Apple made a deal with Amazon to gain streaming rights of Prime Video. The US congressional committee revealed that the Cupertino based tech giant lowered its 30% App Store 30% revenue cut for Amazon to bring Prime Video streaming service on iOS and Apple TV.
This discovery refutes the claims that Apple has made about treating all apps and developers equally. A policy CEO of Apple, Tim Cook reiterated in his opening statement at the Congressional Antitrust hearing on Wednesday, July 29, 2020.
Apple and Amazon’s deal
The U.S. House Judiciary Committee published a few email correspondence between Eddy Cue, Apple’s chief of services and Jeff Bezos, owner of Amazon in 2016 as evidence in which both parties negotiated a deal in which Amazon would share 15% of revenues generated by new subscribers who signed up for Prime Video through in-app purchase.
The evidence released by the antitrust committee helped shed some light on the negotiations that took place between the two companies but were never made public, in order for iPhone maker to acquire Amazon Prime Video for its platform.
Typically, Apple takes a 30% revenue cut for all apps on its digital store. Therefore, this deal shouts of preferential treatment by the iPhone maker who publicly claims that its policy is the same for all.
An email from the published evidence included the terms of this deal sent to Jeff Bezos from Eddy Cue which sheds light on the negotiations between the two companies. Along with a lowered 15% cut of subscriptions, Cue also agreed to offer support for Siri and Apple TV, integration of Prime Video metadata for Siri and Spotlight searches, and up-sell streaming services in the Amazon app. A year after the email was sent, Amazon Prime Video launched on Apple TV.
Other documents included in the evidence also reveal the correspondence between the two companies regarding the 2018 deal which ultimately allowed Apple to officially sell devices on Amazon’s website. The documents show Amazon expected to earn $3.2 billion from the deal in the first year.
Though the reduced App Store fees for video streaming apps are a part of a policy run by the tech giant, the antitrust subcommittee described this deal as the company giving Amazon preferential treatment and not treating its developers equally on the issue of providing access to its app store and other platforms. Since the EU Anti-trust investigation has launched against Cupertino tech giant, a few developers have been vocal about its anti-competitive behavior. However, Tim Cook denied the allegations regarding the deal by saying his company “treats every developer the same.”