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

As the Epic Games v. Apple trial progresses into its third day, Apple's internal documents and communications with various companies are continuing to surface, giving us some insight into the dealings that Apple has had around the App Store.

netflix sign up
Back in December 2018, Netflix stopped offering in-app subscription options for new or resubscribing members and instead began requiring them to sign up for Netflix outside of the ‌App Store‌ in order to avoid paying Apple's 30 percent cut. As it turns out, Apple executives were unhappy with Netflix's decision, and made attempts to persuade Netflix to keep in-app purchases available.

The subject hasn't yet been broached in the live in-person trial that's going on right now, but 9to5Mac highlighted emails between Apple executives discussing Netflix's decision. When Apple learned that Netflix was A/B testing the removal of in-app purchases in certain countries, Apple started scrambling to put a stop to it.

Apple's ‌App Store‌ Business Management Director Carson Oliver sent out an email in February 2018 outlining Netflix's testing plans and asked his fellow ‌App Store‌ executives whether Apple should take "punitive measures" against Netflix.

Do we want to take any punitive measures in response to the test (for examples, pulling all global featuring during the test period)? If so, how should those punitive measures be communicated to Netflix? (sic)

The emails do not make it clear if Apple did indeed take any steps to limit featuring during Netflix's testing, but Netflix did proceed with the A/B test and found it fruitful. Ahead of when Netflix pulled in-app purchase options, Apple designed an entire presentation to persuade Netflix to continue to offer in-app subscription sign ups.

Netflix was concerned about voluntary churn levels on iOS because it was higher than those who signed up via the web. In a nutshell, iOS users who subscribed to 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 included free trial abuse (which Apple addressed), un-grandfathering (raising prices on users locked in to a select price), and offering promotions (wasn't possible to offer discounts on iOS). Apple internally discussed ways to fix these problems for Netflix to encourage the company to stick with in-app purchases.

Apple also incentivized Netflix by describing how much dedicated featuring Netflix was getting. Apple said that Netflix was featured more than any other partner, something that Apple was willing to continue doing.

Apple proposed continued coordinated featuring across iOS and Apple TV, ads promoting Netflix, ‌App Store‌ email campaigns, featuring performance data, an "‌Apple TV‌ bundle" and select 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 subscription offers, as well as in-store marketing for Netflix, but none of these measures ultimately convinced Netflix to stick with in-app purchases.

Today, there is no in-app purchase option for Netflix, and those who want to watch Netflix on an iPhone or an iPad must first sign up on the web, with Apple collecting no money. Netflix is also not allowed to direct customers where to sign up, though, and the splash screen just says "You can't sign up for Netflix in the app."

The ‌Epic Games‌ v. Apple trial is expected to last for approximately three weeks in total, with Apple CEO Tim Cook and other executives set to testify in the coming weeks.

Top Rated Comments

threesixty360 Avatar
15 months ago
I dont see anything here. A business manager asked a question about what the company should do. Thats not "apple" doing anything here.

Then they discussed working with Netflix to improve the experience etc.. Again what is the deal here? Apple works with companies that add significant benefit to their products.. is that news?

Finally, Netflix seem to have decided that the churn rate for sign ups via the app were even more of a problem than the 30% cut ( which would drop to a lot lower after 1yr right?).

What am I missing here?
Score: 54 Votes (Like | Disagree)
mihirdelirious Avatar
15 months ago
"We do not retaliate or bully people. It’s strongly against our company culture.” - Tim Cook.
So that was a lie under oath.
Score: 51 Votes (Like | Disagree)
gnasher729 Avatar
15 months ago

"We do not retaliate or bully people. It’s strongly against our company culture.” - Tim Cook.
So that was a lie under oath.
There was a discussion. There was no retaliation or bullying.
Score: 41 Votes (Like | Disagree)
dba415 Avatar
15 months ago
Apple is the greediest company in the world. They take extracting money out of others to ridiculous levels in every product they sell.
Score: 32 Votes (Like | Disagree)
drumpat01 Avatar
15 months ago
The biggest issue I've always had with Apple's in-app purchasing is that you can't even LINK to your own website to sign up. That is not OK! Yes, people know what Netflix is and can get to Netflix a million ways...but what about everyone else? What about some other small app maker that isn't already a household name? So they can list their website for support but not list it in the app itself when registering? That's terrible and anti-competitive.
Score: 32 Votes (Like | Disagree)
goobot Avatar
15 months ago
This is a good example of Apple almost going too far.
Score: 29 Votes (Like | Disagree)

Related Stories

Netflix

Netflix to Take on Apple Arcade With Mobile Games for Subscribers

Tuesday July 20, 2021 1:32 pm PDT by
Netflix today confirmed that it is planning to expand on its TV movie offerings with a new gaming offering. During the company's second quarter earnings report (via CNET), Netflix said that gaming is "another new content category," similar to its expansion into original films, animation, and unscripted TV. Netflix plans to focus primarily on games that are designed for mobile devices, with...
Netflix

