Apple’s Phil Schiller Explains Cut Video Deal With Amazon

On Monday, former Apple Senior Vice President of Marketing and current Apple partner Phil Schiller testified that Apple reduces its App Store fees for certain businesses from 30% to 15% in exchange for them supporting the Apple TV app. .

Schiller testified as part of a lawsuit by Fortnite maker Epic Games asking a judge to force Apple to allow Epic to install its own app store on iPhones and avoid Apple’s 30% App Store fee. .

Schiller said that a few years ago, the Apple TV department was working on a way to collect video streams from various apps and integrate them into a single experience for users.

The result was the Apple Video Partner Program, which allows members to take 85% of the sales they make through in-app purchases, rather than paying Apple’s typical 30% fee.

“The Apple TV team met with premium content providers and described the work they were going to do to integrate this new experience. For example, they had to integrate with our Siri voice assistant so that we can find any show in any of those app experiences, “said Schiller. “In talking to those developers, the Apple TV team asked if we could reduce the commission to 85/15, not in the second year, but in the first year” to allow them to recoup the engineering costs of supporting Apple features.

Apple charges developers who are not part of the video partner program 15% in the second year of a subscription billed through Apple’s in-app purchases. Schiller said any company could get the 15% cut by joining the program and doing the engineering work to integrate with Apple’s TV app. It’s not only available to large media companies, Schiller said.

Schiller also said that the program allowed participants to charge users directly, without using Apple’s in-app purchase feature.

“Working with several of these partners, notably cable providers going digital, they had movie rental companies installed as clients. And they asked if they could maintain those existing relationships, ”Schiller said, adding that Amazon is one of the companies in the program.

Much of Schiller’s testimony on Monday emphasized how much Apple invests in its developer community to maintain a competitive advantage over competing app stores. Schiller said Apple spends about $ 50 million per year to hold its annual developer conference and is building third-party developer facilities at its headquarters.

Apple began calling its own witnesses, including Schiller, on Monday, and the trial is expected to end next Monday. Schiller has not yet been questioned by attorneys for Epic Games.

Apple and its CEO, Tim Cook, have consistently said that they treat all iPhone developers the same: the same rules for their App Store, the same commissions, and the same review process.

Last year, the House of Representatives Antitrust subcommittee released an email showing Apple’s senior vice president of online services Eddy Cue sending an email to Amazon CEO Jeff Bezos in 2016 about the Program.

“Here are the details of what we discussed about Prime Video – Amazon Prime Video App on iOS and Apple TV – 15% revenue share for customers who sign up using the app (use our payment); no profit sharing for clients who have already subscribed ”. Cue wrote.

Apple’s Premium Video Partner Program was widely reported in April 2020, when it was discovered that the Amazon Prime Video app for iPhones and Apple TV boxes could charge existing Amazon customers for rentals directly through data from credit cards they already had, a practice that is generally prohibited in the Apple App Store, even for Fortnite.

An Apple spokesperson said when it was first reported that it was a program set exclusively for “premium subscription video entertainment” providers, including Amazon, Altice and Canal, that supported Apple features like the Apple TV app, AirPlay 2, Siri and Apple’s Universal Search and wanted to bill their existing customers.

An internal Apple slide deck released as part of the Epic Games test this month showed Apple employees debating whether to offer “video partner program benefits” to Netflix in 2018 when the video broadcaster was considering whether to stop use Apple’s in-app purchase software.

A page on Apple’s website says that the Apple Video Partner Program has been in existence since 2016 and has 130 participants, including Disney +, HBO Max, and the Canadian Broadcasting Corporation.

When the Premium Video Partner Program was first reported, Epic Games CEO Tim Sweeney told CNBC in response to the news, in a preview of his lawsuit: “Epic Games unconditionally supports smartphone platforms and their digital stores that open up to payment processing competition ”.

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