When Microsoft was in discussions with Apple about bringing its xCloud platform to the iPhone, Microsoft attempted to sweet talk Apple into allowing the cloud gaming service.
According to emails between Microsoft and Apple executives that were unearthed by The Verge, Microsoft was willing to agree to many of Apple's demands about how the system would work, even agreeing to bring Xbox titles to Apple's platform.
Microsoft told Apple that it would bring triple-A Xbox exclusive games to the iPhone, with the games running on the Xbox Cloud Gaming platform. Had this deal been reached, iPhone users might have been able to play high-end Xbox titles on their mobile devices.
Apple wanted Microsoft to submit every game to the App Store individually to be overseen by App Store reviewers rather than offering games in an overarching Cloud Gaming app. Microsoft initially expressed reservations about doing so because of the workload it would create and the negative customer experience, but in March 2020, Microsoft agreed that it could actually submit each app on an individual basis while offering a catalog app linking out to them.
Microsoft head of business development Lori Wright told Apple's App Store team that Xbox games on iPhone would be an "incredibly exciting opportunity for iOS users."
Despite the near agreement, negotiations between Microsoft and Apple ultimately fell through and Xbox Cloud Gaming did not launch as separate apps in the App Store, but as a web-based platform that does not need to follow the App Store rules.
Microsoft told The Verge that Microsoft wanted a single streaming tech app to support its individual game apps, but Apple wanted each game to include a full streaming stack.
"Our proposal for bringing games through individual apps was designed to comply with App Store policies. It was denied by Apple based on our request that there be a single streaming tech app to support the individual game apps, as the initial email states. Forcing each game to include our streaming tech stack proved to be unrealistic from a support and engineering perspective and would create an incredibly negative experience for customers," reads a statement from Xbox Cloud Gaming CVP Kareem Choudhry to The Verge.
Emails also suggest that the deal fell through because Apple was concerned about how in-app purchases in Microsoft's games would work. "Their proposal for IAPs is still that they process all IAPs on their existing system and settle up with us (either in real-time or monthly)," wrote App Store games manager Mark Grimm in an email describing the negotiations with Microsoft.
Apple told The Verge that the deal did indeed fall apart over in-app purchase requirements.
"Unfortunately, Microsoft proposed a version of xCloud that was not compliant with our App Store Review Guidelines, specifically the requirement to use in-app purchase to unlock additional features or functionality within an app," reads a statement via Apple spokesperson Adam Dema.
Xbox Cloud Gaming CVP Kareem Choudhry told The Verge that in-app purchases weren't the issue, but Apple rejected many of Microsoft's suggestions on how to implement Xbox Cloud Gaming. "Apple rejected our proposals and we were left without the ability to release a cohesive Xbox Game Pass offering through the App Store," he said.
Apple has successfully prevented cloud-based gaming services from Microsoft and Google from launching on the App Store because of its requirements that each app be submitted individually. For Google Stadia, Google too has opted for a web-based system that does not require it to comply with the App Store rules.
