Microsoft Slams Apple’s 30% Fee, Barrier Xbox Cloud Gaming iOS

Microsoft's criticism of Apple's 30% commission fee highlights a significant barrier to the monetization of its Xbox Cloud Gaming service on iOS devices. This issue is part of a broader investigation into the competitive landscape of mobile browsers and cloud gaming markets.

The Economic Impact of Apple's Commission Fee

Microsoft argues that Apple's 30% commission fee on in-app purchases is economically unsustainable for its cloud gaming service. This fee structure, coupled with Apple's guidelines, prevents Microsoft from offering the same content, subscriptions, or features to iOS users as it does on other platforms.

For instance, Guideline 3.1.3(b) mandates that all subscriptions and features available on iOS devices must be offered through in-app purchases. This requirement is particularly challenging for cloud gaming services, which often rely on a consumption model where users can purchase content on other platforms and then play it on iOS devices. However, Apple's rules currently prohibit such arrangements, making it financially unviable for Microsoft to operate its cloud gaming service on iOS.

Comparison with Other Platforms

The criticism also raises questions about the fairness and consistency of platform fees across different ecosystems. Microsoft itself charges a 30% commission on the Xbox Store, but the context and services provided differ significantly. On the Xbox, Microsoft offers a range of value-added services, including promotional support, technical assistance, and other benefits that justify the fee. In contrast, Apple's fee is seen as a pure commission without equivalent value-added services.

Regulatory and Market Implications

The dispute is part of a larger investigation by the UK's Competition and Markets Authority (CMA) into whether Apple and Google's dominance hinders competition in mobile ecosystems. This investigation was restarted after a brief hiatus and includes input from various industry players. Google, in its submission, has urged regulators to focus more on Apple's App Store practices rather than examining the Google Play Store, further highlighting the scrutiny Apple is under.

Recent Changes and Ongoing Issues

Despite recent modifications to Apple's guidelines between January and March, Microsoft asserts that significant barriers remain for native cloud gaming apps. Apple has allowed cloud gaming apps on the App Store, but the underlying issues related to commission fees and content restrictions persist. Additionally, Apple has updated its terms in the EU to permit developers to link to external payment platforms, bypassing the iOS inbuilt payment system. However, this change does not address the core concerns raised by Microsoft regarding the economic viability of its cloud gaming service on iOS.

User and Developer Perspectives

The debate also involves perspectives from users and developers. Some argue that the 30% fee is not justifiable, especially when compared to other platforms that offer more flexibility and lower fees. Others point out that Apple's control over the App Store, including the prohibition on side-loading apps, is a more significant issue than the commission fee itself.

Potential Solutions and Future Directions

For Microsoft to successfully monetize its Xbox Cloud Gaming service on iOS, significant changes to Apple's policies would be necessary. This could include revising the commission fee structure or allowing more flexibility in how content and subscriptions are offered. Until such changes are made, Microsoft is likely to continue avoiding the iOS platform for its cloud gaming services, highlighting the ongoing tension between these tech giants and the regulatory bodies overseeing their practices.