Microsoft shook up the PC gaming industry this week with the announcement that it was cutting the fee it takes from game sales on the Windows store. On the surface, it’s a welcome move, with Microsoft matching the 12 percent cut that Epic Games takes, and putting more pressure on Valve, which still takes a 30 percent cut on most Steam purchases. But the cut is also a tactical move: Microsoft wants to help pressure Apple, and this week’s changes could play a role in the bigger app store battles kicking off next week.
Microsoft’s announcement comes just days before a huge court trial between Epic Games and Apple, and just as the EU has found issues with Apple’s rules — claiming the company has a “dominant position in the market for the distribution of music streaming apps through its App Store.” Microsoft has been quietly backing Epic Games’ action against Apple, and not-so-quietly calling for regulators to investigate the App Store. If either effort is successful, it would directly benefit Microsoft’s software business, as well as its ambitions for cloud gaming.
Epic founder Tim Sweeney has a long history with Microsoft, and it’s only recently that their interests have aligned. Sweeney famously lashed out at Microsoft’s efforts to control the Windows software ecosystem with its store and Universal Windows Platform (UWP) initiative. Microsoft has since walked much of this back, and the company’s more open model for HoloLens saw Sweeney share the stage with the software maker and pledge Epic Games’ support for Microsoft’s mixed reality headsets.
Apple’s App Store, which is at the center of the current lawsuit, has also been a particular sore point for Microsoft. After losing out to iOS and Android with its Windows Phone efforts, Microsoft has been fighting its own battles against Apple’s App Store for years. After hitting out at the App Store with its own Windows store policy changes last year, Microsoft will take any chance it can to help force favorable fees, especially if it’s well timed. The software maker attempted to launch its SkyDrive (now OneDrive) app for iPhones back in 2012, but got locked in a battle with Apple over a 30 percent cut of revenue for cloud storage purchases in the app. It was a test for Microsoft’s real cash cow — Office on iOS.
Microsoft has also been battling to launch its xCloud game streaming service on iOS, where it would love to keep the 30 percent cut it makes on game purchases and in-app transactions on cloud versions of Xbox games. Apple is still blocking services like xCloud or Stadia, and Microsoft has had to create a web version to work around the restrictions.
While Microsoft hasn’t lodged any formal complaints about Apple, the company’s chief legal officer, Brad Smith, reportedly met with the House Judiciary Antitrust Subcommittee last year to brief the panel on concerns around the App Store and its fees. This was around the same time Apple had commissioned a study that argued its 30 percent cut was an industry standard. It’s hard to look at Microsoft’s PC gaming fee cut this week and not see it as a well-timed push that will help highlight the disparity between PC and mobile app stores.
Microsoft’s app store on Windows isn’t a huge revenue driver for the company, and it already had a 15 percent cut on apps ahead of these PC game changes. Gaming is the most lucrative part of any app store, but a large number of game developers don’t currently publish their games on the Windows store. That makes Microsoft’s cut to 12…