Netflix Is Attempting to Bypass Apple's iOS Tax

Apple is now a trillion-dollar company, which is due in no small part to the 30 percent cut it takes on all App Store app sales and subscriptions. But it looks as though some of Apple's biggest generators of app revenue are no longer happy to accept it. One of those is Netflix, and it's attempting to bypass the 30 percent tax completely on iOS.

Any company that signs up an iOS customer to a subscription service through the App Store is also agreeing to gift Apple 30 percent of the revenue. After the first year that drops to 15 percent, but it's still a significant cut of the profits. As TechCrunch reports, in 33 countries Netflix is experimenting with bypassing the need to pay that 30 percent.

New or lapsed subscribers in those 33 countries are being redirected to the mobile browser when they attempt to sign up using the Netflix app. If the subscription is started without using Apple's service, then the tax doesn't apply, or at least that's what Netflix figures. Apple may see things differently when it realizes how much revenue is being lost.

The countries where Netflix is trying this experiment are Argentina, Australia, Austria, Belgium, Brazil, Canada, Colombia, Croatia, Czech Republic, Denmark, Ecuador, Finland, France, Germany, Great Britain, Hungary, India, Indonesia, Italy, Japan, Korea, Malaysia, Mexico, Norway, Peru, Philippines, Poland, Slovakia, South Africa, Spain, Sweden, Taiwan and Thailand. If it works, then it seems likely to become permanent and then expand to other countries.

The question now is, what can Apple do about this? It could remove the Netflix app from the App Store, but how much would that really matter? Netflix is such a well-known brand and service that iOS users will search it out regardless. Any hit to users on iOS Netflix takes would probably more than be made up for by keeping that 30 percent from existing subscribers Apple usually takes. Would Apple offer Netflix a lower percentage to keep them on the App Store?

It's also worth noting that Netflix already carried out this switch for Android users, with Google Play not being used since May for new or lapsed subscribers. Epic made the same decision recently when Fortnite launched on Android.