Amazon Prime Video’s iOS and Apple TV apps now let customers purchase or rent movies or TV shows in-app. Previously, you could still sign up for a Prime Video subscription through the iOS app, however, for transactional purchases or rentals, Amazon directed customers to a web browser, thus avoiding paying any platform tax on those purchases.
Last Wednesday, Apple confirmed it has a new program for so-called “premium” streaming video providers that allows them to use their own billing platforms and bypass the standard 30% tax when selling individual purchases. Notably, this only applies to transactional purchases and not subscriptions.
So if I was to sign up to Prime Video through its iPhone app, my payment would be processed by iTunes Billing and you can be sure that Apple’s collecting a bounty on my $8.99 per month subscription fee.
Moreover, Apple stated to The Verge in a statement, “On qualifying premium video entertainment apps such as Prime Video, customers have the option to buy or rent movies and TV shows using the payment method tied to their existing video subscription.”
Therefore if I were to purchase or rent a movie, my transaction would again be processed by iTunes Billing. What’s not clear is if Apple would collect a fee in this scenario.
What’s also not clear is if this a quid-pro-quo for Amazon to eventually give Apple products the same treatment on Amazon devices.
What is clear is that Apple will still get theirs, but at the moment, this is a much bigger win for Amazon especially at a time when many new blockbusters are coming straight to home.
There’s also a theory that this move is by Apple to prevent further pressure from regulators. Subscription services like Spotify have insisted Apple’s 30% platform tax is abusive, given the control over the software that can be installed on phones. Though no major US regulators have taken to this cause, courts have favorably viewed the argument. In May 2019, the Supreme Court allowed a civil antitrust lawsuit against Apple to proceed and EU regulators are also closely looking at the case.
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