Apple Discussed ‘Punitive Measures’ Against Netflix for Dropping In-App Purchases

As the Epic Games v. Apple trial advances into its third day, Apples internal files and communications with different business are continuing to surface, giving us some insight into the transactions that Apple has had around the App Store.
Back in December 2018, Netflix stopped offering in-app membership options for new or resubscribing members and instead started needing them to register for Netflix beyond the App Store in order to avoid paying Apples 30 percent cut. As it turns out, Apple executives were unhappy with Netflixs choice, and made attempts to encourage Netflix to keep in-app purchases offered.
The subject hasnt yet been brought up in the live in-person trial thats going on right now, however 9to5Mac highlighted e-mails in between Apple executives discussing Netflixs choice. Apple started scrambling to put a stop to it when Apple learned that Netflix was A/B checking the removal of in-app purchases in particular countries.
Apples App Store Business Management Director Carson Oliver sent an e-mail in February 2018 detailing Netflixs testing strategies and asked his fellow App Store executives whether Apple need to take “punitive steps” versus Netflix.
Do we wish to take any punitive steps in reaction to the test (for instances, pulling all global featuring during the test duration)? If so, how should those punitive steps be interacted to Netflix? (sic).
The e-mails do not make it clear if Apple did indeed take any steps to limit featuring throughout Netflixs testing, however Netflix did continue with the A/B test and found it productive. Ahead of when Netflix pulled in-app purchase options, Apple created an entire presentation to convince Netflix to continue to use in-app subscription indication ups.
Due to the fact that it was higher than those who signed up through the web, Netflix was worried about voluntary churn levels on iOS. In a nutshell, iOS users who registered for Netflix through in-app purchases were cancelling their Netflix accounts at a greater rate, an issue that Apple worked to solve for Netflix.
Other Netflix concerns consisted of free trial abuse (which Apple attended to), un-grandfathering (raising prices on users locked in to a select rate), and providing promos (wasnt possible to provide discounts on iOS). Apple internally went over methods to repair these problems for Netflix to encourage the company to stick to in-app purchases.
Apple also incentivized Netflix by explaining how much dedicated including Netflix was getting. Apple stated that Netflix was included more than any other partner, something that Apple wanted to continue doing.
Apple proposed continued coordinated including across iOS and Apple TELEVISION, advertisements promoting Netflix, App Store email projects, featuring performance information, an “Apple TELEVISION package” and choose video partner program benefits such as the option to up-sell non-IAP customers and billing flexibility to un-grandfather and cancel subscription charges.
Apple also discussed bundle offers for Netflix and an Apple service along with carrier and payment partners for co-funded membership deals, as well as in-store marketing for Netflix, however none of these steps ultimately persuaded Netflix to stick to in-app purchases.
Today, there is no in-app purchase choice for Netflix, and those who want to watch Netflix on an iPhone or an iPad need to initially sign up on the internet, with Apple collecting no cash. Netflix is also not allowed to direct clients where to register, though, and the splash screen just states “You cant sign up for Netflix in the app.”.
The Epic Games v. Apple trial is expected to last for roughly three weeks in total, with Apple CEO Tim Cook and other executives set to affirm in the coming weeks.

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