The United States House of Representatives antitrust subcommittee held a hearing yesterday that saw CEOs of four major tech companies – Apple, Google, Amazon, and Facebook – appear before the panel. The session was a six-hour-long one with questions relating to anti-competitive business practices, among others. During the hearing, Apple CEO Tim Cook was asked about App Store policies, to which he testified that the company applies the same policy “to all developers evenly”.
However, documents accessed by the subcommittee as part of its investigation (reported by Bloomberg) reveals that the “even policy” claim was not the case when it came to its dealings with Amazon. The report from Bloomberg adds that “Eddy Cue, an Apple senior vice president, and Amazon Chief Executive Officer Jeff Bezos negotiated directly on the deal”. As part of the deal, Apple would get a 15% revenue share from purchases and sign-ups from the App Store, as opposed to the 30% “Apple Tax” for apps from other developers. The deal was also supposedly the reason for Amazon to bring its app to the App Store.
Now we know how Apple convinced Amazon to finally put Prime Video on the App Store in 2017: Apple agreed to only take 15% of revenue from Prime Video subscriptions made on iOS, versus the 30% they were taking from others. https://t.co/vscPLYKFe2 pic.twitter.com/75e46VGiai— Mark Gurman (@markgurman) July 29, 2020
The same agreement with the eCommerce behemoth was reportedly expanded to “select developers” earlier this year that enabled them to avoid the 30% fee by “integrating with certain features”. This was when Amazon began letting users make in-app purchases. The documents in possession of the subcommittee also reveal that there were some talks between the two companies with regard to Apple’s decision to sell its PCs on Amazon.
Cook, in his testimony, reportedly denied that the reduced percentage of revenue share applied to Amazon alone (via TheVerge), adding that the rates reduced to 15% when customers enter the second year of a subscription. Interestingly, Bloomberg also reports that the Cupertino giant was considering taking a 40% cut from developers and third-party content providers for content purchased from its app stores.
Music streaming service Spotify is one of the companies that publicly went against Apple by filing an antitrust complaint in the EU against the firm due to its unfair App Store policies. However, the iPhone company said that Spotify was paying App Store fees for just 0.5% of the subscribers.
It will be interesting to see how the case pans out and if Apple provides sufficient proof denying the allegations of favoring Amazon, or any other parties, for that matter. The company’s App Store policies have been on the receiving end of criticism recently which has also led to investigations in the EU.