How Microsoft unsuccessfully tried to negotiate with Apple about the release of Xbox exclusives in the App Store

New details of Microsoft’s negotiations with Apple have become known from the published emails. For the sake of launching a cloud gaming service in the App Store, the company was ready to make a number of compromises. On iOS, among other things, AAA Xbox exclusives could appear. However, the negotiations have reached an impasse due to financial and technical differences.This was reported by The Verge with reference to documents related to the litigation between Apple and Epic Games.

Microsoft has been negotiating with Apple since at least February last year. The company initially disagreed with the requirement to release each game as a separate application.

The head of the Xbox business development department, Lori Wright, noted in correspondence with key App Store employees that it would be incredibly difficult to create hundreds and thousands of applications. Among the main concerns Microsoft highlighted the need to update each of them separately. Given the large catalog of titles, this solution seemed the least effective.

In March 2020, Microsoft offered Apple another solution to the problem. She could release individual applications for games from her catalog only if they would be something like shortcuts. Applications for watchOS work on a similar system.

“If we had one streaming app about 150 MB in size, other apps would weigh only 30 MB. They will not need to be updated separately. This will create a better experience for users,” Wright noted in one of the emails.

Thus, each game would simply act as a shortcut, redirecting users to the basic application for cloud gaming. Microsoft could operate a single system without the need to implement a full package of cloud technologies in each application.

All calculations had to be processed in the cloud using data centers with Xbox Series X processors. iOS devices would simply stream the necessary gameplay.

As a bonus, the company wanted to offer Apple to transfer a number of AAA Xbox exclusives to iOS. Thus, users could separately buy a conditional Halo Infinite and play it through the cloud on their iPhone without having to pay for an Xbox Game Pass subscription.

Despite lengthy negotiations, in September last year Microsoft still decided to bypass the rules of the App Store. As a result, the company announced the release of Xbox Cloud Gaming (previously called xCloud) as a separate web application (PWA). The cloud gaming service became available on iOS last summer.

According to Microsoft, the reason for the unsuccessful conclusion of the negotiations is Apple’s steadfastness. She rejected all offers and insisted that every game should have a full package of cloud technologies.

“The desire to force us to use the full stack of cloud technologies in every game seemed unrealistic to us from an engineering point of view. And it would create an incredibly negative experience for customers,” said Kareem Choudhry, vice president of Microsoft cloud gaming.

Another stumbling block was Microsoft’s refusal to use the App Store payment system. All transactions had to go through Apple’s store only, forcing the company to pay a commission on each purchase. Microsoft was not satisfied with this option, since Google Play already had a Game Pass application — and all payments in it bypassed the Google system.

In a conversation with The Verge, Apple only noted that Microsoft violated the guidelines of the App Store. xCloud was not allowed in the App Store, among other things, due to the company’s refusal to comply with IAP-related requirements.

That is why Microsoft eventually had to release its service in the form of a browser application. Due to Apple’s policy regarding cloud gaming, other companies, including Amazon, have previously used this method.