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Microsoft, Apple in Dispute Over SkyDrive iOS App

Posted by Michael Tanenbaum News | Current Affairs Dec 11, 2012
Microsoft and Apple are at odds over subscriptions and revenue related to the SkyDrive app for iOS .
One of the rules effective in Apple's app marketplace is a 30% cut of in-app revenues generated by sales in Apple's App Store. This includes not only official first-party apps designed by rivals to support services on other operating systems, but also the third-party apps developed for specific purposes as add-ons to rival content. 

SkyDrive Logo.jpgApple App Store logo 1.jpg

According to a report from TheNextWeb, based on conversations with Microsoft sources, the Redmond company is at an impasse with Apple over the 30% cut related to its SkyDrive app for iOS. When Microsoft introduced an option for users to purchase more SkyDrive storage via its iOS app, Apple suspended all updates and fixes to the app on grounds that Microsoft would not pay a 30% cut of subscription revenue generated by from such purchases. 

According to the report, Microsoft has attempted to negotiate a deal with Apple that would include removing all subscription options from the SkyDrive iOS app, however Apple rejected the offer.

The issues surrounding Apple's app store and development policies affects more than Microsoft, too. Developers building third-party applications for SkyDrive -- for instance, apps related to syncing stored music with an iDevice -- have encountered similar blocks to updating their apps due to the presence of a potentially revenue-generating "Sign Up" button on the SkyDrive login. Despite Microsoft's offer to remove the subscription options, third-party apps remain blocked because Microsoft is not permitted to modify or update the app, presumably until an agreement is reached. 

As the report notes, Apple's policies in its own app store are its own prerogative, but the company could be sending the wrong message to developers, particularly if it makes exceptions for certain applications while adhering to its revenue model on others. 

TheNextWeb likens the situation to similar issues that cropped up in May relating to third-party apps using the Dropbox SDK. Apple's prohibition against separate "sign up" features that could generate revenue outside of its own in-app purchase platform may potentially stall deployment of numerous add-ons, at least until users of the marketplace agree to forfeit 30%. 

With Microsoft expanding SkyDrive capabilities and signs that the cloud service is garnering attention, Apple's stance raises the question of whether the company is reacting to SkyDrive's competitive potential or merely drawing a line in the sand about use of its app marketplace. If Windows 8 and Windows Phone 8 generate the kind of adoption that SkyDrive storage shows promise of carrying, then growth of the Windows app marketplace may diminish the importance of this issue for Microsoft's business. 

Until then, it seems Microsoft is stuck with a SkyDrive app for iOS that hasn't been updated since June, as well as developers with frozen iOS projects related to its subscription services.
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