Apple’s new deal with Amazon Prime video is a game changer: Tae Kim

What was once sacrosanct is no more. Apple Inc seems to have blinked.

Late Wednesday, Bloomberg News reported that Apple as relaxed its rules requiring a 30% cut for any content sold inside video apps on its iOS platform. The tech giant said its program allows “premium subscription video” providers the ability to charge consumers directly using their own payment systems without paying a commission to Apple.

For customers of Amazon.com Inc, which started taking advantage of the change on Wednesday, it means Amazon’s Prime Video subscribers in the US, UK and Germany, can now buy or rent video content using the e-commerce company’s app on Apple’s platforms. Amazon.com Inc had previously only allowed video purchases outside of Apple’s ecosystem, such as its website. Canal+, owned by Vivendi SA, and Altice USA Inc’s Altice One had already joined Apple’s program in recent years.

As recently as last year, Apple CEO Tim Cook told CBS News the company didn’t have a dominant position in any market. But analysts have said Apple’s App Store may be the one business where it actually had excessive power over developers, because of the steep commission it was able to demand in exchange for allowing their apps, in-app purchases and subscriptions to be sold on its platforms. (The 30% subscription fee is lowered to 15% after the first year.)

The Apple App Store’s high commission structure has been infuriating for many companies. In 2019, music-streaming company Spotify Technology SA filed a complaint against Apple with the European Commission, while Epic Games Inc CEO Tim Sweeney, whose company makes Fortnite, has consistently railed against Apple’s commission structure as unjustified. Netflix Inc even abandoned using Apple’s payment system altogether to avoid the fee in 2018.

Why did Apple budge? Perhaps it’s a move to preempt further pressure from regulators. Whatever the reason, once the first step is made toward lower fees, there is no turning back.

It’s only a matter time before other companies such as Netflix, Spotify and countless others ask for better terms as well. Lower middle-man fees can also be good news for consumers if it leads to lower prices, too.

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