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?