Apple and Netflix, two of the biggest Corporate giants have made huge profits by working with each other. But Apple’s excessive tax policy was proving too much of a burden on the Netflix profits.
Netflix had enough of it, and now its action has made Apple lose a huge sum of revenue. The Streaming service recently removed the iTunes billing or what we call the Apple Tax. It will result in a loss of around $256 million for Apple.
How Netflix was able to beat Apple?
Most people think that Apple only makes money by selling the iPhone and other devices. What they don’t know is that a large part of Apple’s profit share comes from the App Store. Apple takes 30% of the total bill for using their billing medium.
Netflix raised its voice to reduce the unfair tax, and after a legal case, Apple responded by cutting it down to 15%. In order to recover its huge investments, Netflix removed the entire inbuilt billing structure. The App now redirects to the official site of Netflix in a browser for making new payments.
Netflix is one of the highest grossing apps in the iOS App Store. It has earned more than $1.5 billion, giving around $450 million as a tax. Netflix will now keep its entire earnings to itself, and Apple will lose millions in revenue.
Apple vs Netflix: The Cold War
The ongoing rivalry between Apple and Netflix have various reasons. iPhone sales have been down, the market is changing, which has made Apple invests into a diverse field.
[fvplayer id=”35″]Apple is launching its own Streaming Service Apple TV Plus. It will have a library of original shows and will be a direct rival to Netflix Originals. What concerns Netflix is that Apple is ready with its Streaming Service.
According to a report by Verge, Netflix removed the Airplay feature support from Apple devices, calling it a technical limitation. While everyone knows that the real reason is the on-going Cold War between the two companies to establish their dominance.
Future Problems for Apple
Apple’s troubles don’t seem to be ending just with losing the tax war with Netflix. If the new payment model from Netflix is successful, other popular Apps like HBO GO, Spotify, Tinder, etc. might follow the same.
If Apple doesn’t revise its tax policy, soon the revenue will fall further down. Stay tuned to Hiptoro for more Netflix updates and other news.