Microsoft pressing Apple to take smaller cut on Office for iOS sales

By , Dec 11, 2012

Apple has just rejected the latest update to Microsoft’s iOS SkyDrive app, a client for its popular cloud-based storage service. The reason for this is that the update includes the ability for users to purchase more storage through the app, and Microsoft isn’t giving Apple its 30% cut of the sales.

Apparently the two companies are at serious odds over the commission fee, and the situation may not be resolvable. Microsoft has even offered to remove all subscription options from the app, but to no avail. And according to a new report, the beef has spilled over into Office for iOS discussions…

AllThingsD’s John Paczkowski has the scoop:

“Sources familiar with the ongoing negotiations between Apple and Microsoft tellAllThingsD that the companies are at loggerheads not over the 30 percent commission Apple asks of storage upgrade sales made through SkyDrive, but over applying that same commission to Office 365 subscriptions sold through Microsoft Office for iOS, which is expected to launch sometime next year.”

We’ve heard a number of reports over the past several months regarding Microsoft’s Office suite coming to iOS, and it looks like the rumors could materialize if the two companies can figure out a way to resolve this dilemma. But at the moment, both sides appear to be standing their grounds.

Microsoft, for its part, knows that bringing Office to iOS would add significant value to the platform and feels it should receive a discount on Apple’s 30% developer cut. Apple on the other hand, is said to be taking the “rules are rules” stance, and provided AllThingsD with the following statement:

“Apple provides customers and developers the largest selection and safest way to discover apps with our curated App Store. We’ve designed our rules to be fair and consistent for every developer — free apps and services are distributed for free, paid apps and services provide a revenue share to Apple. We’ve paid out over 6.5 billion dollars to our developer community who have created over 700,000 apps.”

It’ll be interesting to see how this all plays out. If Office for iOS ever sees the light of day, that means someone will have given in. The question is, who? Who needs who more in this scenario — does Microsoft need Office on iOS more, or does Apple?

What do you think?

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  • Lordthree

    Apples iWork software is really all anyone needs. Office has always been crap, forced upon the masses in enterprise. If M$ doesn’t wanna play ball Apple needs to tell them to go pound sand and see how many Surface RTs they sell.

    • http://www.facebook.com/joe.jonsen Joe Jonsen

      yeah well 1000000000000000000 use that crap so all serious devices need to be fully compatible with that crap.

      • Lordthree

        I can’t think of anything office can do that iWork or OpenOffice.org can’t. I can edit .doc files with anything. Office era has passed.

  • http://twitter.com/Rirath Rirath

    Apple has no reason to give MS a lower rate, which would only lead to cries of “foul” and “me too” from other developers. It’s opening the floodgate. As for who needs who more? Apple has their own office suite which is selling quite well. Not approving this at all would be better for Apple. (I’m not suggesting they shouldn’t approve it – competition and choice are good.)

    • Falk M.

      Uhm, sorry to burst a bubble here, whilst I agree Apple should keep the rules the same, they definitely shouldn’t underestimate the importance of Office here.

      MS Office is seen as the deciding factor for even considering a platform in business.
      If it can’t run MS Office, don’t even look at the spec sheets.
      Like it or hate it, whilst I love iWork, the compatibility and acceptance of MS Office is unbeaten (yet – and for a long time to come).

      • http://www.facebook.com/joe.jonsen Joe Jonsen

        i agree

      • http://www.facebook.com/joe.jonsen Joe Jonsen

        MS office is essential for apple to close the deal as far as IOS becoming the new “black berry” for business…lol

  • http://twitter.com/Chindavon Chindavon

    MS has ZERO leverage.

  • http://twitter.com/calvinyleung Calvin Leung

    Spammer -_-

    • Falk M.

      Lol… that comment is still up and undeleted collecting thumbs down. :,D

  • astereostudio

    This article is missing the main key as to why MS is asking this to begin with. The in-app purchases become subscriptions, and Apple would therefore be taking a cut every single time the user re-ups their subscription. So even if two years down the road a customer has moved onto a new device but is still using office web apps, Apple would continue taking their 30% because the subscription originated from an in-app purchase

    • Falk M.

      This.

      And to be frank, I think it’s quite sensible for MS to demand to be lifted from that requirement.
      NOBODY should be forced into such a contract.

      And before people cry foul: Think about it:
      The money you give to a developer for a subscription to a service is rightfully cut between the developer and Apple.
      Now, sometime later your renew NOT via Apple, yet, you have your service price split to Apple again? If that is what you want, well, that’s bad for developers and I think we can safely say that the more profit a product or service generates, the longer it lives.
      So if you enjoy the longevity of your apps and services, you should be behind Microsoft in this case.

      Now obviously, Microsoft’s Office doesn’t live and die by this, but smaller devs with smaller income might make decisions based on this.
      Think about it.

    • SimonReidy

      Exactly. I can’t believe this wasn’t made clear in the story. The Verge has much more accurate coverage of the problem you highlight.

      To people batting for Apple on this topic: Imagine someone signs up for extra SkyDrive storage using the iOS app, but then never uses the iOS app again, and continues to pay for their SkyDrive service which they use on their Windows devices for years to come. Is it really fair for Apple to continue to take 30% commission on that subscription?

    • http://www.facebook.com/kenrick88 Kenrick Fernandes

      What do you mean if he moves onto a new device ? Are you saying if he goes on from iphone 4 to iphone5 ? or iphone to android ? But then how does it work that way ?

  • http://www.facebook.com/joe.jonsen Joe Jonsen

    here comes the greed