Microsoft & Apple tussle over SkyDrive, Xbox Music and Office for iOS cash grab?

Today there has been a report that Microsoft and Apple are currently at a stalemate with a supposed app update to SkyDrive on iOS. Apple has allegedly blocked the update as they are now demanding a 30% cut of revenue from SkyDrive subscriptions.

It is not possible to purchase more storage from within the SkyDrive app, if the report from TheNextWeb is true this could mean bad news for iOS versions of the Office Apps.

The report then goes on to say that Microsoft cannot budge on a 30% cut as it would mean an automatic and continued revenue stream for Apple even if the user doesn’t have an iOS device. It’s perpetual regardless of what device they happen to be using. The inner workings of these agreements are of course open to speculation and we’ll be remiss not to point out that this one is firmly chalked up to being “rumour” at the moment.

So is Apple really worried about a cut of Microsoft’s SkyDrive Subscriptions? That could be the case and may signal a more concerted effort by the Apple to take a little more from the developers who inhabit their eco system. After all if everyone starts providing a free app but actually has a subscription model behind it, how will Apple make any money? Companies like Amazon have rejected the notion of a 30% tax on in-app purchases for this very reason. These apps are now for windows shopping only or consuming content bought through the web site. How does this enhance the experience of users?

Yep, SkyDrive is free here, here & here

With the obvious reasons parked for the moment, this alleged spat over SkyDrive is more likely to be a pre-cursor to a revenue grab from an iOS version of Office. This week has seen renewed signs of life from an iOS version of the suite. Office for Android and iOS is widely assumed to be delivered by way of a free app that requires an Office 365 Subscription to use it - the same way that SkyDrive works currently. The reasons for making Office available for devices like the iPad are clear and it could be a win for Apple and MS equally but reason has a way of taking a back seat to these types of issues.

If there is any truth to the report that Microsoft and Apple are in deadlock over SkyDrive then it’s almost certainly just a side show for Office. Unlike SkyDrive which comes with 7GB of free space, Office will likely need that subscription to work at all. The potential market for Microsoft for Office apps on Android and iOS is huge; the most widely known productivity package has tons of revenue potential on mobile. It will also be a great way to introduce consumers and business to a new way of using office, through a subscription.

Will Microsoft cave into Apple and give up a whopping 30% of revenue for the chance to have an app on the platform? If the company wants to play in Apple's ecosystem then they have to play by their rules whatever they might be. The two companies have a long and close working relationship, we’re sure that these things will settle down eventually.

Would Apple rather see no Office be available on their mobile devices than never see any money from the app subscription? Microsoft will need to address this SkyDrive issue now. If they cannot, then perhaps some demos of Office 365 apps and services on the iPad might be the gentle push that’s needed to grease the wheels of these talks?

Xbox Music - Set to arrived on iOS but at what cost to Microsoft?

The iOS subscription issue doesn’t just end at SkyDrive and Office; there is also the looming availability of an Xbox Music App for the platform. Perhaps that app will even allow music to be purchased from within? Until we hear from either Microsoft or Apple on this subject (which is highly unlikely) we’re going to take the report with a pinch of salt but it offers a tantalising glimpse of the potential issues at stake for Microsoft’s apps and services.

If Apple do dig their heels in then it’s also a great chance for Microsoft to promote Office on their own mobile platform, Windows Phone. By highlighting an iOS app that works but is being held back by Apple whilst showing off the free offering built into Windows Phone, this could be a PR coup.

Source: TheNextWeb, via TheVerge

117 Comments

Apple loses at the end of the day, because no one can match the software might of Microsoft. Hell, up until recently Apple's cloud ran on Microsoft Azure...still may be the case.

Microsoft can turn this into a PR war and pit the users against Apple and say "we'd love to give you Office, but Apple's terms are untenable."
I'm really hoping Microsoft flexes its muscles a little on this one too.
1 i completely agree with this. not everyone wants to use icloud or itunes or their office alternatives and this could be a real win for them but unless microsoft makes a firm stand a gives apple the bird it will remain to be seen.
What does it run on now?
iCloud may still run on Azure I haven't checked lately.
Where do you check for this information
http://www.theregister.co.uk/2011/09/02/icloud_runs_on_microsoft_azure_and_amazon/

but that was a year ago, so I dunno if they still do.
Very interesting tidbit for sure, I did not know that.
That's rich. Reminds me of when Apple first had WinCE POS devices in their retail stores. Makes sense: focus on core business. But its still rich. :)
It also means that if users really want Office and Skydrive they can get a Windows Phone. Those features could be an additional selling point for an iPhone and without them consumers may look elsewhere. It really is a loss for Apple.
I already think of Office as a selling point for Windows Phone. Not sure how making it available on other phone OSes is going to help WP grow.

