Report: Apple, Microsoft lock horns over iOS Office revenue split

Computerworld - Apple and Microsoft are arguing over the iOS App Store's submission and payment requirements, and Microsoft has already made concessions as it tries to get its SkyDrive app approved, support discussions show.

The dispute may also have implications for Microsoft's Office iOS apps, which are believed to be in the works. On Tuesday, the Wall Street Journal's AllThingD blog reported that the firms were at loggerheads over compensation issues regarding Office on the iPad and iPhone.

On Monday, The Next Web, citing anonymous "sources close to Microsoft," said that Microsoft had not been allowed to update its SkyDrive iOS app since June, when Microsoft gave customers the option of buying additional storage beyond the free 7GB allotment.

The two companies could not agree on what, if anything, Apple was owed by Microsoft for revenue generated by additional storage plans. According to App Store policy, Apple takes 30% of all app revenue, including in-app purchases. The Cupertino, Calif. company may have argued that it was due the portion of all SkyDrive storage sales credited to iOS users.

It wouldn't have been surprising if Microsoft declined, if only because it couldn't guarantee that someone who paid for more storage used that space solely from an iPad or iPhone.

Microsoft confirmed the delay of a SkyDrive app update, but wouldn't go into specifics. "Similar to the experiences of some other companies, we are experiencing a delay in approval of our updated SkyDrive for iOS," a spokeswoman said in an email yesterday. "We are in contact with Apple regarding the matter and hope to come to a resolution."

Microsoft's developer support staff, however, hinted at the real reason for the logjam.

On several threads in the Live Connect Developer Center, developers reported that their iOS apps had been rejected because the apps included a SkyDrive log-in feature. According to the developers, Apple cited a rule that bans purchases or subscription sign-ups outside the app itself.

"Apps that link to external mechanisms for purchases or subscriptions to be used in the app, such as a 'buy' button that goes to a Web site to purchase a digital book, will be rejected," Apple told one developer, reciting section 11.13 of the App Store Review Guidelines.

Apparently, Apple interpreted the rule as applying to any third-party app that requires users to log into their SkyDrive account via Microsoft's SkyDrive website. "A few days ago, our last update was rejected by the Apple review team because of the presence of the 'Sign Up' button in the Live login authorization page," wrote Olive Toast Software on Aug. 9.

A day later, Dare Obasanjo, whose profile identified him as a Microsoft employee, replied on the same support thread, noting that Microsoft had already made concessions to Apple. "We recently removed some links to upgrading your SkyDrive from the 'sign up' experience," said Obasanjo, who then asked Toast when they had submitted the app update to Apple.