Microsoft Runs Into the Apple App Store Gotcha

According to a report, Apple is refusing to let Microsoft update its SkyDrive app for iPhone and iPad because of a well-known “gotcha” in the Cupertino firm’s App Store policies: It demands 30 percent of all sales related to apps, and since SkyDrive offers optional paid storage tiers, Apple won’t let Microsoft update the app until it gets its slice of the pie.

This story has potentially huge ramifications: As I reported previously, Microsoft plans to bypass the Apple App Store "30 percent vig" when it releases Office for the iPad next year. Instead, the app will be free but will require users to pay for an Office 365 subscription plan, which comes with monthly fees. Apple’s blocking of the SkyDrive app is seen as a prelude to that bigger, and more important, fight.

But is it true?

The Apple/Microsoft battle was first reported by the reliable Alex Wilhelm at The Next Web; he cites sources close to Microsoft. And Microsoft has since confirmed the report, at least in general terms.

“Similar to the experiences of some other companies, we are experiencing a delay in approval of our updated SkyDrive for iOS,” a Microsoft statement reads. “We are in contact with Apple regarding the matter and hope to come to a resolution.”

Regardless of the specifics, the report is certainly plausible: As detailed in the official Steve Jobs biography by Walter Isaacson, Apple has always been unyielding in its demands for a 30 percent cut of all revenues related to iPhone and iPad apps. It refuses to let periodical publishers deal directly with customers that have subscribed through Apple’s services, and it won’t let companies—like Amazon, which sells ebooks through its own Kindle Store—provide in-app purchases without getting the 30 percent cut.

While the rationale for denying a SkyDrive app update is rocky at best—SkyDrive is a cloud storage service, and the app is a simple front end to that storage—it’s clear that this story, if true, is really about Office. And it’s understandable why Apple would want a piece of the Office pie: Office is Microsoft’s best-selling software and a version for the iPad, in particular, would be a smash hit.