Microsoft tried to convince Apple to allow the cloud gaming service when they were talking about bringing the xCloud platform to the iPhone.
According to emails between Microsoft and Apple executives, 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 phone, with the games running on the cloud gaming platform. If this deal had been reached, iPhone users would 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, 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's head of business development told Apple's App Store team that the company's games would be an "incredibly exciting opportunity" for users of the device.
Despite the near agreement, negotiations between Microsoft and Apple ultimately fell through and the platform that was supposed to be a separate app in the App Store was instead launched as a web-based platform.
Apple wanted each game to include a full streaming stack, but Microsoft wanted a single streaming tech app to support its individual game apps.
The proposal for bringing games through individual apps was designed to comply with App Store policies. The initial email states that Apple denied it because of our request for a single streaming tech app to support the individual game apps. It was not realistic to force each game to include our streaming tech stack, which would create an incredibly negative experience for customers.
Emails suggest that the deal fell through because Apple was concerned about how in-app purchases in Microsoft's games would work. Mark Grimm, manager of the App Store games, said in an email that Microsoft still wants to process all IAPs on their existing system and settle with them.
The deal fell apart over in-app purchase requirements, Apple told The Verge.
"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 orFunctionality within an app," reads a statement from Apple spokesman Adam Dema.
In-app purchases weren't the issue, but Apple rejected many of Microsoft's suggestions on how to implement Xbox Cloud Gaming, according to the CVP. He said that Apple rejected their proposals and left them without the ability to release a cohesive Xbox Game Pass offering through the App Store.
Apple required each app to be submitted individually, which prevented cloud-based gaming services from launching on the App Store. The web-based system that is used for Stadia is not required to comply with the App Store rules.
