Fees and subscription revenue
Twitter and Apple have been partners for years. In 2011, Apple deeply integrated tweets into
its iOS operating system. Tweets that function as official company communications are regularly posted under Apple CEO Tim Cook’s account. Apple has advertised new iPhones and its big launch events on Twitter.
But the relationship appears poised to change as Musk moves to generate a larger bulk of income from subscriptions.
Twitter reported $5.08 billion in revenue in 2021. If half of that comes from subscriptions in the future, as Musk has
said is the goal, hundreds of millions of dollars would end up going to Apple and Google — a small amount for them, but a potentially massive hit for Twitter.
One of Apple’s main rules is that digital content — game coins, or an avatar’s outfit, or a premium subscription— that’s purchased inside an iPhone app, has to use Apple’s in-app purchasing mechanism, in which Apple bills the user directly. Apple takes 30% of sales, decreasing to 15% after a year for subscriptions, and pays the remainder to the developer.
Companies such as Epic Games, Spotify, and Match Group lobby against Apple and Google’s rules as part of the Coalition for App Fairness. Microsoft and Meta have also filed briefs in court criticizing the system and made public remarks aimed at app stores.
One option for Musk is to take an approach similar to what Spotify has done: Offer a lower $9.99 price on the web, where it doesn’t pay Apple a cut, and then users simply log in to their existing account inside the app. Users subscribing to a Premium subscription inside the iPhone app pay $12.99, effectively covering Apple’s fees.
Or Twitter could go further, like Netflix, which stopped offering subscriptions through Apple entirely in 2018.
Musk could sell Twitter Blue on the company’s website at a cheaper price and tweet to his over 118 million followers that Blue is only available on Twitter.com. It might work and could help cut Apple out of any fees.
But that also means Twitter would have to remove many options for informing users about the subscription inside the app, where they’re most likely to make a purchasing decision. And Apple has detailed rules about what apps can link to when telling users about alternative ways to pay.
As Netflix’s app says: “You can’t sign up for Netflix in the app. We know it’s a hassle.”