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Apple Blinks: Some Streaming Apps Won't Have to Pay the App Store Its Cut

By Danny Vena – Apr 2, 2020 at 12:18PM

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The tech giant is relaxing one of its most divisive policies -- but only a bit.

Apple (AAPL -1.51%) revealed on Wednesday that it had initiated a new program for "premium subscription video entertainment" apps that exempts them from paying the company its traditional cut of the sales they make via the App Store. The most high-profile beneficiary of this change is Amazon (AMZN -3.01%), which rolled out updates to its Apple TV and Prime Video apps that for the first time allowing users to rent and purchase videos on their iPhones, iPads, and Apple TVs. 

The iPhone maker confirmed it would stop taking a cut of sales from "qualifying" streaming video services on its devices, including Amazon's Prime Video, Altice USA's (ATUS -5.31%) One and Canal+.

Apple's Retail store in Manhatten.

Image source: Apple.

"Apple has an established program for premium subscription video entertainment providers to offer a variety of customer benefits -- including integration with the Apple TV app, AirPlay 2 support, tvOS apps, universal search, Siri support and, where applicable, single or zero sign-on," the company said in a statement.  

On qualifying purchases, customers now will be permitted to buy or rent movies and TV shows, and use the payment method associated with their existing video subscriptions. Previously, that wasn't allowed. 

Apple's relentless insistence on taking a 15%-to-30% cut of every transaction that happens through the App Store has long been a source of contention. A class-action lawsuit against Apple over the policy was filed by developers and customers who say the App Store behaves as a monopoly. Apple's shift to somewhat relax that stance is likely in part an effort to avoid further legal and regulatory headaches.

It wasn't immediately clear whether Apple plans to apply the policy more broadly and expand it to include other streaming services like Netflix and Spotify.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Amazon, Apple, and Netflix. The Motley Fool owns shares of and recommends Amazon, Apple, Netflix, and Spotify Technology and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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