Microsoft and Apple are at odds again over cloud gaming apps

Earlier this year, Apple began opening up its App Store to game streaming services like Xbox Cloud Gaming and GeForce Now, freeing them from restrictions on web apps on iPhone and iPad. Despite a number of changes to Apple’s App Store guidelines this year, Microsoft and Nvidia still haven’t released native cloud gaming apps for iOS, and Microsoft is now explaining exactly why.

Microsoft previously said earlier this year that Apple’s cloud changes don’t go “far enough” for Xbox, but in documents filed with the UK’s Competition and Markets Authority (CMA), Microsoft is now arguing that the changes Apple made in January, March, and April to the App Store Guidelines (sections 4.9 and 4.7) aren’t enough to enable the native Xbox Cloud Gaming app to run on iOS at all.

“Microsoft has identified a number of other provisions in Apple’s Guidelines that continue to restrict its ability to distribute and support the native iOS Cloud Gaming app (namely, Guidelines 2.1, 2.5.2, 2.5.6, 3.1.1, 3.1.2(a), 3.1.3(b), 3.2.2(i), 3.2.2(ii), 4.2.2, 4.2.7(e)),” Microsoft said in a letter filed with the CMA in late July.

Microsoft claims that Apple’s guidelines “continue to be a barrier to native Cloud Gaming apps,” since it apparently can’t comply with them, both technically and economically, by including third-party games in its Xbox Cloud Gaming service on iOS. Microsoft is specifically referring to Apple’s requirement for multiplatform services like Xbox Cloud Gaming that all content, subscriptions, and features be available in the iOS app as an in-app purchase (IAP):

In fact, Apple’s commission on in-app purchases is set at a level that is neither economically sustainable nor justified. The 30 percent commission prevents Microsoft from effectively monetizing its cloud gaming offering, given that Guideline 3.1.3(b) prevents it from offering different content, subscriptions, or features (including consumables in multiplatform games) to iOS users (as compared to content, subscriptions, and features offered on other platforms).

As the CMA noted in its study of the mobile device ecosystem, the 30 percent fee that Apple charges on in-app purchases is a result of the lack of competition in the distribution of native iOS apps.

Microsoft also says third-party game developers will be required to recode their games to meet IAP requirements.

Microsoft is also challenging Apple’s Guidelines 3.1.1, which prevent iOS app developers from linking outside of them to enable subscription purchases. Apple provides an exception for “Reader” apps, but cloud gaming apps do not qualify for this exception. Apple argues in its CMA application that it “has never approved gaming apps to benefit from the Reader Rule,” so it says app developers should not challenge its approach to in-app purchases in the context of cloud gaming.

The CMA is currently conducting an investigation into the market for mobile browsers, browser engines and the distribution of cloud gaming services via app stores in the UK. It has identified a number of possible remedies to address competition concerns regarding cloud gaming apps on mobile devices, including a potential requirement for Apple to allow native cloud gaming apps to operate in a ‘read-only’ mode without in-game purchases or subscriptions so that games do not need to be re-coded.

The CMA is also considering requiring Apple and Google to allow cloud gaming service providers to enable their own in-app payment systems, as well as potentially requiring Apple to amend its guidelines to remove elements that may contain technical restrictions on cloud gaming apps.

Apple says it supports cloud gaming via web apps and even cites two Edge articles, which include Microsoft’s improvements to Xbox Cloud Gaming performance on iPhones and iPads and the fact that more than 20 million people have used Xbox Cloud Gaming. “It is worth noting that while the CMA cites Microsoft’s concerns in the working paper, Microsoft has chosen not to engage in discussions with Apple regarding cloud gaming apps since Apple’s changes to the Guidelines,” Apple says. “This lack of engagement comes despite Apple’s positive steps forward with new capabilities and tools for cloud gaming apps on iOS.”

Apple also claims that developers “…generally have no difficulty with the IPA requirement,” and then cites Antstream, a small app developer that launched the first iPhone game streaming service on the App Store earlier this year with over 1,300 retro titles from Atari, Amiga, and Nintendo consoles. Apple helped Antstream with subscription optimization, editorial frameworks, and even PR overhauls and launch announcement guidance.

The CMA has given all parties a deadline of this month to respond to the market inquiry, before it plans to publish an interim decision report in November. Microsoft and Apple will then have plenty of time to continue their arguments between November and December, before a final report in February or March next year.