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Illustration: Rebecca Zisser/Axios

After years of grudgingly handing over as much as 30% of their mobile revenue to Apple or Google, some app makers and digital service providers are exploring ways to cut out the middlemen.

Among the recent examples: Epic Games is distributing Fortnite for Android outside Google's Play Store. Netflix is testing the removal of the ability to subscribe from within its iOS apps. Spotify, which once offered a discount to iPhone customers who subscribe outside of the app, has discontinued the ability for new subscribers to pay via the app.

The bottom line: Apple and Google make big bucks off their cut of subscriptions.

  • Sensor Tower estimates that Apple, for example, made $85 million in the first half of 2018 from those subscribing to Netflix, $26 million from Pandora subscribers and $15 million from those purchasing Hulu.
  • Google, it estimates, made $17 million off Pandora subscriptions and $14 million from those subscribing to Netflix, over the same period.

Be smart: While selling virtual goods doesn't carry the same expenses as operating a brick-and-mortar store, there are still some costs to Apple and Google. Credit card fees are the most notable hard cost, along with the costs associated with hosting the app stores and delivering digital content.

And, while there are savings to be had, there are other costs associated with cutting out the app store.

  • With Apple, it's a simple dollars and cents equation. Does the increase in sales you get offering subscriptions or content sales in the app offset the cut you have to give to Apple? And if what you are selling is the app itself, there really is no choice — there isn't any way to get around Apple's App Store if you're distributing iPhone apps.
  • On Android, it's more complicated. There are plenty of options to go around Google, but doing so requires missing out on the most widely used method for getting apps — and it also requires users to turn off a security setting that helps stop malware.

History lesson: It's not like anyone likes handing over 30% of sales to Apple or Google. Still, most of the industry has just adjusted to this as the cost of doing business. But not everyone: Amazon, for example, pulled the ability to buy books from its Kindle and Audible audiobook iOS apps in order to avoid having to give a cut to Apple.

What they're saying:

  • Startup investor/adviser Steven Sinofsky tells Axios that Apple and Google don't just distribute apps, they created the ecosystems, curate the stores and help spur demand. And the option to go around those stores, he noted, is rather limited. "Just because Fortnite or Amazon do it does not mean the newest game has, or should have, the same leverage."
  • "It feels like something bubbling up here. The dollars are just getting so big. They just don’t want to be paying Apple and Google billions," Macquarie analyst Ben Schachter told Bloomberg, which raised the issue in a story Wednesday.

Go deeper

Updated 3 hours ago - Politics & Policy

Supreme Court backs religious groups on New York coronavirus restrictions

Photo: Saul Loeb/AFP via Getty Images

The U.S. Supreme Court ruled late Wednesday that restrictions previously imposed on New York places of worship by Gov. Andrew Cuomo (D) during the coronavirus pandemic violated the First Amendment.

Why it matters: The decision in a 5-4 vote heralds the first significant action by the new President Trump-appointed conservative Justice Amy Coney Barrett, who cast the deciding vote in favor of the Catholic Church and Orthodox Jewish synagogues.

USAID chief tests positive for coronavirus

An Air Force cargo jet delivers USAID supplies to Russia earlier this year. Photo: Mikhail Metzel/TASS via Getty Images

The acting administrator of the United States Agency for International Development informed senior staff Wednesday he has tested positive for coronavirus, two sources familiar with the call tell Axios.

Why it matters: John Barsa, who staffers say rarely wears a mask in their office, is the latest in a series of senior administration officials to contract the virus. His positive diagnosis comes amid broader turmoil at the agency following the election.

Bryan Walsh, author of Future
10 hours ago - Health

COVID-19 shows a bright future for vaccines

Illustration: Annelise Capossela/Axios

Promising results from COVID-19 vaccine trials offer hope not just that the pandemic could be ended sooner than expected, but that medicine itself may have a powerful new weapon.

Why it matters: Vaccines are, in the words of one expert, "the single most life-saving innovation ever," but progress had slowed in recent years. New gene-based technology that sped the arrival of the COVID vaccine will boost the overall field, and could even extend to mass killers like cancer.