Apple Arcade Facing More Competition as Netflix Plans Expansion Into Video Games

Wednesday July 14, 2021 3:39 pm PDT by
Netflix is planning to add to its TV and movie offerings by breaking into video game content, reports Bloomberg. Netflix has hired former Electronic Arts and Facebook executive Mike Verdu as vice president of game development, and he will report to Netflix chief operating officer Greg Peters. At Facebook, Verdu worked with developers to bring games and other content to the Oculus VR headset. ...
iOS App Store General Feature Dock

Dutch Regulator Says Apple's Plan for Third-Party In-App Payments is Insufficient, Fines Apple 5 Million Euros

Monday January 24, 2022 6:33 am PST by
The Dutch Authority for Consumers and Markets (ACM) has ruled that Apple's plan to allow App Store dating apps to use third-party payment methods for in-app purchases does not sufficiently meet the requirements of a previous ruling. As a result, the ACM has hit Apple with an initial 5 million euro fine as a consequence, and fines will continue to be assessed at 5 million euros per week up to a...
maxresdefault

Netflix Launches New 'Play Something' Shuffle Feature

Wednesday April 28, 2021 11:01 am PDT by
Netflix today announced the launch of a new "Play Something" option that's designed to play content on the streaming service based on user habits. The feature gives people who log into Netflix and aren't sure what they want to view an option to get to content quickly without endless scrolling.There are times when we just don't want to make decisions. A Friday evening after a long work week....
netflix account sharing

Netflix Testing Add-On Payment for People Who Share Accounts Outside Their Households

Wednesday March 16, 2022 11:23 am PDT by
Netflix today said that it may implement an extra payment for those who share their Netflix accounts with people outside of their households, a practice that is common with the streaming service. According to Netflix, sharing accounts between households impacts its ability to "invest in great new TV and films" for its members, and so it has been exploring ways to permit users to share...
netflix games launch

Netflix Taking on Apple Arcade With Official Games Launch on Android

Tuesday November 2, 2021 10:58 am PDT by
Netflix today announced the full official rollout of its Netflix Games feature, which will allow Netflix users to play a handful of games on their mobile devices. At the current time, Netflix is making games available for Android users, but support for iOS is "on the way." Netflix says that it's early days, but its goal is to build a library of games offering "something for everyone."...
netflix mobile games stranger things

Netflix Now Testing Integrated Mobile Games in Poland

Thursday August 26, 2021 10:46 am PDT by
Netflix earlier this year confirmed plans to get into mobile gaming, and now the company is testing its gaming experience with Netflix users in Poland. Netflix's Polish Twitter account today tweeted that the Android Netflix app in Poland is offering access to "Stranger Things 1984" and "Stranger Things 3," two mobile game options. According to NetflixGeeked, the games are included with a...
iOS App Store General Feature Dock

Indie Developer Dogged By Scammy Clone Apps Again Highlights the Holes in Apple's App Store Review Process

Monday February 21, 2022 9:29 am PST by
Apps that copy concepts and features from other apps are nothing new in the ‌App Store‌, but scammy like-for-like clones of genuine apps remain a perennial problem that Apple still hasn't resolved, as indie developer Kevin Archer recently discovered. Archer is responsible for 2Stable's Authenticator App, a feature-rich app that stores and generates secure two-factor authentication tokens...

Popular Stories

top stories 2jul2022

Top Stories: M2 MacBook Air Release Date, New HomePod Rumor, and More

Saturday July 2, 2022 6:00 am PDT by
The M2 MacBook Pro has started making its way into customers' hands and we're learning more about how it performs in a variety of situations, but all eyes are really on the upcoming M2 MacBook Air which has seen a complete redesign and should be arriving in a couple of weeks. Other top stories this week included a host of product rumors including additional M2 and even M3 Macs, an updated...
Mac Studio IO

Apple Begins Selling Refurbished Mac Studio Models

Thursday June 30, 2022 7:42 pm PDT by
Apple today began selling refurbished Mac Studio models for the first time in the United States, Canada, and select European countries, such as Belgium, Germany, Ireland, Spain, Switzerland, the Netherlands, and the United Kingdom. In the United States, two refurbished Mac Studio configurations are currently available, including one with the M1 Max chip (10-core CPU and 24-core GPU) for...
macbook air m2

Exclusive: Apple Plans to Launch MacBook Air With M2 Chip on July 15

Wednesday June 29, 2022 5:23 pm PDT by
The redesigned MacBook Air with the all-new M2 Apple silicon chip will be available for customers starting Friday, July 15, MacRumors has learned from a retail source. The new MacBook Air was announced and previewed during WWDC earlier this month, with Apple stating availability will begin in July. The MacBook Air features a redesigned body that is thinner and lighter than the previous...
13 inch macbook pro m2 mock feature 2

M2 MacBook Pro Much Slower Than Previous Model

Friday July 1, 2022 2:24 am PDT by
Apple's new 13-inch MacBook Pro with the M2 chip features a significantly slower SSD compared to the previous model, resulting in poorer performance in some workflows, it has been discovered. Specifically, it has been found that the $1,299 base model with 256GB of storage has significantly slower SSD read and write speeds compared to the equivalent previous-generation 13-inch MacBook Pro....