Exclusive: Microsoft Pressing Apple to Take a Smaller Cut on Sales Inside Office for iOS
Apple has indeed rejected — not merely delayed — an update to Microsoft's SkyDrive app for iOS following a disagreement over whether it is owed the 30 percent cut of in-app purchases it typically demands.
Context & Ripple Effects
The fee fight between the two companies has history: back in March 2011 they were already sparring over the App Store itself, when Microsoft tried to quash Apple's trademark brief in the 'App Store' naming case. What is new here is that the dispute has moved from branding to money — AllThingsD reports Apple outright rejected, rather than delayed, an update to Microsoft's SkyDrive iOS app because Microsoft would not concede the standard 30 percent cut on in-app purchases.
On top of that sits a second, unconfirmed claim: that Microsoft is pressing Apple for a smaller-than-30-percent share of sales made inside Office for iOS. The story traveled widely the same day — Ars Technica, Business Insider, Phone Arena and others all picked it up — which reflects how much rides on the answer for any large software vendor that wants to sell subscriptions through Apple's storefront.
First-order effects
- Microsoft's SkyDrive users on iOS are stuck on the current version until the fee disagreement is resolved, since Apple has rejected the update outright.
- Microsoft's plan to sell Office on the iPhone and iPad now hinges on an unresolved commercial term: at a full 30 percent cut, in-app pricing for Office subscriptions gets materially more expensive than selling outside the app.
Second-order effects
- If Microsoft extracts a discounted rate, every other large subscription vendor on iOS gains a negotiating template; if Apple holds the line against its biggest desktop-software rival, smaller developers have no leverage case to point to.
- Subscription businesses face a forced routing decision — either absorb the commission inside iOS pricing or steer purchases to the web — which shapes how Office and competing productivity suites are packaged on mobile.
Third-order effects
- The episode marks the moment the flat 30 percent app-store commission stops being a settled industry default and becomes a negotiated, contested term for marquee partners — the kind of friction that historically invites regulatory scrutiny of platform take rates.
- Platform owners' control of distribution on their own devices is being tested by the largest PC-era software companies, setting up a structural conflict between device ecosystems and cross-platform software franchises.
The trend: App-store commissions are shifting from a uniform 30 percent standard toward individually negotiated terms, with the biggest software vendors as the first to test the floor.