Epic exposes Apple's efforts to persuade Netflix to keep in-app subscriptions

Cal Jeffrey

Posts: 2,978   +795
Staff member
In brief: Epic Games presented documents in its lawsuit against Apple showing that the Cupertino tech giant went to great lengths to prevent Netflix from dropping in-app payment (IAP) subscriptions from its iOS app. Efforts included special favors and the consideration of punitive measures. Epic hopes to portray Apple as "anything goes" when it comes to retaining its App Store commissions.

In 2018, Netflix was debating whether it should remove in-app subscriptions for new customers in its iPhone app. It planned to run tests that summer in select markets to see its effect on subscription numbers. When Apple learned this, it called all-hands-on-deck to prevent the streaming service from going through with it.

In an email thread (Exhibit A below), several Apple execs, including Vice President of the App Store Matt Fischer, Vice President of Marketing Pete Distad, Vice President of Service Peter Stern, and others, expressed their concerns over Netflix conducting the tests and the possibility of it removing IAPs from its app. Apple did not want Netflix to eliminate subscription options from the software for obvious reasons, but it also didn't like the company even conducting its own tests.

Netflix Exhibits in Epic Ga... by MacRumors

"Outside of the voluntary churn issue, Netflix is concerned with understanding the incremental value of offering subscription via IAP on iOS," wrote VP Fischer. "We expressed our concern that running this test would create a bad customer experience for app users in those markets and limit co-marketing opportunities, including on-store featuring."

The email also discussed taking punitive measures against the movie streaming service. "Pulling all global featuring" was suggested as an example.

They conducted several meetings with leaders at Netflix, including a face-to-face between Apple's Eddy Cue, senior vice president of internet software and services, and Netflix's CEO Reed Hastings. During the meetings, Apple more or less begged Netflix not to perform the tests, even going so far as to offer promotions in its brick-and-mortar stores in a slide presentation (Exhibit B below).

Exhibit B by Chance Miller

Netflix ultimately ran the tests and found that "voluntary churn" was higher for those subscribing via in-app payments than through the Netflix website or other means. It subsequently removed IAPs at the end of December 2018.

By presenting this evidence, Epic wanted to show a couple of things. One is that Apple is not above providing special treatment to big customers when it stands to benefit. This favoritism creates an unlevel playing field for smaller iOS developers. Second, that Apple has previously considered taking punitive action against companies not willing to pay the so-called "Apple tax"—a point it contends is what happened with the Fortnite removal.

We'll see in the coming weeks whether Judge Rogers has a sympathetic ear on the matter.

Image credit: XanderSt

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dnous

Posts: 32   +35
Yeah, and Epic would have no issues accepting a deal like that. This just makes Epic look salty that they weren't offered the same deal.
 

Shadowboxer

Posts: 1,506   +1,091
So. It’s Apples marketplace. It’s not a secret that certain companies have a deal with Apple. For example Amazon work with Apple.

The thing is Epic is so much smaller on iOS than the likes of Amazon/Netflix etc and therefore Apple aren’t interested in cutting them a deal.

I don’t hate Epic, I love that they are pouring billions into free games and making a real effort in the PC gaming space. But I wish they would leave Apple alone, they don’t mind MS taking 30% of sales on Xbox so why are they hassling Apple so hard? And I like Apple, I don’t want some lawyer to force them to open up iOS to any company who wants your dollar.
 

Cubi Dorf

Posts: 337   +223
What does it hurt to let apps be sold outside of Apple App store? You can still get your app from Apple App store. Why is competition bad?


So. It’s Apples marketplace. It’s not a secret that certain companies have a deal with Apple. For example Amazon work with Apple.

The thing is Epic is so much smaller on iOS than the likes of Amazon/Netflix etc and therefore Apple aren’t interested in cutting them a deal.

I don’t hate Epic, I love that they are pouring billions into free games and making a real effort in the PC gaming space. But I wish they would leave Apple alone, they don’t mind MS taking 30% of sales on Xbox so why are they hassling Apple so hard? And I like Apple, I don’t want some lawyer to force them to open up iOS to any company who wants your dollar.
 

Dimitriid

Posts: 558   +960
Yeah, and Epic would have no issues accepting a deal like that. This just makes Epic look salty that they weren't offered the same deal.

The more this trial goes, the more it tends into a case of "Terrible people making points you agree with" which is to say that the sad part is that such a hypocritical company like Epic are the only ones with enough money to make all these points in court against Apple.
 

Wereweeb

Posts: 30   +54
Apple's business model is inherently monopolistic and anti-competitive. Hardware/OS providers shouldn't have control over third party software, nor profit from it.

They should make money from the products that they develop, instead of demanding "market share rent" to allow third-party apps to be able to sell their products.

