Microsoft quietly told Apple it was willing to turn big Xbox-exclusive games into iPhone apps

Remember when Apple pretended like it would let cloud gaming services like Microsoft xCloud and Google Stadia into the App Store, while effectively tearing their business models to shreds? Know how Microsoft replied that forcing gamers to download hundreds of individual apps to play a catalog of cloud games would be a bad experience?

In reality, Microsoft was willing to play along with many of Apple’s demands — and it even offered to bring triple-A, Xbox-exclusive games to iPhone to help sweeten the deal. That’s according to a new set of private emails that The Verge unearthed in the aftermath of the Epic v. Apple trial.

These games would have run on Microsoft’s Xbox Cloud Gaming (xCloud) platform, streaming from remote server farms filled with Xbox One and Xbox Series X processors instead of relying on the local processing power of your phone. If the deal had been made, you could have theoretically bought a copy of a game like Halo Infinite in Apple’s App Store itself and launched it like any other app — instead of having to pay $14.99 a month for an Xbox Game Pass Ultimate subscription with a set catalog of games and then needing to use Microsoft’s web-based App Store workaround.

But primarily, Microsoft was negotiating to bring its Netflix-esque catalog of xCloud games to the App Store, at a time when Apple had gotten very touchy about cloud gaming in general.

The emails, between Microsoft Xbox head of business development Lori Wright and several key members of Apple’s App Store teams, show that Microsoft did start with a wide array of concerns about stuffing an entire service worth of Xbox games into individual App Store apps as of February 2020. Wright mentioned the “Complexity & management of creating hundreds to thousands of apps,” how they’d have to update every one of those apps to fix any bugs, and how all those app icons could lead to cluttered iOS homescreens, among other worries.

“We believe that the issues described here will create frustration and confusion for customers, resulting in a sub-par experience on Apple devices relative to the equivalent experience on all other platforms,” she wrote.

But by March of last year, Microsoft was proposing that it could, actually, create those hundreds or thousands of individual apps to submit to the App Store — as long as it could make those apps a bit more like shortcuts, instead of stuffing the whole cloud gaming streaming stack into each one. She argued that’s similar to how watchOS apps already worked.

“If we have a single streaming tech app, it will be around 150 MB, but the other apps will only be roughly 30 MB and will not need to be updated when the streaming tech is updated. This will be a better experience for users,” Wright wrote:

Screenshot by Sean Hollister / The Verge

That’s also when Wright pulled out the idea of bringing exclusive triple-A Xbox games to iOS, arguing that they, too, would need “the streaming tech package as a separate app to deliver the right experience.”

“This would be an incredibly exciting opportunity for iOS users to get access to these exclusive AAA titles in addition to the Game Pass games,” she wrote.

Obviously, none of this happened. Microsoft rejected Apple’s new App Store guidelines in September 2020 and announced the web workaround version of xCloud a month later. It arrived this April.

Where did negotiations break down? Microsoft now tells The Verge that Apple was actually the one that rejected its proposals — because Apple insisted on forcing each and every game to include the full streaming stack and wouldn’t agree to anything else.

“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.

Late last April, Apple’s App Store games manager Mark Grimm suggested that might not be the only reason the companies didn’t reach an understanding — it might have something to do with money as well. He told colleagues that Microsoft was actually now entertaining the idea of including the streaming code in individual Xbox games on the App Store. “[Wright] was far more positive and was trying to pressure her engineering team into finding a way to put the entire streaming stack into each binary,” he wrote.

Screenshot by Sean Hollister / The Verge

But there was also a concern that Microsoft didn’t want to put in-app purchases into each game: “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 Grimm, stating the opinion that Apple should let Microsoft’s games bypass IAP. “They’re not trying to circumvent paying us, they’re trying to circumvent a large amount of redundant API work,” he said.

And Apple tells The Verge that money was indeed involved. “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.

Microsoft’s Choudhry denies that IAP came into the final decision. “The reasons for rejection were unrelated to in-app purchase capabilities; we currently provide Xbox Cloud Gaming through a singular Xbox Game Pass app in the Google Play Store without IAP enabled, for example, and we would do the same through the App Store if allowed.”

Here’s Choudhry’s general statement on the entire matter:

We explored many options to bring Cloud Gaming via Xbox Game Pass to Apple devices, always in ways that led with the customer experience first, which we believed was best through a singular app. Apple’s Store policies would have forced us to launch each game as an individual app—while we never favored that approach, we explored it as a possibility in the spirit of finding any solution to bring Cloud Gaming to iOS customers. However between that email in March 2020 and our statement to The Verge in September 2020, Apple rejected our proposals and we were left without the ability to release a cohesive Xbox Game Pass offering through the App Store. We shifted our engineering priorities and have now moved to a browser-based solution making Xbox Cloud Gaming available to iOS customers through web browsers, and will continue to look for viable resolutions that allow us into the App Store.

As for the possibility of bringing triple-A Xbox exclusives to the iPhone and iPad as individual games, he confirms:

“In addition to Xbox Game Pass, we were also open to bringing select individual games to iOS as we do today with titles like Minecraft.”