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Apple blocks Steam's plan to extend its video games to iPhones

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Thomson
Reuters


By Stephen Nellis

(Reuters) – Apple Inc has blocked the plans of the biggest
distributor of PC-based video games to extend its reach into
iPhones, according to the game distributor, a sign that Apple is
serious about protecting its ability to take a cut of digital
purchases made inside games on its mobile devices.

Steam, the dominant online store for downloaded games played on
Windows PCs, had planned to release a free mobile phone app
called Steam Link so that gamers could continue playing on their
mobile phones while away from their desktop machines. But Apple
has rejected the app, blocking its release, according to a
statement from Steam’s parent company, the Bellevue,
Washington-based Valve Corp.

“The team here spent many hours on this project and the approval
process, so we’re clearly disappointed,” Valve spokesman Doug
Lombardi said in a statement to Reuters. “But we hope Apple will
reconsider in the future.”

Apple did not immediately return a request for comment. The
magazine Variety earlier reported Steam’s rejection from the App
Store.

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Bob O’Donnell, chief of TECHnalysis Research, said Apple’s move
to block steam could hurt it with users between 18 and 24 years
old, more than half of whom have iPhones, according to his
research.

“What they’re doing is denying iPhone owners access to the most
important gaming ecosystem there is,” he said. “Given that the
younger demographic skews toward iPhones, it seems particularly
damaging.”

Steam did not give a precise reason for the App Store denials,
saying only that Apple cited “business conflicts with app
guidelines.” But the conflict likely centers on what are known as
in-app purchases or micro-transactions, in which gamers can spend
small sums of money inside games to buy tokens, extra lives or
others so-called digital goods.

Lombardi said Steam disabled purchasing its iOS app but did not
elaborate on how the change was made.

Apple takes a 30 percent cut of such purchases made within apps
distributed through its App Store. Analysts believe those
purchases are among the primary drivers of revenue in Apple’s
services business, which includes the App Store, iCloud and Apple
Music. In Apple’s most recent quarter, services revenue hit $9.1
billion, beating Wall Street expectations and providing a bright
spot for revenue growth as the smartphone market matures.
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Steam, however, also offers purchases within games distributed
through its platform and also takes a cut of those purchases.
Apple’s App Store guidelines ban such a store-within-a-store
unless the purchases flow the Apple’s infrastructure and pay
Apple’s cut.

(Reporting by Stephen Nellis; Editing by Lisa Shumaker)

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