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What this Google Stadia move could mean for the future

Google has announced that it will bring its cloud gaming service Stadia to iOS devices. Like Microsoft xCloud, Amazon Luna, and Nvidia's Geforce Now, the service will bypass the App Store and operate using a progressive web application users will access through Safari.

The news that Stadia would begin public testing on iOS over the coming weeks is another blow against the restrictive App Store policies that put Apple in a legal battle with Epic Games. While the Epic Games lawsuit against Apple focuses on in-game microtransactions, cloud gaming services have been blocked from joining the App Store because games come bundled and for sale within the service.

According to a Bloomberg report, the problems stem from Apple guidelines that require any games sold in an app downloaded from the App Store to be available for purchase in the App Store itself, not from within the service. By including games running a digital marketplace within the app itself, services such as Stadia would be violating those rules and were not allowed to build an App Store product to reach iOS customers.

To circumvent these rules, Microsoft was the first company to give up on reaching an agreement with the App Store and instead find its own solution to bring Microsoft xCloud to Apple devices. According to Business Insider, Xbox head Phil Spencer told Microsoft employees, "We absolutely will end up on iOS." The company then began working on the same type of progressive web application Stadia has just debuted, set to arrive in early 2021.

Google Stadia's progressive web application should function in the same way that the standard Google Play Stadia app does, except that users won't install it on their device. Instead, it will be accessible only through the Safari browser. Building an app that doesn't depend on the App Store has its advantages and disadvantages.

The obvious advantage, and the reason why so many prominent companies are pursuing this strategy, is that it frees companies from the restrictions Apple places on its proprietary App Store. The disadvantage is that it does not allow services like Stadia, xCloud, and Luna to take advantage of the massive, built-in audience that the App Store reaches every day.

The implications of this pivot by Google Stadia and other services could be immense. Almost 40 percent of Apple's annual revenue comes directly from the 30-percent cut the App Store takes on digital content sold through the platform. A significant portion of that income is derived directly from its most popular apps, such as Fortnite, which had 116 million users before Apple removed it from the App Store.

If popular games, apps, and services decide to bypass the App Store entirely, it could have massive financial consequences for Apple. While it's too early to say what those will be, we can already see the company making certain concessions, such as offering to lower their commission for some apps from 30 to 15 percent starting January 1, 2021.