Amazon bypasses iTunes App Store commission

Posted by Mark Raby

Amazon has just set up shop for iPad e-book customers, but plans on giving no cut of its sales to Apple.

The online retail giant's new iPad-optimized Kindle Books store looks sleek and functions just like a native app would, but it's all hosted through a proprietary Amazon server.

As such, when users make a purchase all the money goes to Amazon. It's a way for the retailer to skirt around Apple's draconian rule that all sales initiated through an app result in a 30% commission.

This was because Apple got annoyed from apps that were advertised as free but then drove customers to make purchases from within the app. Apple got no cut from that, since it previously only collected revenue from sales of the apps themselves.

This relatively recent rule has forced many publishers to yank their apps entirely. The Financial Times, for example, pulled out of the App Store because leaving it up would have meant anyone who signed up for a digital subscription would end up giving Apple 30% of their subscription fee every single month, even if they never went into the App Store again.

While the decision is no doubt driving more money to Apple's wallets, it does appear to have backfired as publishers now work on creating mobile sites instead of dedicated apps, which leads to a less intuitive user experience.