During the Big Tech CEO’s congressional hearing earlier today, Apple’s CEO Tim Cook was quick to reject the notion that Apple does not treat every developer in the same way. However, emails released as a part of the congressional hearing on Wednesday paint a different picture, with Apple making an exception for Amazon to gets the Prime Video app on Apple TV and its iOS devices.
Apple generally charges developers a 30 percent fee on sales for the first year before dropping it to 15% in the second year. However, to get the Prime Video app on its platform, Apple only took 15 percent commission from Amazon and this was for only new subscribers. It did not take any commission for existing subscribers. Additionally, the agreement between the two companies entitled Apple to a 15 percent cut of subscriptions for users who signed up for Amazon Prime partner services like Showtime. The deal was directly negotiated by the CEOs of both companies, Tim Cook and Jeff Bezos.
While this agreement between Apple and Amazon was signed in 2017, it was only earlier this year that Apple launched a similar program for selected other video streaming platforms. And yet when questioned about treating developers differently, Tim Cook said that Apple treats “every developer the same. ”
Emails from nearly a decade ago also show that Apple was considering charging developers a 40 percent commission on subscriptions for the first year. Eddy Cue in an email to other Apple executives said the company “should ask for 40% of the first year only but we need to work a few deals to see what is right.” Another Apple executive, Jai Chulani, replied that Apple “may be leaving money on the table if we just asked for about 30% of the first year.” Apple ultimately settled on a 30 percent commission for video streaming services like Hulu.
Developers are already finding Apple’s 30 percent commission a bit too much to digest nowadays, so one can only imagine the backlash the company might have been subjected to if the commission rate was 40 percent.[Via Bloomberg]