Apple Reportedly Stopped Work on iPhone Subscription Service

Apple has reportedly stopped working on an iPhone hardware subscription service that would have allowed customers to pay a monthly fee to get a new iPhone each year. Bloomberg’s Mark Gurman, who first reported on the project two years ago, said yesterday that the team working on it was recently disbanded, citing sources familiar with the situation.

According to Gurman, Apple’s iPhone subscription service had been delayed multiple times as the company faced software issues throughout its development. But that’s not all. “The service would have competed with — and likely upset — Apple’s wireless carrier partners, which increasingly rely on installment programs and promotions to sell iPhones and retain customers,” Gurman explained.

The program may have replaced Apple’s existing iPhone Upgrade Program, which the company launched back in 2015 to sell iPhones on installment plans. In the US, Apple also offers an alternative with Apple Card Monthly Installments, a service that lets Apple Card owners pay for new Apple products over time, interest-free.

“The move is part of a broader shift in how Apple approaches payment services,” Gurman reported. Apple’s iPhone subscription service would have used a similar technology as Apple Pay Later, a “buy now, pay later” service the company shut down earlier this year over regulatory scrutiny.

According to Gurman, Apple’s decision to shut down Apple Pay Later in the US was due in part to an inquiry from the Consumer Financial Protection Bureau, which concluded that Buy Now, Pay Later lenders are credit card providers that must provide consumers with the same protection and rights as credit card companies. “That’s a headache Apple didn’t want to deal with, especially since the size of the business is relatively small,” Gurman explained.