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Chronicles

The story behind the story

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As Netflix prepped limited tests to drop Apple's IAPs, Apple told Netflix these tests would “limit co-marketing opportunities, including on-store featuring”

New internal emails and presentation documents revealed as part of the Epic vs. Apple show how Apple attempted …

9to5Mac Chance Miller

Context & Ripple Effects

The emails add a distribution lever to Apple’s payment-policy enforcement: Netflix’s proposed test was not framed only as a transaction-fee issue, but as a choice that could affect App Store promotion. That sits alongside Apple’s internal deliberations over fees for paid streaming channels and its earlier move to block Kindle book purchases inside iOS apps.

The Epic trial disclosures are surfacing how Apple connected App Store economics, platform rules and merchandising treatment for large services. For Netflix, the relevant trade-off was between changing its in-app purchase approach and preserving access to Apple’s promotional support.

First-order effects

  • Netflix faced an immediate choice: proceed with a limited non-IAP test or avoid jeopardizing App Store featuring and related co-marketing opportunities.
  • Apple reinforced that App Store featuring could be withheld when a major developer pursued a payment flow outside Apple’s in-app purchase system.

Second-order effects

  • Other streaming services evaluating payment terms had reason to treat App Store promotion as part of the effective cost of platform distribution, not a benefit separate from billing rules.
  • The disclosures give Epic’s challenge a concrete example of Apple pairing commercial visibility with compliance, alongside internal consideration of changes to Apple’s 30% fee.

Third-order effects

  • If such links between payments and merchandising are used broadly, platform take rates will be defended through a combined package of billing access and distribution benefits rather than the fee alone.
  • The resulting scrutiny centers on whether app-store curation and promotional tools can be conditioned on a developer’s choice of payment system.

The trend: App-store payment disputes are expanding from headline commission rates to the wider set of promotional and distribution privileges controlled by the platform.

