In a nutshell: On Thursday, Epic revealed emails showing that Apple blacklisted Hulu from using its in-app subscription API in retaliation for using it to automatically cancel users and upgrade their plans through Hulu's website, circumventing the App Store commission.
As the fight between Epic Games and Apple drags out in court, the game maker continues to paint an ugly picture of its nemesis. On Wednesday, it presented evidence showing that when Apple could not get Netflix to reconsider its idea of removing in-app subscription purchases by offering special favors, it contemplated using "punitive" measures to influence the streamer's decision.
In 2015, back before Apple had upgrading options implemented in its in-app purchase (IAP) system, some developers, including Hulu, had access to a special subscription cancel/refund API. It was intended (by Apple) to be a way to cancel subscriptions to get customers on an upgraded 2-family plan. Hulu was using it for just that purpose, but somewhere between 2015 and 2018, it started using it to upgrade subscribers to its Live TV plan via the Hulu website. This deal was only for customers wanting the premium package. Regular subscribers still paid their monthly fees through Apple's system.
I didn't realize App Store subscriptions could be automatically cancelled through the StoreKit API. I'm surprised I haven't seen more offers to switch billing away from the App Store. pic.twitter.com/DcXzM2CCrq--- David Barnard (@drbarnard) September 28, 2018
In 2018, David Barnard tweeted about it (above), pondering why he hadn't seen more companies taking advantage of that. Phil Schiller saw it and presumably asked Matt Fischer, vice president of the App Store, "What's going on?" Fischer emailed the Director of Program Management Cindy Lin to look into it. Lin pulled Vice President of Marketing Pete Distad and App Store Business Management Director Carson Oliver into the email conversation.
Distad had been the senior vice president of marketing and communications at Hulu before coming to Apple, but he could not shed any light on the situation. After further discussion, Oliver concludes the email thread by saying, "I think we need to take immediate steps to protect against further misuse of the API."
3.1.1 In-App Purchase:
- If you want to unlock features or functionality within your app, (by way of example: subscriptions, in-game currencies, game levels, access to premium content, or unlocking a full version), you must use in-app purchase. Apps may not use their own mechanisms to unlock content or functionality, such as license keys, augmented reality markers, QR codes, etc. Apps and their metadata may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase.
So it banned Hulu from using the API. It also changed its guidelines to prohibit developers from using external means to subscribe or upgrade subscriptions (see Section 3.1.1 above).
Apple has maintained that developers are free to use external subscription methods with the stipulation that they do not promote those methods within their apps. In Hulu's case, that rule did not yet exist. One can contend that it was Hulu that triggered Apple to enact that policy.
However, what Epic wants to argue here is that Apple took punitive action against Hulu for breaking a rule that did not exist at the time. It intends to use Hulu as an example of how Apple exercises its power to get developers to pay never-ending App Store fees for content it does not own, store, or maintain.
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