Even if it's Epic saying this, I can't say I disagree.
 

umbala

Posts: 355   +473
What does it hurt to let apps be sold outside of Apple App store? You can still get your app from Apple App store. Why is competition bad?
Is this a serious question? Obviously Apple wants to keep everything locked down tight so that they reap almost all the profits. Competition = less profit for Apple.
 

fl21289

Posts: 242   +290
Hence why I don't buy apple. At least with android you are allowed to side loaf any apps you want. Remember the old days when you jailbreak that IPhone to do the same lol.
 

ypsylon

Posts: 352   +270
Little corporations in sandbox, throwing dog poop at each other trying to convince the other one is bad.

All of them (corporations) are radioactive filth and that's the only story from this trial. Case closed.

In a way they should give machetes and baseball bats and let them duke it out fair and square.

Epic is marginally more in the right because Apple very well knows if they open their amazingly integrated and seamless ecosystem, they'll be dead in 5 seconds flat, but that's the only point I'm willing to concede that Epic is right. Still, being right radioactive filth doesn't change the fact that you're still radioactive filth. :p

Epic can be charged by many, many developers for its abuse of older UE engines licensing. Heck I would love EA doing fistfight with Epic.*

* - I find violence abhorrent, but in this instance it would prove most illuminating. ;)
 

Cal Jeffrey

Posts: 2,978   +795
Staff member
Apple's business model is inherently monopolistic and anti-competitive. Hardware/OS providers shouldn't have control over third party software, nor profit from it.

They should make money from the products that they develop, instead of demanding "market share rent" to allow third-party apps to be able to sell their products.

Even if it's Epic saying this, I can't say I disagree.
"Market share rent." I like that. I might borrow that sometime.
 

Shadowboxer

Posts: 1,506   +1,091
What does it hurt to let apps be sold outside of Apple App store? You can still get your app from Apple App store. Why is competition bad?
Because those apps are not vetted by Apple. I trust that Apple will put its users before the companies that sell apps. And that’s because Apple would lose their core business if they didn’t. However if a random company can just setup a store on iPhones they have no incentive not to harvest your data, or prevent malware being installed etc.

Oh and by the way, an unvetted third party marketplace isn’t competition. Competition is another device with a different store on it. This exists already in Android. Admittedly it’s poor. But that’s not Apples fault.

Users wouldn’t benefit at all from a judge forcing Apple to allow any old company to setup a marketplace. It would harm users. But it will benefit big globalist tech corporations who currently pay Apple their fees. I don’t understand why any decent or intelligent person would want Apple forced open. Unless they have a strong irrational hatred for Apple and it’s users.
 

Cubi Dorf

Posts: 337   +223
I am Apple user with much Apple devices and services consumption, but I think it is wrong to give yourself monopoly over app sale and abusing it. It is matter of morals and fairness for me. I also disagree with fact that a person cannot write their own app and load it on their own device without Apple permission and agree to Apple developer account terms or fee. If I am own a device, it should be mine to control and load whatever I want on it.


Because those apps are not vetted by Apple. I trust that Apple will put its users before the companies that sell apps. And that’s because Apple would lose their core business if they didn’t. However if a random company can just setup a store on iPhones they have no incentive not to harvest your data, or prevent malware being installed etc.

Oh and by the way, an unvetted third party marketplace isn’t competition. Competition is another device with a different store on it. This exists already in Android. Admittedly it’s poor. But that’s not Apples fault.

Users wouldn’t benefit at all from a judge forcing Apple to allow any old company to setup a marketplace. It would harm users. But it will benefit big globalist tech corporations who currently pay Apple their fees. I don’t understand why any decent or intelligent person would want Apple forced open. Unless they have a strong irrational hatred for Apple and it’s users.
 

Shadowboxer

Posts: 1,506   +1,091
I am Apple user with much Apple devices and services consumption, but I think it is wrong to give yourself monopoly over app sale and abusing it. It is matter of morals and fairness for me. I also disagree with fact that a person cannot write their own app and load it on their own device without Apple permission and agree to Apple developer account terms or fee. If I am own a device, it should be mine to control and load whatever I want on it.
It’s not a monopoly though. Nobody is forced to use Apple. No company is forced to sell their app on the App Store. If you think it’s unfair then don’t buy Apple and please leave it alone. The actual users of Apple tech like it just how it is.

Personally I find Apple offers a significantly better experience than any other company when it comes to personal computing. That would be in jeopardy if we force Apple to give up control of it. And I don’t understand why people are so keen to see it changed. If you don’t like it don’t buy Apple.

Of course several major multi billion dollar tech companies want Apple to give up its control aswell, so they can make yet even more money. In fact these corporations are even spending money on campaigns to change public opinion to force Apple to open its store.

Hopefully the judge will see sense and choose to let Apple maintain its control. If they force it open, the users will get screwed with a deteriorating service and a bunch of large tech companies reduce their bottom line.