Apple Offered to Halve App Store Fee to Get Amazon Prime Video on iOS and Apple TV

[MacRumors]

Apple offered Amazon lower App Store fees to convince it to launch its Prime Video app on the App Store and Apple TV, documents published by the U.S. antitrust subcommittee have revealed.

According to email correspondence between Apple's services chief Eddy Cue and Amazon CEO Jeff Bezos, Apple struck a deal to bring Amazon Prime Video into the App Store by agreeing to take a 15% revenue share of subscriptions signed-up through the app. Apple usually takes a 30% share of all App Store subscription revenue, dropping to 15% only if the subscription continues for a second year.

Image credit: Mark Gurman​

In 2016, when the meeting took place, Amazon Prime Video wasn't available on Apple TV, which competes directly with Amazon's Fire TV. At the time, Bezos admitted that Amazon was holding out for "acceptable business terms" from Apple to include its service on Apple's set-top box. It's unclear if the reduced subscriptions cut was part of the final terms of the agreement.

According to the email, Apple also agreed to take a 15% share of third-party Amazon Channels sold through the app if the subscriber used Apple payment processing, agreed to support integration with Siri and pipe in Prime Video content to its TV app for iOS, and agreed to include Prime Video results in Siri and Spotlight searches. A year after the email was sent, Amazon Prime Video launched on Apple TV.

Other documents shared by the committee also reveal correspondence between Apple and Amazon regarding the 2018 deal for Apple to officially sell devices on Amazon's website. Bloomberg notes that the documents show Amazon expected to bring in $3.2 billion from the deal in the first year, including $1.1 billion from iPhone sales.

The reduced App Store fees for Amazon's Prime Video app are actually part of a longstanding policy run by Apple to provide better fees for subscription-based streaming video apps.

However, the antitrust subcommittee interpreted the deal as representing preferential treatment given to Amazon and that Apple was not treating its developers equally when it came to providing access to its App Store and other platforms. "That is not correct," Cook said on Wednesday when asked by the subcommittee if some developers are treated differently. "We treat every developer the same."

Article Link: Apple Offered to Halve App Store Fee to Get Amazon Prime Video on iOS and Apple TV

 

[George Dawes]

Love the app on my apple tv , Pq in 4k us awesome

Grand tour especially

 

[Infinite Vortex]

And who covers that 15% offset that Amazon get (and I'm sure others)… the small developer that doesn't get a break where the rules are followed in an unforgiving, seemingly mean spirited, way. And at the end of the day its the consumer that is the one that always pays for it all!

 

[adamjackson]

All of the pundits when Prime Video came to AppleTV speculated 15%. I'm also surprised the email doesn't include that it was also at the same time that Apple brought back their products to amazon.com for sale. Basically Apple gave Prime team Half off on revenue and brought their products back to amazon's store.

 

[lenard]

So. Large volume app get better deal, Apple feels it can still make up the 15 percent difference in volume.

 

[itsmilo]

They are all shady. How do you expect any company to grow so big otherwise. We live in a shady world. You can’t get far by being nice.

 

[MOFS]

I feel most stores (physical and web) will have something similar for “premium content”. There are quid pro quo deals done to get these sort of things sorted. It would be unusual for any store to have the same percentage cut from all the products. The difference is obvious for those smaller stores - Amazon wanted to sell their stuff via Apple, and Apple wanted their video content. Other companies won’t have that same pull and realistically it won’t change.

 

[PaulpBenitti]

It is quite the conundrum isn't it?

On the one hand it's just a normal deal being made between 2 businesses.

On the other hand, its anti-competitive behavior being engaged in by 2 monster companies.

It is both, at the same time. There is nothing wrong with it, and there is everything wrong with it. It is bizarre how normal business is not acceptable anymore when you become too big, but that's how it is.

 

[spook]

pretty standard stuff here whats the big deal.

Builders merchants, if a builder comes if and buys more bricks then anyone else he gets a bigger discount then anyone else, same all over.

 

[jayducharme]

This seems like a damned-if-you-do-damned-if-you-don't situation. If Apple hadn't allowed Amazon into their ecosystem, Apple would have been charged with anti-competitive practices. But Apple worked out a deal, brought Amazon on board and allowed customers more choices, and they're accused of being anti-competitive.

