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Amazon managed to get a deal to avoid Apple’s App Store tax

Apple has made a reputation for running the world’s biggest walled garden for physical and digital goods, but every now and then the company relaxes its powerful grip when it sees the opportunity to gain more loyal customers. The latest relevant case is a deal with Amazon on letting users buy or rent content from the latter from inside the Prime Video app, despite App Store rules being clearly against such practices.
Earlier this week, Amazon quietly entered an arrangement with Apple to have the latter waive the 30 percent cut for things bought through the Prime Video apps on iPhone, iPad, and Apple TV. Upon opening the app on these devices, users are now greeted with a message that explains thatht they can browser, rent, and purchase content from inside the app, using the Store tab at the bottom of the UI.

For those of you who don’t know, that is technically against the rules, because the company exerts very strict control over the App Store. The case can be made that it’s an unsustainable practice that has already attracted scrutiny from regulators, as well as criticism that it gives the company the power to police and remove apps at will. The walled garden approach has worked very well for Apple and not at all for almost everyone else.

Apple told Bloomberg’s Mark Gurman that it has had an “established program for premium video app subscriptions” for a while now, which happens to include Amazon Prime. The Cupertino giant mentioned Altice One and Canal+, which are two smaller, European services that benefit from the same program, apparently since as far back as 2018.

Some speculate that Apple may be playing favorites here as a way to compensate for its lagging Apple TV+. If you look at the App Store Review Guidelines, they specifically state that, as a developer, “if you want to unlock features or functionality within your app, (by way of example: subscriptions, in-game currencies, game levels, access to premium content, or unlocking a full version), you must use in-app purchase.”

Furthermore, “you must not directly or indirectly target iOS users to use a purchasing method other than in-app purchase, and your general communications about other purchasing methods must not discourage use of in-app purchase.” This seems to indicate that Amazon’s Prime Video is breaking App Store rules with a special seal of approval from Apple.

Renowned Apple watcher John Gruber dug deeper into the case and found that Prime Video is now effectively a first-class citizen in the Apple ecosystem. Users can still use a subscription or rent through iTunes like before, but the company will forego its 30 percent cut if people choose to buy or rent content directly from Amazon from inside the app. The first scenario happens for everyone who doesn’t already have a Prime subscription.

As noted by Gruber, the deal is a win for Amazon, Apple, and consumers in the Apple ecosystem. And, who knows, this might just extend to game streaming services sometime in the future. Those don’t work at all on iOS because of the company’s draconic App Store rules.

On the other hand, it’s hard to turn a blind eye on how smaller developers are side-stepped once again while giants like Amazon are offered special entitlements. Of course, it wouldn’t be practical to conduct this preferential treatment with each and every developer, but remember than Netflix with all its might has yet to strike a similar deal as Amazon.