A trade body representing the world's major news organisations is pressing for more favourable terms for publishers on Apple's App Store—becoming the latest industry to question the iPhone maker's policies.
The chief executive of Digital Content Next, a trade body representing more than 50 mostly-US-based media companies including Dow Jones, the New York Times, News Corp and the Washington Post, penned a letter to Apple chief executive Tim Cook on Thursday (August 20) demanding clarity on how certain companies are given better financial terms than others.
In particular, the letter called out an agreement struck between Amazon and Apple, in which Apple is purpoted to have cut its App Store fee in half, from 30% to 15%, for consumers who subscribed to Prime Video, and abolished the fee for existing Prime Video subscribers. Apple also reportedly permitted Amazon to use payment systems other than Apple's own—a topic at the centre of a separate battle between Apple and Epic Games. In return, Apple could sell and market its products on Amazon's marketplace.
This quid pro quo between the two technology giants was struck silently in 2017 but only recently came to light during a hearing in the US House of Representatives Judiciary Committee on July 29. The committee uncovered an email exchange between Eddy Cue, a top executive at Apple, and Amazon CEO Jeff Bezos, which detailed the terms of the agreement. At the Committee hearing, Representative Hank Johnson asked Cook whether the terms between Apple and Amazon are available to other developers, to which Cook responded that they are “available to anyone meeting the conditions.”
Chris Pedigo, the SVP of government affairs at Digital Content Next, said the deal between Apple and Amazon "stinks of favoritism at best—and collusion at worst", in an opinion article published on the trade body's website.
Jason Kint, the chief executive of the Digital Content Next, wrote in the letter to Apple's Cook: "We would like to know what conditions our members—high-quality digital content companies—would need to meet in order to qualify for the arrangement Amazon is receiving for its Amazon Prime Video app in the Apple App Store."
Apple takes a 30% cut of all payments made in apps that feature in its App Store, including publisher subscriptions. The 30% fee applies to first-time subscribers and is reduced to 15% after the subscriber’s first year.
Many publishers have adopted a subscription-based model for news in recent years—a more reliable source of income than advertising, which is prone to severe fluctuations.
Kint said in the letter that the terms of Apple’s marketplace "greatly impact the ability to continue to invest in high-quality, trusted news and entertainment particularly in competition with other larger firms".
Apple's lofty App Store fees are at the heart of an antitrust lawsuit filed by game developer Epic Games last week. The developer took out a lawsuit against Apple last Friday (August 14) after its popular Fortnite game was banned on the App Store for violating Apple's payment rules. The game maker purposely provoked Apple's reaction by introducing its own in-app payment mechanism that circumvented Apple's 30% fee, which it called "exorbitant" and "oppressive" in the legal papers. It was banned from Google's Play Store for the same violation, and has filed a similar lawsuit against the search giant.