I do see how it a help to consumers but with Nokia Maps making the leap too, there doesn't seem to be enough for "switchers". Maybe new phone owners???.... maybe...
Apple can suck it.
GO BLUE!!!
Screw apple
I also think of there products as ScrApple.
Scrapple is also a delcious breakfast meat available on the east coast.
Mmm, scrapple. :)
Apple is breaking it's own balls.
Reminds me how Apple pretty much grew Android by going with the stupid AT&T exclusive lock for so long. Then they started whining because their competitor's Android phones were selling well and started trying to sue everyone.
This could actually propel Windows Phone and RT much higher in market penetration.
Just curious, does Apple then get 30% of Spotify's subscription revenue? Because to use it on mobile you have to have a premium account but the app is free, I find it hard to believe that they would accept a 30% loss on really their main revenue stream beyond ads.
What apple is trying to get us 30% of anything purchased in app for Spotify you have to have already purchased the premium subscription to use it on mobile.
Isn't that the same with office 365 and SkyDrive, none of those a subscriptions you pay for in app, but so thing you purchase else where . The only one that makes sense is the Xbox music if you purchased a song you listened too, but restricting SkyDrive and Office doesn't make sense.
What about Netflix and Hulu?
They want 30% of all subscriptions?! That is some feces of a bull. I say this, apple should only get 30% of the monthly fee if I use skydrive or eventually office on an iOS device THAT month. No usage on an iOS device that month, no commission for Apple.
after a terrible loss in iphone 5 i thnk ceo of apple is trying to begg form other rivals... Lol plz give me 30% plzplzplZ...:)
Apple shouldn't get anything that an external company makes on subscriptions.
MS should ask for a cut of revenues from purchases made via iTunes on Windows machines.
+1-BILLLLLLLION +'s!
i agree. windows doesnt charge apple for their useless apps on windows machines.
Agree with that!
i would love to see that happen
^
That would be awesome xD
+1 Agreed, they have gotten out of hand with these cases against other manufacturers and there everyone owes us everything demeanor.
Bingo. Apples got balls but no brains here. MSoft should release a converter that moves an iTunes library on a Windows machine over to Zune, then cripple iTunes on Windows until Apple pays them back for their 30% cut on everything in the Users iTunes library. Seems fair if you apply AppleLogic doesn't it.
You can now copy iTunes music to WP8. Haven't tested it, but assume you could then copy the same music back to Xbox Music on Win8 - http://www.windowsphone.com/en-US/how-to/wp8/music/copy-my-itunes-music-to-my-phone
Actually, if you were to use the Apple manner of logic here, it would be 30% of ALL iTunes revenue, regardless of platform.

It would be a tough thing to try, though. As we've mentioned, Apple's decision to do this coudl REALLY shoot Apple in the foot. If Microsoft did that to iTunes, it's the same scenario. If Apple replies with a "fine, take it away," it hurts Microsoft more. If you take away iTunes, you take away ways to transfer files to and from all PC owners' iPods, iPhones, and iPads. How do you think those people will react? If history is any indication, it won't be with anger at the benevolent company that is Apple.

