Apple halved Amazon's App Store fee to get Prime Video on iOS and Apple TV

Apple offered Amazon a reduced rate revenue sharing model in a bid to bring Prime Video to the App Store, a move that seemingly contradicts the tech giant's claims that it treats all apps and app makers equally.

In 2016, Apple services chief Eddy Cue proffered a deal in which Amazon would share 15% of revenues generated by new subscribers who signed up for Prime Video through an in-app purchase. Apple typically takes a 30% share of App Store subscription revenue, with the figure dropping to 15% for paying customers who maintain a subscription for more than one year.

The proposal was detailed in email correspondence published by the U.S. House Judiciary Committee as produced evidence in a congressional hearing on big tech antitrust matters on Wednesday.

Cue in a memo to Amazon CEO Jeff Bezos recapped an apparent meeting at which the two executives discussed terms of a deal that would see Prime Video debut on iOS and Apple TV. At the time, the lack of Prime Video on Apple's set-top platform, a result of Bezos' unwillingness to allow the service onto devices that competed with Amazon's Fire TV boxes, was viewed by consumers as a platform shortcoming.

Along with a reduced 15% cut of subscriptions, Apple agreed to support integration with Siri and the then-new TV app for iOS, as well as incorporate Prime Video metadata for Siri and Spotlight searches. As part of the arrangement, Apple would take 15% of in-app processed subscriptions to "upsell" streaming services like Showtime, the email reads.

The finalized deal was never made public and it is unknown if terms of the agreement changed in the interim between Cue's email and the tvOS launch of Prime Video in December 2017. It is assumed that Amazon took advantage of the offer, however, as details align with a 2017 report regarding the Prime Video tvOS app and a return of Apple TV products on Amazon.com.

Bloomberg reported on the release of Cue's email on Wednesday.

The special arrangement calls into question claims made by Apple CEO Tim Cook and other executives regarding the company's App Store policies. In an opening statement at the Wednesday hearing, Cook said, "The App Store guidelines ensure a high-quality, reliable and secure user experience. They are transparent and applied equally to developers of all sizes and in all categories." He added that the rules are "not set in stone."

Cook doubled down on the stance during questioning, saying Apple "treats every developer the same."

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41 Comments

dutchlord 274 comments · 7 Years

About 4 years ago

Troubles ahead for Cook

Beats 3073 comments · 4 Years

ALL developers should be treated equally.

People here like to talk about "capitalism" only if it means Apple gets screwed. I would have said "fu** off" if they didn't wanna join my platform and double down on TV+.

dutchlord said:

Troubles ahead for Cook

What's the problem? Apple should be able to do whatever they want with THEIR store! People are just mad Apple is making money from their hard earned work.

avon b7 8008 comments · 20 Years

Beats said:

ALL developers should be treated equally.

People here like to talk about "capitalism" only if it means Apple gets screwed. I would have said "fu** off" if they didn't wanna join my platform and double down on TV+.

dutchlord said:

Troubles ahead for Cook

What's the problem? Apple should be able to do whatever they want with THEIR store! People are just mad Apple is making money from their hard earned work.

You really can't see the problem? That potential conflict?

Apple can do what it wants. Of course.

But someone could come along and say 'this is abusive or harming competition' and depending on who says that, Apple won't be able to do what it wants.

crowley 10431 comments · 15 Years

Isn't lying to Congress a crime? If Cook is saying they treat everyone the same then that seems to be a pretty egregious lie.

Marvin 15335 comments · 18 Years

dutchlord said:

Troubles ahead for Cook

The phrasing Tim Cook uses seems contradictory at times but he described this already around 1:13:00 in the following video:

https://www.youtube.com/watch?v=1s1uWo1_bzg

A developer the size of Amazon or meeting the same conditions as them would be treated the same as Amazon. Of course a sole developer isn't expected to get the same deal as Amazon but in most cases that will be true. Governments do the same thing, they give out multi-billion dollar contracts to big companies instead of small ones; they give tax incentives to companies like Amazon to locate to their region where they wouldn't do the same for small companies. Governments can't criticize Apple for doing the same thing they do.

Tim Cook explicitly said they treat everyone who meets the same conditions the same way. Netflix, Hulu and Amazon are on the same level regarding video streaming services. If some enthusiast makes a small special-interest video sharing app, it's not on the same level.

Not only that, it's the developer who sets the prices, not Apple. If a developer wants $4.99/month and doesn't like the fee, they can charge more.

$4.99 x 0.7 = $3.49, $6.99 x 0.7 = $4.89. For a subscription after 12 months, it's 15% for everyone so $5.99 x 0.85 = $5.09

Having to charge $5.99 vs $4.99 is hardly extortion. The App Store runs on multi-billion dollar data centers across the world to be able to service over 1 billion users in an efficient way. The people who profit from the store help pay for it. Most apps on the store are free.