How Apple Went To Extremes To Persuade Netflix Against Abandoning In-App Purchases

Apple Inc’s AAPL internal email correspondence sheds a light on efforts it made to prevent Netflix Inc NFLX from abandoning in-app purchases offered to its viewers, The Verge reported Wednesday.

What Happened: The emails were revealed as a part of the ongoing lawsuit between “Fortnite” maker Epic Games and the Tim Cook-led company.

The correspondence commences with an explanation that Netflix wanted to run a study that would involve disabling in-app purchases on iOS in order to study “voluntary churn.”

See Also: Netflix Staring At A Big Customer Churn, Deloitte Report Finds: What You Should Know

Apple then reportedly conceptualized a plethora of measures in order to encourage Netflix to keep offering in-app purchases.

Included was a proposal to advertise Netflix in retail stores, the use of a portion of Apple’s 30% commission garnered through in-app purchases to pay for search ads, and bundling Netflix with other Apple services.

The emails also contained a presentation Apple employees had created that makes the case for in-app purchases. 

The presentation highlighted steps Apple had taken in the past for Netflix and included new deals — like subscriber discounts — aimed at the streaming company, as per the Verge.

See also: How To Buy Apple Stock

Why It Matters: Irrespective of the discussions between the two companies, Netflix removed in-app purchases from its app.

In its presentation, the Cupertino, California-based tech giant reportedly mentioned offering Netflix “video partner program benefits,” which, according to the Verge, are akin to the deal it made with Amazon.com, Inc AMZN.

It was reported in July last year that Apple offered the Jeff Bezos-led company a 15% fee on Prime Video subscriptions garnered through the App Store, while it charged a 30% fee to other third-party developers.

See Also: Apple's 15% Store Fee Cut Attempt At Skirting Scrutiny By Doing The Bare Minimum, Says Epic CEO

The Apple presentation supposedly conceptualized even more benefits aimed at Netflix, some of which were not offered publicly to other developers.

These benefits included in the “What we could do” section of the presentation included bundling Apple TV with Netflix.

It is noteworthy, that Apple launched its own “Apple One'' bundles in October last year, which bundle Apple Music, Apple TV+, and Apple Arcade as well as cloud storage.

Price Action: Apple shares closed 0.2% higher at $128.10 in Wednesday’s regular session. On the same day, Netflix shares closed 1.4% lower at $496.08 in the regular session and fell 0.22% in the after-hours trading.

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