Apple agreed to halve its App Store fee for Amazon so the company would bring its Prime Video app to iOS and Apple TV, emails reveal (.pdf).
Apple exec Eddy Cue and Amazon boss Jeff Bezos personally negotiated the deal in 2016, it was revealed during Wednesday’s antitrust hearing looking into tech giants’ business practices. They agreed that Apple would get a 15% revenue cut from day one for customers who signed up through the app. Apple normally gets a 30% cut for the first year of an app’s subscription. It then claims a 15% commission for subsequent years.
Amazon App Store fees
The Amazon deal was announced in 2017. At the time, Amazon Prime Video was one of the last streaming video apps of its kind to arrive on Apple TV, following the likes of Hulu and Netflix. The lack of Prime Video on Apple TV had been a source of consternation for both customers and Amazon. At one point, Amazon even stopped selling Apple TV because Bezos claimed its inability to play Amazon Prime TV shows would befuddle customers.
“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,” Bezos said at the 2016 Code Conference. “And so, you can always get the player on the device; the question is can you do so with acceptable business terms. And if you can’t, then we don’t want to sell it to our customers, because they’re going to be buying it thinking they can watch Prime Video and then they’re going to be disappointed. And they’re going to return it.”
Offering a fair deal to developers
The Amazon agreement appears to contradict one of Apple CEO Tim Cook’s talking points during Wednesday’s antitrust hearing. During the hearing, Cook was asked whether Apple plays favorites with developers.
“Sir, we treat every developer the same,” Cook said. “We have open and transparent rules. It’s a rigorous process. Because we care so deeply about privacy and security and quality, we do look at every app before it goes on. But those apps, those rules apply evenly to everyone.”
Offering favorable deal terms to large companies isn’t a problem exclusive to Apple, of course. Being in a position to negotiate margins and broker better deals is something seen throughout the business world. But that isn’t necessarily going to go in Apple’s or Amazon’s favor at a time when both companies face increased scrutiny.