Doing that would basically tell people "go to Mac and use your iToys there." With the way people blindly follow Apple, they'd probably do just that.
How so? Who on a Windows machine is really using the God awful iTunes and why???
The millions of people who own an iPod or iPhone and don't own Macs. And contrary to popular belief on this site, not everyone is in the tech know how and are aware of software reputations. So for many, iTunes works. I know I never had much problems with it. In addition to a WP, I own an iPod Touch and a shuffle. My wife has an iPhone 4 and a Nano. She hasn't complained about iTunes.
My wife complained sparingly about iTunes -- until she started using the Zune software. Now, she can't imagine using that piece of software ever again.
If you've never seen a car before, you probably won't complain too much about having to depend on a bicycle for transportation....
Have you used iTunes recently? I don't own any Apple products, but my parents have an iPod Touch.
It's far better than transferring music/pics from Windows 8 to Windows Phone 8. And you can't even look for apps using Zune anymore. You have to go through your phone or online.
Zune used to be good for a lot of things, but now that that's basically gone, we're left with almost nothing.
This is why you will are unlikely to see a Metro version of iTunes hit Windows 8 - MS would then have some leverage. That wouldn't do at all. RB
But isn't that the model, that's coming? RT, really is the new Windows 8. The Windows 7 desktop, is just a vestigial tail, until they can grow thier app store to encompass every scenario, that you'd need a computer for. When that happens, Apple will have to create an iTunes app, and anything purchased through it would have to get MS, a cut, right? Why not pull an Amazon, and for purchases, launch safari, to Office 365's website, where you'd create your account, and pay for your storage upgrades?
Microsoft doesn't charged for In-App purchases.
+100000000
Microsoft has the upper hand.
When the giant monsters battle its the little Japanese people (us) who get stomped.
Friicken apple. come on Microsoft... Use this to your advantage.
Maybe they are...? RB
"if the report from TheNextWeb is true this could mean bad news for iOS versions of the Office Apps" OR good news to WP7/8 as users who want/need Skydrive/Office could be tempted to switch.
If true, sounds like a dumb move on Apple's part.
Apple won't be able to hog 30% from a company like Microsoft. They can take 30% from a little guy because they little guy has nowhere to go and has no choice. I am sure Microsoft lawyers will be able to take that cut from 30% to roughly 10%. And I base that on absolutely nothing.
Microsoft is not going to allow any of their SkyDrive revenue to be consumed by Apple. It is an independent service that doesn't require iOS. Dropbox and Box are just a bag of tools to give into Apple's terms.
Dropbox didn't actually give into them. They completely removed their links and do not offer any upgrades for their iOS client. MS offered to do the same, but Apple is rejecting the offer.
And what's apple next move? Will they be asking for 30% of Xbox sales and Gold subscriptions since there is an Xbox app. Maybe they'll try and get 30% of transactions through PayPal and bank of America too. What a bunch of crap.
Easy to fix:
NO SKYDRIVE ON I-OS as to MS terms...
THEN NO OFFICE FOR I-OS!
"Nothing to negotiate here!"
NO SOUP FOR YOU! LOL. That's what Steve Jobs would do, btw.
Same rules applie to everyone. Why should MS be different. Go see what happened to dropbox.
30% would be fine, if it weren't perpetual, even after the user leaves iOS. That's the sticking point. Well, that and the fact that Apple should never have a right to profits from a subscription model. Plus, companies have every right to say, "you can take your 30% and shove it up your ass."
I agree that there should be no exception made for MS if companies like Dropbox have to pay. But I think that MS should also just not make it available on Apple. I'd rather that Apple only take a cut of an initial sale, not a subscription. Or have Apple require that it's a paid app, with a subscription to the app itself. Then only get a portion of revenues based on the sale of the actual app.
I'd like to know if Dropbox and Box.com are paying 30% of their subscription fees to Apple also. If they aren't, why should Microsoft for Skydrive.
There's more to it than the article suggests... according to one of the articles I read elsewhere, Microsoft has actually offered to NOT include the "add storage" links within SkyDrive, but that wasn't enough for Apple... they still blocked the app. They seem to be playing the same hardball game they took against Amazon.

Oh the irony that Apple is quickly losing share to Amazon though, so they probably are scared of losing share to Microsoft too. Then again, all the more reason to cooperate with the companies and keep your platform interesting, in my opinion.

Apple has no end game anymore, and things like this help prove it. If they can't strong-arm the book publishers and developers into that 30%, they will lose revenue AND app selection. People move elsewhere. Apple goes bye-bye.

Personally... I hope Apple keeps on keeping on with their plan. :)
Sounds like Apple is seeing WP and the MS ecosystem as a legitimate threat. I could understand why they don't want people to start getting used to MS's services.
I don't think Apple is concerned about getting "new" users. Not too many people use Skydrive yet. Apple is not worried if they don't get these users. They're more worried about their own users finding Skydrive convenient, and thus, making it easier for those users to jump ship to MS in the future.
The big Ace card in this is MS Office. Apple has been okay so far without it, so they're likely willing to take the gamble that they don't need it. But as MS Office gets more and more optimized for handheld devices and tied to Skydrive, it will make WP look more and more capable for Enterprise, while the iPhone will look less capable by comparison.
Antitrust.
Apple is providing a competing product in an environment controlled by them, but charging a competitor 30% to provide a like product in that environment? Can't help believing that this would raise someone's concerns about abuse of power.
That's not the definition of antitrust practice at all. They're not preventing competition in the market as a whole. An antitrust matter would be if their practices caused the mobile market to collapse outside of Apple's products. Customers are 100% capable of leaving the Apple ecosystem for Android or Windows Phone at any time, so there's no antitrust matter here.

