Microsoft is embroiled in a conflict with Apple that is part of a bigger story. Today I’ll tell you about the details of the standoff over whether Microsoft will be allowed to keep giving away a Skydrive app for iPhones and iPads. In the next article, I’ll give you the bigger picture, which will help you understand some of the battles to come – and perhaps help you make decisions about what devices you buy.

Today’s flap is about whether Microsoft will be able to update an app for iPhones and iPads that provides access to files and pictures stored in Skydrive.

BACKGROUND

Skydrive is Microsoft’s cloud service for storing files and pictures online and syncing them to your computers and other devices. If you’re not familiar with Skydrive, take a look at this article for some background.

Signing up for Skydrive is free – 2Gb of space is available to anyone with a free Microsoft account. If you want more space, you can sign up for additional space for a modest subscription fee.

Most people will use Skydrive by installing a small program on a computer or phone or tablet. On computers, it creates a special Skydrive folder that is synced with the online storage and any other computers connected to the same account.

On a phone or tablet, a Skydrive app displays everything in the Skydrive folders and allows them to be reviewed or downloaded. I have access to all my client files on my Windows Phone 8 device and my Microsoft Surface tablet, in addition to my laptop and desktop computer.

The Skydrive apps for phones and tablets have other features unique to those devices. For example, you can have your phone automatically upload all the pictures you take to your Skydrive folders, where they can immediately be viewed on your computer or tablet.

Microsoft has been continuously improving Skydrive for the last few months. It is built deeply into Windows 8 (all sizes – computer, tablet, phone) and it will take center stage in January when Office 2013 is released and Skydrive becomes the default location for saving files. Developers have been given tools to create programs that integrate with Skydrive in interesting ways. Skydrive fits the new age of mobile devices, meeting your expectation that you will be connected to your stuff everywhere – every computer, every device.

There are competitors to Skydrive which have their own strong points. Dropbox continues to be a compelling, secure service for file syncing and sharing, with good cross-platform support, for example. But Microsoft’s plans to integrate Skydrive with everything are well under way. If you’re a Windows user and you’re not already committed to Dropbox or SugarSync or one of the others, you should be using Skydrive.

THE DISPUTE WITH APPLE

There is a Skydrive app for iPhones and iPads in the iOS App Store. Microsoft has an update ready that will fix bugs and add some new features. Apple won’t approve the update.

Apple wants money.

See that reference above to a subscription fee? A few months ago, Microsoft gave users the ability to buy more online storage space for an annual fee. You can sign up from the Skydrive web site.

Apple’s position is that it must be paid 30% of all money collected from a user who signs up for extra space, if they have the Skydrive app installed on an iOS device.

Forever.

Even if the purchase is not done through the iOS app. Microsoft offered to take out every vestige of a purchase mechanism from the app. Apple said it didn’t make any difference.

Even if the app is immediately uninstalled. Apple says it has a right to 30% of the revenue from that user’s subscription forever.

Even if the user stops using an iPhone and switches to an Android phone or Windows phone. Apple wants its cut forever.

What’s more, at the moment, Apple is blocking apps from third-party developers who integrate with Skydrive in any way, because Apple must get a cut from anything that touches money even indirectly. You can’t get an iOS app to play music stored in your Skydrive folders because Apple isn’t getting a cut of Microsoft’s Skydrive revenue.

Apple’s position is that it must be given 30% of the revenue from a product which roams across multiple platforms – lifetime fees for a subscription which was not purchased through the Apple store and which is not directly related to use of the service on an Apple device and indeed which might never be used on an Apple device.

The story was broken by The Next Web a few days ago, and has been confirmed by Microsoft.

It is extortion by Apple, driven by greed and its desire to keep Microsoft away from iOS devices – a bit ironic, since Microsoft has arguably done as much as any third party to keep Apple’s computer business alive. Microsoft Office has long been one of the most popular third-party programs for Macs. Microsoft even invested $150 million in Apple when the company needed a boost to survive at the end of the nineties.

That’s old history, though. Apple is ascendant today in phones and tablets and aims to stay that way.

The companies will negotiate and eventually it will be resolved. We may never know what they decide. When the giants fight, the little people don’t always get to know the details. You can and should use Skydrive while they work it out.

There is a bigger issue behind this fight, though – specifically for Microsoft and Apple, as well as many more fights to come as Apple, Google, Microsoft and Amazon jockey for position in the new world of mobile technology. I’ll step back and give you a broader view in the next article.