Report: Microsoft pressuring Apple to adjust revenue split on Office for iOS


Following reports that Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) are sparring over App Store revenues derived from the iOS version of Microsoft's SkyDrive cloud storage and file sharing application, insiders say the two firms are also at loggerheads over how they will share proceeds from the forthcoming Microsoft Office productivity suite for iOS, expected to roll out next year.

Citing sources familiar with ongoing negotiations between the two companies, AllThingsD reports Microsoft is pressuring Apple to adjust its standard App Store revenue split: Apple claims a 30 percent cut of all premium iOS downloads, in-app purchases and subscription sales, awarding the remaining 70 percent to its developer and content publisher partners. But insiders say Microsoft is balking at giving Apple 30 percent of revenues from Office-branded, native iOS apps allowing users to access Word, PowerPoint and Excel documents on the go: Because Office is a perennial cash cow, Microsoft does not want to hand over such a large chunk of its profits. Microsoft also contends that Office's value and utility will bring significant benefits to the iOS platform as a whole, meriting an adjustment to the 70/30 split.

While it is unknown what kind of revenue split Microsoft is seeking, sources say Apple is refusing to alter its stance or even consider an arrangement more favorable to Microsoft. Apple declined to comment on talks with Microsoft, but it did clarify its position on App Store revenue sharing.

"Apple provides customers and developers the largest selection and safest way to discover apps with our curated App Store," Apple spokesperson Tom Neumayr told AllThingsD. "We've designed our rules to be fair and consistent for every developer. Free apps and services are distributed for free, paid apps and services provide a revenue share to Apple. We've paid out over $6.5 billion to our developer community who have created over 700,000 apps." Microsoft has not yet responded to a request for comment.

Earlier this week, The Next Web reported Microsoft has already run afoul of App Store regulations by enabling SkyDrive for iOS users to sign up for 7GB of free storage space, with the option to increase their allotment via paid subscription. Because Microsoft has not agreed to award Apple a 30 percent share of SkyDrive revenues, Apple has blocked subsequent SkyDrive updates, including a critical bug fix designed to keep the app from crashing.

Insiders say Microsoft is declining to share SkyDrive revenues because subscriptions purchased through the App Store will continue awarding Apple its 30 percent cut in perpetuity, even if the subscriber moves to a Windows Phone or Android device or migrates from a mobile device to desktop access. The report adds that Microsoft has offered to remove the subscription option for Skydrive for iOS, eliminating all revenue-generating features from the app, but Apple has declined the proposal. As a result of the impasse, Microsoft has not released a SkyDrive for iOS update since rolling out version 2.1 on June 1, 2012.

For more:
- read this AllThingsD article

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