Apple tried to lure Amazon video app with lower 15% fee: Eddy Cue email

Tim Cook, chief executive officer of Apple Inc., speaks during the Apple Worldwide Developers Conference (WWDC) in San Jose, California, U.S., on Monday, June 5, 2017.

David Paul Morris | Bloomberg | Getty Images

In the summer of 2017, Apple CEO Tim Cook announced that Amazon’s Prime Video service would be launching on the Apple TV set-top box, after a long and noticeable absence.

An email released by the House Antitrust Subcommittee on Wednesday shed new light into the negotiations that led to that announcement. It shows an Apple exec offered Amazon a 15% fee on subscriptions that signed up through the app, which is lower than Apple’s customary 30% fee for most in-app purchases.

The email suggests that big players can negotiate for better business terms on Apple’s App Store, contradicting Apple’s public stance that all apps are treated the same on its platform. “We apply the rules to all developers evenly,” Cook testified on Wednesday.

Software makers are required to use Apple’s payment mechanism for any digital purchases inside an iPhone app. Apple typically takes 30% of the initial purchase price, including 30% from the first year of subscription services that customers buy through the app, then drops the fee to 15% in the second year of a subscription. The 30% fee is a core part of Spotify’s antitrust complaint with EU regulators.

In May 2016, Bezos told an interviewer that Amazon refused to sell devices like Apple TV or Google‘s Chromecast on Amazon.com because it was unable to agree on terms for placing Amazon Prime Video on those devices. 

“When we sell those devices, we want our player — our Prime Video player — to be on the device, and we want it to be on the device with acceptable business terms,” he said. “You can always get the player on the device. The question is, can you get it on there with acceptable business terms?”

At some point later in the year, Bezos met with Apple senior vice president Eddy Cue and discussed business terms for this and other matters, according to the document released Wednesday. 

“Jeff, I really enjoyed our time together,” emailed Amazon CEO Jeff Bezos in November 2016.

“Here are the details of what we discussed on Prime Video — Amazon Prime Video app in iOS and Apple TV — 15% rev share for customers that signup using the app (uses our payment); no rev share for customers that already subscribe.” 

In addition, Cue said that if Amazon was able to sell services like Showtime in its app, that Apple would only take 15% if the customer originally signed up through Apple. 

It’s not clear if the companies ended up agreeing to the terms in the email. Although the Amazon Prime Video app appeared on Apple TV only in 2017, a version of Amazon’s video app been available on iOS since 2012, and it’s not known what the terms were before or after Cue’s email to Bezos.

Representatives for Apple and Amazon didn’t respond to a request for comment. 

Apple’s arrangement with Amazon was made public earlier this year when users discovered that the Amazon Prime Video iPhone app started to allow users to purchase digital content — movies and TV shows — inside the app using a credit card on file with Amazon. Apple said at the time that it was part of an “established program” for “premium subscription video entertainment providers.”

House Antitrust Subcommittee

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