 

[supremedesigner]

​

How did someone obtain the confidential email screenshot? Insider or subpoena?

 

[rp2011]

When two giants WANT a deal, they negotiate because neither could bully they other. But when both have dominant positions in the market with consumer and developer, they are obviously less inclined to bend.
Even though this is the same exact circumstances in many businesses today, it is not acceptable, but they were obviously targeted because they are huge targets.

 

[Freida]

This is disgusting. One thing is to do this, another thing is to stand with straight face and say that 'we treat each developer the same'
Really not genuine! Shame on you Apple

 

[gplusplus]

All of the pundits when Prime Video came to AppleTV speculated 15%. I'm also surprised the email doesn't include that it was also at the same time that Apple brought back their products to amazon.com for sale. Basically Apple gave Prime team Half off on revenue and brought their products back to amazon's store.

You’re absolutely right. There was definitely some quid pro quo going on between Amazon and Apple. Amazon took the stance of not allowing streaming boxes that didn’t have Amazon Prime Video to be sold on the Amazon marketplace, then later pointed to Apple and said they’re the ones not allowing it. The truth is that Apple wouldn’t allow it under whatever terms Amazon proposed. Amazon was then able to strong-arm Apple to make an exception to their policies.

The infuriating part is that developers and consumers suffer consequences due to closed-door agreements between giant corporation A and giant corporation B: Apple and Amazon, in this case. If Amazon wanted to be competitive and Apple wouldn’t make an exception to their policy, Amazon would have taken legal action to be able to distribute their software and services to Apple customers independently of the App Store. But instead, Apple squelched the possibility, Amazon wins, and the little people are left at a loss of healthy competition.

 

[Stevez67]

And who covers that 15% offset that Amazon get (and I'm sure others)… the small developer that doesn't get a break where the rules are followed in an unforgiving, seemingly mean spirited, way. And at the end of the day its the consumer that is the one that always pays for it all!

There's nothing "mean spirited" about complying with rules. In business bigger companies routinely get better deals than smaller companies. And no matter what a deal's specifics are, in the end the customer is ALWAYS the one who pays. The customer is the only who ever pays for any service or product.

 

[macsrcool1234]

No, Apple. You have nothing to do with the production of the content. Maybe you can get 2-3% like CC companies but **** your greedy 15%.

 

[GeoStructural]

“Content metadata is shared to Siri”.

There falls all of Apple hypocrisy and “privacy” bullc**p, they collect and analyze your data just like any other company.

 

[Rogifan]

This is not surprising but it does show Tim Cook is lying when he says all developers are treated the same.

 

[iLoma]

Other video streaming services were offered the same deal if they agree to all the terms (being available in the tv app, support Siri and universal search..etc)
Tim Cook shortly addressed this yesterday.

 

[edgonzalez32]

This is the kind of arbitrary **** Apple keeps doing with the App Store that no one around here seems to be understanding.

 

[4jasontv]

I tired trying to watch Amazon Prime video this week for the first time in months and the first 4 movies I selected were pay-per-view. There might be a lot of great Prime content on Amazon Video, but I am not going to waste my time looking for it. With the exception of Grand Tour, I don't see value in their video service. Amazon needs to get all the content that costs extra out of my face and keep it hidden in a sub-menu. It shouldn't show up on searches unless I ask to see them, and pay-per-view should stay off the landing page.

 

[sw1tcher]

So much for Tim Cook's claim that “We apply the rules to all developers evenly."

 

[gim]

How did someone obtain the confidential email screenshot? Insider or subpoena?

Read the article...

documents published by the U.S. antitrust subcommittee

 

[HylianKnight]

I feel like a lot of people missed this short blurb in the article about Apple fee policy for subscription-based video apps...

“The reduced ‌App Store‌ fees for Amazon's Prime Video app are actually part of a longstanding policy run by Apple to provide better fees for subscription-based streaming video apps.”

It was easy to miss, and probably should have been mentioned a bit sooner.

 

[Baymowe335]

No, Apple. You have nothing to do with the production of the content. Maybe you can get 2-3% like CC companies but **** your greedy 15%.

What are the operating margins for Visa and MasterCard?

What about Apple?

Do you understand exactly what comes with each fee and what the company does for the fee?