Not selling a competing company's products isn't an example of antitrust issues.
This could be. If they are trying to leverage their power over the app store specifically because it's MS then there is a case especially considering DropBox and Amazon. On what grounds do they refuse MS the same offer?
Then why does Microsoft get in trouble for "hiding" browser options (like Chrome, etc) in Windows 8 from the EU?
Because the browser selection screen was a remedy that they agreed to.
MS should just focus on making a great webapp that runs in Safari and cut Apple completely out of the picture.
Quite simple, isn't it? Same as Office Web Apps, just do a Skydrive Web App that runs on Safari, that's it!
i see it as win win if ms keeps skydrive office and possibly xbox music to themselves they are creating selling points for their own platforms. On the other hand subcriptions to their services could double/triple if allowed on android and ios. so its a matter of what exactly ms is looking to do imo
The question I keep asking myself is: "Why pay $10/month for Xbox Music on my phone when I have offline streaming via Nokia Music for free?" Seriously, the biggest problem with streaming music is data consumption. I do the vast majority of my daily listening on the drive to and from places, and there's no WiFi in my car. Is there any offline capability for Xbox Music?
Yeah there is when your on WiFi you can download the music directly to your device to save data and then listen as much as you'd like Nokia music is great but I don't always like the music they play and with xbm I can download only what I like to preserve space on the phone
You can download as much music as you want from the Xbox Music pass. Nice for me for when I'm in a lab at work and can't get signal.
Well if you call being able to skip 5 tracks per hour listening to music, then yea, not sure why you pay. Just download the tracks you want from your phone (cell or WiFi) or from the Zune client or Xbox Music on your PC
Why the hell hasn't anyone seued apple for monopoly practices? And they fine Microsoft becouse IE comes preinstaled on Windows bun Apple can do whatever they want and go home free?
F them
Microsoft got into trouble because they abused their monopoly position in operating systems in order to force their way into the browser market. No one has even identified what monopoly Apple is supposed to have (hint: none), let alone how they are abusing it.
Awww, those poor ios users. /s
Office on IOS?!?! It's one of the last few remaining reasons to switch to WP and even W8 tablets. My workplace are trying to decide between new ipads/surface & iphones/920's. The Office suite is looking to be the "killer feature", but if it comes out on IOS they definitely won't bother with WP8/W8.
That's why MS has kept Office an exclusive for as long as it has. They're in the business to make money, so offering it to other o/s will make way more than on our little platform. It's business 101.
This is app store. It's not desktop, so it's not free for all. If Microsoft want its products in the App store, It has to play by the rule. I believe same thing will happen for iTune in Windows8 store base on T&C of inApp purchases.
Microsoft should ask Google 30% share from Search results generated thru their Windows8 app.
Something must be done with inApp purchase practice. It doesn't seems right.
MIcrosoft doesn't charge for In-App purchases in the Windows Store.
This seems no different than Netflix. You must be already paying for it to use the app, but you can't subscribe from the app. There's no way 30% of Netflix fees go to Apple.
The difference is that 99% of users won't be paying for SkyDrive... So it's ridiculous to ask for a chunk of those that are, especially when they aren't necessarily using Apple products. i.e. They may not have any paying users on IOS
What's the problem, Apple? iCloud not taking off like you hoped?
I don't see how this can be true, Apple needs Office on their device, not so much for SkyDrive and XBM. I don't see why Apple woud block Office, if anything they should be helping. Of course they did drop Google so who knows.
I really don't get it. I mean for MS, they have different benefits they can enjoy from both releasing or not releasing office to ios. I'd actually be happier if they don't do so. But for apple, what they could possibly gain if ms just decided screw you apple and release office to WP only or WP, android only? Apple no longer possesses the market power they have even one year ago. With them losing ground in smartphone and more choices available in tablet market, can they really afford to offer only the useless iwork when others have office ND more? Maybe apple top executives only read feedbacks from itards who claim they need no ms whatsoever then everything makes sense again.
I bet if MS had tried getting a cut for itune purchases via Windows, the Feds would have hit them with anti-trust long time. The rules however are different when it comes to Apple: they make the God's phone, God's pad and God's music and who are you mere mortals to bring any case against them.
