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News publishers fight Apple to lower App Store fees

Yahoo Finance’s On The Move panel discuss what’s moving the world of finance.

Video Transcript

JULIE HYMAN: Let's get back to the antitrust question, because major news publishers are saying to Apple, why can't we get a sweet App Store deal like Amazon has? And again, this speaks to the question of whether Apple treats different companies differently and whether it should.

DAN HOWLEY: Yeah, this is kind of a big deal for Apple, because it's essentially all of the house of cards that the App Store is seeming to fall apart, at least as far as the people who participate-- the developers that participate in the App Store. We had Epic Games, obviously this week, with their big showdown-- Microsoft and Facebook also lobbing grenades at Apple. And now we have the news publishers jumping in.

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The news publishers-- basically the ones that see part of their subscription revenue go to Apple as a result of being on their platform, essentially asking to get the same kind of sweetheart deal that Amazon got. Amazon came out through documents that Apple had to submit to the House Judiciary Committee, showing that they had given a reduction in the commission that Amazon has to pay Apple for new subscriptions of its Prime Video service when people sign up through the App Store Apple TV.

That was kind of a sticking point, it seemed, for the two companies. And they did come to an agreement. Tim Cook said that there are some arrangements that are made for companies that meet special demands or thresholds-- something along those lines. And now these news publishers are saying, well, why can't we be part of that?

So this all goes back to antitrust. It also has to do with the news industry in general. Look, Google is basically saying down in Australia, which is passing legislation saying that Facebook and Google have to help the news industry because they've dominated the advertising business so much, you guys have to help them. And now, Google and Facebook are trying to jump in and say, we don't really want to do that. So this all goes back to the issues of media and antitrust.

[HOWLING]

RICK NEWMAN: How much of a cut does Apple get, even when you do something like make a purchase using your iPhone? So if you have your credit card registered with Apple, then you use your phone to make a purchase that gets charged to your credit card, obviously the credit card takes a cut. And then Apple takes another cut. I mean, doesn't this pile up at some point and start to be too many middlemen in the purchasing stream?

DAN HOWLEY: Yeah, I mean, look, it's a 30% cut for every purchase that Apple gets from the App Store. And then if there's a subscription, the first year is 30%, and then they drop that to 15% for each subsequent year. So they're making money hand over fist and if the App Store gets taken down or there's some greater issue here for them, it could cut into their services revenue a great deal. And that's the second-largest revenue stream for Apple outside the iPhone.