Here’s what Apple’s new rules about cloud gaming actually mean

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Apple has changed the rules.

One month after suggesting its iOS App Store guidelines would bar cloud gaming services like Google Stadia and Microsoft xCloud from appearing on an iPhone or iPad, the company has now overhauled those rules, telling journalists last Friday that Google and Microsoft’s streaming games are actually welcome after all.

But if you know how cloud game services operate, and then look at Apple’s actual written rules, you’ll see that’s only technically true. If I understand correctly, the reality is one of two things:

Either 1) Apple is asking Microsoft, Google and others to turn their streaming game services into an entirely new category of standalone app which guarantees Apple a profit — a kind of app that’s rarely existed on iOS before, and one that Apple itself called “not appropriate” just last year.

Or 2) Apple’s new guidelines aren’t designed to be anything but an attempt to confuse — a way to get the world to think Apple’s not actually rejecting the future of gaming, while simultaneously erecting so many roadblocks that companies like Google and Microsoft would never dream of taking Apple up on the offer.

It occurs to me, though, that you might not know how cloud gaming services operate. Most of them are pretty recent additions to the gaming landscape, even if I’ve been covering them for years. So let’s break down those new rules, and I’ll tell you how today’s cloud gaming services don’t actually fit.

The rule that didn’t exist

On August 6th, Apple told Business Insider and The Verge something it also suggested to Bloomberg months before: the primary reason why it wouldn’t allow Stadia, xCloud, and Nvidia’s GeForce Now into the App Store. That reason: Apple claimed its App Store rules require developers to submit each and every game individually so they can be reviewed and listed as apps in Apple’s App Store. Since Stadia and xCloud weren’t exactly planning to do that, they were out.

There were two gaping holes in that logic, though:

  1. Apple already allows giant subscription services chock-full of content onto the iPhone that don’t have to be individually submitted. Ever heard of Netflix? YouTube? Spotify? Twitch?
  2. Apple’s App Store Guidelines didn’t actually include an explicit rule that required submitting each game as its own app. We checked.

Arguing over whether Apple’s guidelines did or didn’t include a thing is kind of pointless, though, because Apple has ultimate authority. The company can interpret the guidelines however it chooses, enforce them when it wants, and change them at will — as we saw last week.

Last Friday, Apple added the rule that didn’t previously exist. It’s right here:

4.9.1: Each streaming game must be submitted to the App Store as an individual app so that it has an App Store product page, appears in charts and search, has user ratings and review, can be managed with ScreenTime and other parental control apps, appears on the user’s device, etc.

“What’s so wrong with listing cloud games on the App Store,” you might wonder? Well, it’s an awful lot of work with little benefit for Microsoft and Google, to start. They have to individually submit every single game, create App Store pages for each one, and hand the customer relationship to Apple — instead of just beaming their ready-made platform into the iPhone the same way they beam it into an Android phone right now.

Oh, but it gets worse (bolding mine):

4.9.2 Streaming game services may offer a catalog app on the App Store to help users sign up for the service and find the games on the App Store, provided that the app adheres to all guidelines, including offering users the option to pay for a subscription with in-app purchase and use Sign in with Apple. All the games included in the catalog app must link to an individual App Store product page.

You see, we’re not even talking about a cloud gaming service anymore, like the visions Google and Microsoft have shared of a portal to instantly hop into any game. Instead, Apple is offering to allow a catalog that merely links to games that live in the App Store, with no ability to launch them any other way.

Apple is effectively saying these companies cannot build a “Netflix of games” on the iPhone. That holy grail of cloud gaming is outlawed. They have to squeeze the entire idea, one game at a time, into a App Store-shaped hole. And of course, in-app purchase ensures Apple gets its cut of the profits as well.

Hacking away at the business model

But I think rule 3.1.2(a) is really the most telling piece of the whole puzzle:

3.1.2(a): Games offered in a streaming game service subscription must be downloaded directly from the App Store, must be designed to avoid duplicate payment by a subscriber, and should not disadvantage non-subscriber customers.

There’s a lot to unpack here. Let’s start with “downloaded directly from the App Store,” because we had to get some clarification on that from Apple itself. Apple tells us it doesn’t mean that games have to run locally on the iPhone — they can still be thin-client cloud games harnessing the power of remote servers to produce AAA graphics.

But I still have to agree with the way Microsoft put it last Friday afternoon:

“Gamers want to jump directly into a game from their curated catalog within one app just like they do with movies or songs, and not be forced to download over 100 apps to play individual games from the cloud.”

You should also really take a look at the phrase “should not disadvantage non-subscriber customers,” because that implies that there would need to be a category of non-subscriber customers for these games: Google and Microsoft would need to sell cloud games a la carte.

And this is where — for big cloud gaming services — Apple’s proposal starts looking a lot more like a ban.