Discussion

  • @thedextriarchy Adi Robertson on x
    “Let's talk about honesty. You knew you were being dishonest, didn't you? You knew you were acting without integrity, weren't you?”
  • @bzamayo Benjamin Mayo on x
    Interesting point in this deck is that Apple was giving Netflix “more featuring than any other partner” in App Store editorial. That is, before Netflix dropped IAP and then Apple scrubbed them entirely. https://9to5mac.com/...
  • @thedextriarchy Adi Robertson on x
    Apple/Epic trial Day 3 starts in 30. We'll hear more from Nvidia's Aashish Patel, then Lori Wright of Xbox, Epic's Andrew Grant and Thomas Ko — and then our first Apple exec, Matthew Fischer. Here's what happened yesterday https://www.theverge.com/... https://twitter.com/...
  • @backlon Dieter Bohn on x
    Epic going to get sent to bed without dessert https://twitter.com/...
  • @slightlylate Alex Russell on x
    Annnnnnnnd there it is: https://9to5mac.com/...
  • @jacobwolf Jacob Wolf on x
    I'll be real: I'm already over games reporters making bad jokes about what are normal, procedural questions in the Epic v. Apple trial. “What is a Xbox?” is not funny. It's to establish fact. Of course a judge isn't much as a gaming expert as you, so please kindly, shut up.
  • @jacobwolf Jacob Wolf on x
    Repeating the questions are fine, sure, but making bad jokes off of them isn't funny. I thought the Sweeney thing yesterday where he couldn't figure out how to attach joy-cons to a Switch was funny, but all the other establishing questions were whatever. It's court.
  • @reckless Nilay Patel on x
    Apple here is wondering what else it can do to justify taking a 30 percent cut of Netflix signups on iOS. The only reasons it's doing that are 1. it knows it's not doing enough to keep Netflix from removing IAP and 2. it has the threat of Netflix app signups going down to rely on…
  • @chrismlacy Chris Lacy on x
    Upon learning of Netflix's *intent* to run an A/B test removing iOS in-app purchases, Apple organized a list of incentives to keep Netflix onboard. Imagine how App Store terms would improve for iOS developers if Apple allowed competition for digital payments. https://twitter.com/…
  • @reckless Nilay Patel on x
    I think anyone could look at this and fairly wonder why an operating system vendor is mucking around so deeply inside the business of a popular app https://www.theverge.com/...
  • @migueldeicaza Miguel de Icaza on x
    My god the lawyer is destroying the Epic employee tasked with inserting the submarine hack and going through the evidence and it ain't good. The evidence that is being presented sounds brutal. Epic might have had a clean lawsuit, and instead they came with unclean hands.
  • @jacobwolf Jacob Wolf on x
    @Xbox's Wright's testimony proved to be one of the most interesting of those who've spoken at the #EpicvsApple trial. Towards the end, she made a bold statement: if Apple's current policies were retroactively applied, Netflix “wouldn't exist now.” More: https://dotesports.com/...
  • @reckless Nilay Patel on x
    Apple lawyers are wildin https://twitter.com/...
  • @reckless Nilay Patel on x
    It really feels like the web app escape hatch for Apple in this trial is very very small https://twitter.com/...
  • @natisho Nati Shochat on x
    “Schiller, in the email, suggested that if Apple were to eventually make a change to its fee structure, it should do so from a position of strength.” Wise words. No matter what happens, Apple is no longer in a position of strength. https://www.bloomberg.com/...
  • @nickstatt Nick Statt on x
    Wright, now on redirect with Epic's lawyer, asked what would happen if the rules applying to cloud gaming applied to video streaming services. “Netflix wouldn't exist today,” Wright says. Because every single tv show and movie on Netflix would have to be an individual app.
  • @johnwilson John Wilson on x
    Not surprising. Apple would prefer to market and highlight apps that support as many of their features and tools as possible. https://twitter.com/...
  • @lapcatsoftware Jeff Johnson on x
    “Do we want to take any punitive measures” is all you need to know about Apple and the crap store. https://twitter.com/...
  • @chancehmiller Chance Miller on x
    Among the things Apple tossed out as ideas for Netflix to convince them to keep using IAP: - Bundle offers (Netflix + Apple service) - Today @ Apple US in-store events supporting Netflix launches - Apple TV bundle https://9to5mac.com/...
  • @stroughtonsmith Steve Troughton-Smith on x
    There should be no App Store in which the platform owner discusses taking ‘punitive measures’ against a Netflix that is experimenting with its own transaction model, like any business should be free to do. Netflix removing IAP should be none of Apple's damn business
  • @chancehmiller Chance Miller on x
    I find this stuff so fascinating. Apple was clearly scrambling to stop Netflix from dropping IAP... https://twitter.com/...
  • @thedextriarchy Adi Robertson on x
    This is the second cross-examination where Apple has made a point of trying to establish that a third-party witness is on Epic's side.
  • @thedextriarchy Adi Robertson on x
    The judge steps in and says she's confused by why Apple would require a separate app for every game. “I can use Netflix with a native app and I can see lots of different movies or TV shows or whatever. Is it that you didn't want to use a subscription model?”
  • @reckless Nilay Patel on x
    Apple's insistence on comparing the iPhone to game consoles at trial is also really interesting — do they *want* the iPhone to be considered a console-like device, or a general purpose computer? What about the iPad? This is seriously like a Vergecast with millions at stake heh ht…
  • @fiercestcheetah George Roberts on x
    @thedextriarchy stupid question, how come all of these people are being questioned? is it because of apples policies?
  • @thedextriarchy Adi Robertson on x
    As with Nvidia yesterday, Apple is now reading out glowing reviews of xCloud on Safari to rebut Microsoft's claims that it was an inferior alternateive to the App Store. I continue to find it funny.
  • @tomwarren Tom Warren on x
    Microsoft's feud with Apple over xCloud on iOS got a rival kicked from the App Store. Shadow disappeared last year, after Microsoft was trying to work out why other cloud gaming apps were not being blocked. Details here: https://t.co/LySpAyGrvl https://t.co/SrzieTyJIW
  • @thedextriarchy Adi Robertson on x
    Day 2 of livetweeting the Apple/Epic trial starts in 15 minutes. Expecting more cross-examination of Epic CEO Tim Sweeney, plus witnesses from Nvidia and Xbox, and god willing better audio. Coverage of yesterday below: https://www.theverge.com/... https://twitter.com/...