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

December 12, 2012 03:59 PM ET

Instead, Olive Toast, a two-man Scottish app shop, created a workaround to hide the "Sign Up" button on the SkyDrive page. That must have been enough for Apple; Olive Toast's File Pro was last updated in the App Store on Nov. 3, and does support SkyDrive.

In October, another developer posted a similar complaint on a support forum, claiming his iOS app was also bounced for the same violation.

Microsoft was aware of the problem as far back as February 2012, when in a "Known Issues" list for the Live Connect SDK, Microsoft said, "Apple has rejected iOS apps that integrate with Live Connect because the Microsoft account login page contains a sign up link, which could potentially take user to a page to purchase more SkyDrive storage."

In late October, another Microsoft employee said the issue had still not been resolved. "We are aware of this rule," wrote Shelly Guo. "Microsoft is in active discussion with Apple on this issue. However, there is no ETA on the resolution timeline at this point."

According to reports, the same problem has plagued plans to release iOS apps for Microsoft Word, Excel and PowerPoint, the three parts of the Office suite that most believe will move to the iPad and iPhone.

Yesterday, AllThingsD, saying it had talked with "sources familiar with the ongoing negotiations," claimed Apple wanted its 30% commission on any Office 365 subscriptions sold through the Office iOS apps.

Office 365, slated to refresh in early 2013 with new subscription plans for consumers and small businesses, lets customers install the Office software on up to five computers and devices. Analysts have predicted that Microsoft will offer limited iOS Office apps free of charge, but unlock their full feature sets only when they are tied to a paying Office 365 subscription.

AllThingsD's sources said that Microsoft was pushing Apple to adjust the App Store's 70%/30% revenue split, but that Apple wasn't budging.

That didn't surprise Wes Miller, an analyst with Directions on Microsoft, a research company that tracks all of Microsoft's move.

"Apple wants its cut," said Miller. "They're pretty firm about the 30%. Amazon tried to get around it, but couldn't."

Miller was referring to Amazon's Kindle app for iOS; in 2011, Apple forced Amazon to remove an in-app link to the Amazon bookstore.

Apple has made its subscription policy clear. In the App Store guidelines, item 11.12 states, "Apps offering subscriptions must do so using [In-App Purchase], Apple will share the same 70/30 revenue split with developers for these purchases."

If Microsoft caved, Apple could be looking at a gold mine: The consumer Office 365 costs $100 annually, while the small business version runs $150 per user per year.

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