It’s not yet clear that cloud gaming can even sustain an a la carte business model, where games are sold one by one. Companies like Google and Microsoft have to pay to maintain expensive cloud gaming servers and infrastructure, and they spin that hardware up based on how many paying subscribers they have and how many will actually be playing games at peak. Some also hope gamers will play less graphically intensive titles some of the time, instead of dedicating the entire power of a server to each person.

But if gamers can just choose a title or two they want instead of subsidizing the whole service, is it even feasible?

Photo by Nick Statt / The Verge

There’s also the little matter of whether Google and Microsoft could even legally do what Apple wants. Do Google and Microsoft actually have the rights to submit any of their cloud gaming service’s games to the App Store as standalone titles?

I’d wager they don’t — in the games industry, that usually falls to the publishers that bankroll these games, and their lawyers have a tendency to make distribution rights exceedingly specific by both region and platform. There’s already precedent in the cloud: Nvidia’s GeForce Now got in massive trouble by assuming the service could keep dishing up games Nvidia already had agreements for, and which gamers already owned, because these developers had technically only agreed during the beta period. Valve is getting partners to sign additional paperwork if they want their games to appear in the cloud, which implies the company didn’t have it from the start.

Did I mention Apple’s asking these companies to submit each and every update to their game for approval as well?

Streaming games are permitted so long as they adhere to all guidelines — for example, each game update must be submitted for review, developers must provide appropriate metadata for search, games must use in-app purchase to unlock features or functionality, etc. Of course, there is always the open Internet and web browser apps to reach all users outside of the App Store.

Perhaps the funniest bit is that for the past 15 months, Apple has explicitly said this exact kind of app is forbidden on the iPhone. In June 2019, the company added this phrase to the section of its App Store Guidelines that it previously applied to streaming games: “Thin clients for cloud-based apps are not appropriate for the App Store”.

In case you don’t know, a “thin client” is what you call a local app that relies on the processing power of a remote server — exactly how Stadia, xCloud, and every other cloud gaming service operates today.

The rule actually still exists, but Apple tells us it no longer applies to streaming games. Apparently that philosophy wasn’t important enough to keep now there’s money on the table.

To be fair, Apple’s under a lot of pressure now to find that money so it can continue to show growth. As iPhone sales have slowed, the company has decided to intensely focus on growing its services business, has seen phenomenal success, and it’s become increasingly clear that the App Store is a huge part of that. The result is that we’re seeing the company make calculated choices like this around the App Store time and again: Stratechery’s Ben Thompson reported that 21 different app developers contacted him about how they’d been pushed to retroactively add in-app purchases in the wake of the Hey and WordPress controversies.

Where this leaves the cloud

What Apple is asking for would create a new category of app on the App Store, a type of thin-client game with better graphics than anything you can currently play on an iPhone or iPad — but one that’s almost entirely under Apple’s control.

A generous interpretation might be that Apple’s hoping one of Google and Microsoft’s rivals will build a new cloud gaming service around that idea — they’d need the server and network infrastructure, which is which is why companies like Microsoft and Google are currently seen as front-runners in the space, but they’re not the only ones capable of fielding the tech.

At one point or another, Nintendo, Amazon, Walmart, Verizon, Comcast, and Electronic Arts were all testing cloud gaming — we’ve already seen a service called G-cluster do this with Square Enix and Koei Tecmo games in Japan, putting individually wrapped cloud games like Final Fantasy XIII on the App Store. It’s not hard to imagine a major ISP becoming a cloud gaming giant with Apple’s blessing, too.

But to Google and Microsoft, the new rules probably sound an awful lot like this: “Yes, you can offer a cloud gaming subscription service if you also individually submit every single game and future game update to the App Store for review, make downloadable thin clients for each one, let people buy them individually so we get a cut of revenue, give us a cut of your subscription revenue too, set up their App Store pages, and give us the customer relationship as well.”

Regardless of how you feel about whether Apple deserves 30 percent of anything that appears on an iPhone or iPad — Epic is taking that entire idea to court with its Fortnite fight — this is a tremendous number of hoops to jump through, when no other category of streaming content on the App Store requires every piece of content to be individually submitted to Apple for review. Not Netflix, not Spotify, not Twitch, and definitely not YouTube.

When I asked Apple why games are being held to a different standard than film and music, the justification was thin indeed: Apple’s customers expect to find their games in the App Store, so that’s where Apple wants each and every one of these games to individually go as well.

So unless Google, Microsoft, Nvidia and others can manage to stream their games through an Apple-approved web browser, we’re right back where we started: Apple has effectively banned xCloud and Stadia from iOS, it’s still in the middle of a feud with the gaming industry, and a huge swath of the potential audience for services like these can’t use them on iPhone.

If you want to play cloud games, you need to be on Android.

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