Here’s How Apple Managed to Lure Amazon Prime Into the Fold

Yesterday’s big tech antitrust hearings before the U.S. House Judiciary Committee yesterday were a mostly pedestrian affair, but one interesting detail did emerge from the documentation collected by the committee showing not only how Apple has occasionally played favourites with developers on the App Store, but how it used that leverage to woo Amazon into the fold.

When Apple first launched the fourth-generation Apple TV back in 2015, it changed the strategy for its set-top box by creating an App Store that would potentially allow any developer or streaming service to join in, opening up a much wider world than previous Apple TV models, which had a monolithic operating system for which only Apple itself could add new “channels.”

However, despite this wide-open playing field, one streaming service remained a conspicuous holdout on the Apple TV: Amazon Prime.

In fact, Amazon went so far as to remove the Apple TV from its online store, based on the fact that it didn’t support the company’s Amazon Prime streaming service, and yet it seems that at least some of the reason for that was as a result of Amazon’s own intransigence.

It seems that like most major streaming providers, Amazon was developing an Amazon Prime app for the Apple TV that could have been ready within weeks following the launch of the new tvOS-powered set-top box, however, it seems that Amazon took issue with the 30% cut that Apple wanted for users who might subscribe to the service through the Apple TV.

While it was never entirely clear if this was truly the case, there was definitely something that held Amazon Prime back from appearing on Apple devices, and yet two years later Amazon Prime finally made a sudden appearance, suggesting that Apple and Amazon had worked things out, although exactly how the two companies had come to terms remained a mystery — until now, that is.

The Deal

Among the evidence in this week’s antitrust hearings is an email uncovered by Bloomberg’s Mark Gurman that outlines how Apple finally capitulated to Amazon in order to get Amazon Prime to come to the Apple TV.

The email, which was sent by Eddy Cue, Apple’s Senior VP of Internet Services, to Amazon CEO Jeff Bezos back in late 2016 outlines an agreement between the two companies that would see Apple taking a 15% revenue share for sign-ups within the Amazon Prime app on Apple devices, versus the 30% share that Apple takes from just about every other developer.

However, the email also outlines certain things that Amazon would have to agree to as part of the deal as well, including ensuring that the Amazon Prime app includes full support for Siri, Spotlight search, and Apple’s TV app. In exchange, Apple agreed that it would take no revenue share from subscribers who signed up outside of Apple’s own ecosystem — which isn’t by itself different from any other app on the App Store — but that it would only take 15% from sign-ups made on the iPhone, iPad, and Apple TV, rather than the normal 30% cut.

Is Apple Playing Favorites?

While this seemingly flies in the face of Tim Cook’s comments before congress yesterday that Apple treats all developers equally, it’s not necessarily unique to Amazon — although it wouldn’t surprise us if Amazon inspired it.

In fact, it seems that this deal, which remained largely a secret until recently, was part of a new program that Apple has extended to other developers in that category. Earlier this year, Amazon Prime Video began letting customers make in-app movie purchases and rentals, which was entirely unprecedented in any app before it, and could represent another chapter in Apple’s dealings with Amazon.

However, it turns out that Amazon isn’t the only service that’s been invited to this party, although it’s certainly the best known. The same report indicated that at least two other services, Altice One and Canal+, were also part of a special program for “premium” which Apple told The Verge had actually been around for several years.

As suggested by the memo from Eddy Cue to Jeff Bezos, the program was designed to encourage streaming services to become better Apple TV and iOS citizens by tying into everything that’s part of the Apple TV experience — offering AirPlay 2 support, universal search, Siri support, single sign-on, and integration with the Apple TV app.

It’s also unclear whether other streaming apps and services may also be part of the same deal —  back when Amazon and Apple were still embroiled in their dispute, there were reports that companies like HBO had also succeeded in negotiating percentages down — and both HBO and many others also embrace the full slate of Apple TV features, and some even go beyond with Apple TV Channels integration, although of course it’s certainly possible for any developer to do this on their own initiative, there are many smaller ones that haven’t bothered, and of course big ones like Netflix that remain staunch holdouts.