I pray Microsoft just sticks it to these bastards. Rip Office, Skydrive and Xbox away from iOS for good. Without Office, the iPad truely becomes just a web browser as I've always said it was. Just try and do work on that piece of junk without Office on it! You cant! People will have to stop taking it to work. Once that's done, just promote the hell out of the fact that it's available for WP8/8 and Android no problem. Seriosly, fuck these guys with a sharp stick.
Apple's trump card has always been their rich ecosystem in the app store. They're taking aggresive steps against partners in this field, kicking Google off the phone with the last update, and blocking Microsoft at this turn. These aren't small developers that they are fighting against, Google and Microsoft are large companies that are also in the mobile market. Apple maps shows that their own in-house solutions aren't even in the same league as the products they are kicking off their system. Could be the type of behavior that makes people think Android or WinPhone before buying the iphone 5s...
Teen girls still love their iPhones.
Not my teen girls they don't like Apple products.
LOL nice
God I hate Apple.
From what I've seen of XBox Music so far, I'd rather have ITunes for Windows RT than XBox Music for iOS.
Till this day I don't understand why MS or any other company makes software for the competition. The way I see it, if you want more phone sales, why not offer your products to your hardware? Skype, Xbox, office, smartglass, etc, etc on windows phone only. You can still give it away or charge online but in mobile products I say make it exclusive. Give people reasons to buy your hardware. Otherwise an iPhone or Android user can just say, I'll just buy an iPhone because there's an app for SkyDrive, or Skype.
Then they wouldn't be any better than Apple, would they? Aside from this, Microsoft is bigger than WP. They're not going to stunt the growth of the huge branch of Office by limiting growth to one still relatively small platform.
All MS has to do is pull Apple's licensing of Activesync. Activesync is big for Apple to be relevent for the business user.
A little phrase comes to mind: restraint of trade?
I remember the good old days when Apple was happy to use software as a lever to sell hardware.
God, I hope MS doesn't give in. Someone really needs to show Apple that they aren't this technology giant they seem to think they are; that they can't control competitors the way they're trying to. Microsoft (or even Google for all I care) needs to really beat some sense into them. :|
For Office: Microsoft should take charge, but worse to not have any Office on iOS than to pay Apple some (as long it's only for DLC or in-app purchases on iOS).
For Xbox Music: A client would be groundbreaking. Not that Apple is expansive enough to care, but do we see an iTunes app or Amazon Music app on WP? iTunes on Android? Apple's philosophy of what-we've-got-is-best isn't likely to relent in this circumstance.
It's moves like this that have me hating Apple! MS has had it's own issues with monapolizing things for years but right now I'm pulling for MS to hot back hard at Apple.
#BB10Believe
I suppose this will get lost in the sea of comments, but a quick search reveals that Apple allow other apps with subscription models. The one I found was Grindr.
I'm confused couldn't someone just sign up for Office 360 download the iOS app, or Android App, then a splash screen pops up asking for your MS Login ID and it just work? Or is Apple saying that they don't want anything on the App Store to have outside purchases? If that's the case what about Audible?
Microsoft suggested they would just leave out the in-app buying links, and Apple STILL refused it, so it's purely based on greed trying to sucker Microsoft. This is why I hope it bites Apple in the ass.
I really hope MS doesn't give in. It's 30% of all office subscriptions is A LOT of money.
Apple can go kick rocks on this one!
If I was MS I'd just pull the app and let the user community scream at apple.
I have a simple solution: I say MS pays Apple their 30% and then ask them for 30% on iTunes sales on the PC...lol
I swear Apple seems to be shooting a gun with a blind bold on.
say yes to 30% of each skydrive and office purchace, but in exchange ask for 30% of each iTunes and iCloud purchace made on a windows device.... that should work out well for microsoft i would think.
greedy apple Microsoft should do the same on itunes for windows
Why doesn't Microsoft just pull all products from Apple and be done with them!
SkyDrive needs to be a Microsoft only product as well as other key apps such as Office.
How greedy can one company be? I'm happy to say that I don't personally own one Apple device.
For sure... We are all very anti Apple and have never owned an Apple product.
Screw them. Drop office on iOS and stick it to them.
Make all of the xbox content exclusive to WIndows 8 and WIndows Phone 8.
therefore for any paid icloud account accessed from a MSFT OS - with ITUNES - MSFT should ask 30% cash :)
.O. 30% wtf... Why does Apple "deserve" 30% of subscriptions to Skydrive... when they have done little to nothing to do with Skydrive -.- They make me hate them more and more....
"After all if everyone starts providing a free app but actually has a subscription model behind it, how will Apple make any money?" Well IMO, considering the Iphone is a grossly overpriced piece of tech. Apple should have no problem continuing to "making money."

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