Disney Throws Down the Gauntlet: Big Tech’s App Store Showdown

When Disney CEO Bob Iger speaks, people listen—especially when he’s addressing tech giants like Apple and Google. This week, Iger had a clear message for these companies: Disney wants a better deal. The company currently relies heavily on third-party app stores to distribute its streaming services, including Hulu and Disney+, but Iger suggests that the costs associated with these partnerships are starting to weigh on the company’s bottom line.

Speaking at an investor conference, Iger highlighted the disparity between Disney’s distribution strategy and that of other streaming giants like Netflix. Unlike Disney, Netflix has managed to circumvent many of these third-party fees, which has positively impacted their profit margins. In contrast, Disney’s arrangements with various platforms such as Apple and Roku come with strings attached, including revenue-sharing agreements and fees. For example, Apple’s deal with video companies like Disney charges a 15% fee on revenue for signups made within Apple-distributed apps. Roku, on the other hand, not only charges a fee for customer signups but also demands a slice of the services’ ad inventory.

These arrangements, while providing reach and accessibility, aren’t cheap. It’s understandable why Iger is looking to renegotiate. The rise in streaming service popularity during the pandemic has placed companies like Disney in a powerful position, but the costs of third-party distribution continue to be a thorn in their side. As Disney’s streaming services grow, so too do the fees paid to these tech platforms. Iger hinted that Disney is evaluating these costs and considering alternatives.

Interestingly, Disney may not need to take drastic measures like pulling their apps from third-party stores to achieve cost savings. Regulatory pressure on Apple’s App Store policies has been mounting globally, forcing Apple to make some begrudging changes. While these modifications are still unfolding, it’s possible that they could lead to lower revenue shares taken by Apple from major content providers such as Disney.

The ongoing global scrutiny of Big Tech’s business practices could also play in Disney’s favor. As Apple faces increasing pressure from regulators, concessions may be made that could benefit large content distributors. Given that app stores and app distribution are significant revenue streams for companies like Apple, any regulatory changes could shift the balance of power, potentially leading to more favorable terms for companies like Disney.

In the backdrop of these discussions is Business Insider’s parent company, Axel Springer, which recently joined a $2.3 billion lawsuit against Google. This lawsuit, filed in Dutch court, alleges that Google’s advertising practices have caused significant financial harm to various media groups. While this case is separate from Disney’s streaming challenges, it underscores the broader context of tech giants facing legal and regulatory pressures worldwide.

Bob Iger’s call for a better deal is more than just corporate maneuvering; it’s a reflection of the evolving landscape where content providers are demanding a fairer share of the revenues they help generate. As Disney navigates these complex waters, the outcome could set a precedent for how other content creators negotiate with the tech platforms that distribute their services. The ball, it seems, is now in Apple’s court.