When the iOS was launched, the Apple App Store bagged 30 percent royalty for all the apps sold. Following this, the App vendors started responding in massive numbers by switching over to the free applications. These free applications also included the apps that come with an in-app annual subscription or other fees.
This prompted Apple to ban the in-app purchases made anyways except via Apple. The company would eventually charge at least 30 percent commission for the lifetime revenues on each user. Competition coming in from hybrid and Android models where the users register and pay over the web has helped drive Apple’s overall lifetime tax for in-app transactions to a 15 percent mark. However, for the top suppliers of Apple, this number still adds to 100s of millions every year.
This has now prompted a particularly slow, yet expanding exodus via the in-app payments starting from Spotify and Amazon Video to the current Netflix. After the experiment organized which required the users to complete the payment via the web, Netflix has recently discontinued use of the in-app payment system for new users. Just last year, the video streaming company paid Apple close to $256 Million in the “Apple Tax”. This was for all the users that paid via the app. Now, Netflix can actually afford to let go of the millions of its users pertaining to the switch while still heading high in its business.
Netflix dropped out the in-app purchases for Google Play Store during the early half of 2018. The app found out that the users that were even allowed to pay via in-app purchases gradually yet steadily started making payments with the use of the web. This eroded Google’s share in the business.
A good example of this move comes from the e-commerce giant, Amazon. The company has restricted the TV and movie rentals/ purchases to the official website as well as similar compatible applications as opposed to allowing all this to take place via Prime Video application. The same move goes for the Kindle e-books that aren’t offered via Kindle mobile application.
Not just Amazon, Spotify also eventually discontinued its option for payment of premium services that used Apple’s in-app system for payment. Epic Games recently bypassed an entry into Google Play Store along with negating the 30 percent charge with the launch of Fortnite. This particular decision led to a loss of $50+ Million for Google.