in to a select price), and offering promotions (wasn't possible to offer discounts on iOS). Apple internally discussed ways to fix these problems for Netflix to encourage the company to stick with in-app purchases.

As I recall I switched because the App-store was not offering all the Netflix subscription option and I needed their 4K option. I now subscribe web based so I am not constrained to only ATV + app also.

 

[Unregistered 4U]

You mean Protonmail? They happily used off-app subscriptions only for years, before Apple threatened to de-platform them.

Yeah, Protonmail was trying some attention grabbing methods, too. THAT’S why Apple threatened to de-platform them.
Ah, just checked the webpage for the Coagulation of App Fairness. As Protonmail is there right along with a company that willingly decided to nullify the agreement they had with Apple, it’s a pretty good guess that they tried to do the same.

 

[Unregistered 4U]

Netflix should simply drop their app from the App Store. Easy.

I’m pretty sure they’ve got numbers showing them how many users view their videos ONLY on iOS, iPadOS or tvOS devices… users who would, fairly quickly, find that Netflix subscription a whole lot less valuable than it was the day before.

Netflix isn’t staying on the App Store out of the kindness of their hearts or they don’t have anything better to do. They’re doing it for their bottom line.

 

[boss.king]

Well, there is a pretty simple solution if they think Apple does not deserve 30% or 15% (or anything at all) They can just take their business on web site and remove the App from the store, since they don't agree anymore to the agreement that they once agreed (when they were not as big as they think they are now) How about that? Or even better, make a smartphone (like once Facebook did try) and have their own store in it? But of course we all know that it all costs a mount of money and they would rather have a free ride on a platform that they did NOT spend billions on R&D etc to build.

You act like Apple doesn't also benefit from the apps in the App Store. This isn't a one-way street

 

[arlomedia]

Apple spent the last 15 years building an ecosystem across all of their devices and now other companies want to use it for free. lol. why am I paying rent again? shouldn't everything other people worked for be free for everyone else?

This reminds me of when the iTunes Music Store first launched, at the height of music piracy. Steve Jobs said people are basically honest, and if you sell licensed music in a convenient way at a reasonable price, people will pay for it. The efforts of developers to get around App Store fees shows that the App Store is not offering them good value for the money. Instead of cajoling or bribing developers to pay for the service, and prohibiting other ways to install apps, Apple should take an honest look at what they are offering and what they are charging for it. It doesn't have to be free, but 15-30% of gross income is not reasonable.

The biggest issue I've always had with Apple's in-app purchasing is that you can't even LINK to your own website to sign up. That is not OK! Yes, people know what Netflix is and can get to Netflix a million ways...but what about everyone else? What about some other small app maker that isn't already a household name? So they can list their website for support but not list it in the app itself when registering? That's terrible and anti-competitive.

As a developer of one-time purchase, IAP and subscription apps, I'm actually okay with that compromise. Apple says they should get 30% because they increase app discovery; I say my users are finding my product through my own marketing, not my app store listing; Apple says prove it by removing any links to your website. It's not a good user experience for customers who do discover the product through the App Store, but it would be up to Apple to fix that by creating some kind of referral tracking system, or letting developers publish "unlisted" apps that can be viewed from a direct link but not an app store search. (I have suggested that to Apple through their developer feedback tool, but I'm not Netflix, so I doubt their execs have been discussing it!)

 

[m11rphy]

They discussed "punitive measures" because a service that exists on a ton of platforms outside of iOS didn't want to give 30% of all subscription costs through iOS directly to Apple. If Netflix was just something that existed on iOS that'd be one thing, but a Netflix subscription is something people use on their TVs, laptops, etc. So a user who signs up through iOS, but primarily watches Netflix on their TV, which is probably pretty common among subscribers, is still only letting Netflix get a little over 2/3rds of the sub cost. Doesn't matter if they only used the iOS app once.

If Apple was actively promoting the Netflix app, have Netflix pay directly for those ads if they wish to. If not, remove the promotions and Netflix would have no business complaining about it. But taking just shy of 1/3 of their money, even for subscribers who don't primarily use the iOS app, isn't the way to get that promoting paid for.

their "punitive measures" is as you say no lingering promoting Netflix app? I question is why is apple wrong to do this? I made no comment about the 30% being fair or not.