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Facebook Chairman and CEO Mark Zuckerberg testifies at a House Financial Services Committee hearing in Washington on October 23, 2019.
Erin Scott | Reuters
Facebook said on Friday that Apple temporarily reversed its decision to take a 30% cut in transactions generated by small businesses that host paid virtual events through the Facebook app. But while it’s a temporary win for Facebook, the company still seized the opportunity to frame Apple’s App Store rules as harmful to small businesses during the Covid-19 pandemic and global recession.
Apple’s rollback comes weeks after it blocked an update to the Facebook app that warned users that a transaction cut for paid events would go to Apple. At the time, Facebook said that Apple would not make an exception to its rules to give the full amount of transactions to the companies that host the events. Facebook has already given up its cut through its Facebook Pay system, and Google has agreed not to take its standard cut of 30% of transactions through the Android version of the app.
An Apple spokesperson told CNBC that it reversed its decision on Facebook event fees due to pressures companies are facing due to the pandemic, and that Apple wants to give those companies more time to adjust to digital business models. . The spokesperson also said that its App Store rule requiring Apple’s 30% cut does not apply to ticket sales for real-world events, only digital events, and Facebook has until the end of the year to implement payments in the app for real world events. Airbnb and ClassPass also have until the end of the year to add in-app payments for events, Apple said.
“The App Store offers a great business opportunity for all developers, who use it to reach 500 million visitors each week in 175 countries,” Apple said in a statement. “To ensure that all developers can create and grow a successful business, Apple maintains a clear and consistent set of guidelines that apply equally to everyone.”
Friday’s Facebook announcement also points to Apple’s App Store policies, claiming they are detrimental to small businesses struggling amid a pandemic-fueled recession. The company said Apple only agreed to waive the fees until Dec. 31, and paid events hosted by game companies will remain subject to the fees. The Apple spokesperson said the decision does not affect gaming companies because gaming companies have not been affected by the pandemic and have always been digital only. Facebook said it will waive its transaction fees until at least August 2021.
“This is a difficult time for small businesses and creators, so we are not charging any fees for paid online events while communities remain closed due to the pandemic,” Facebook spokesman Joe Osborne said in a statement. “Apple agreed to provide a brief three-month respite, after which companies in difficulty will once again have to pay Apple the full 30% App Store tax.”
Facebook vs. Apple
Facebook executives have become increasingly critical of Apple’s App Store rules, saying the company has an effective monopoly on how apps work on more than 1 billion devices in use around the world.
In an interview on CNBC’s “Squawk Box” earlier this month, Facebook-owned Instagram boss Adam Mosseri said Apple has “an immense amount of power” over its App Store and has control over how businesses operate. application-based. Apple recently delayed a feature in its new iOS 14 software that would have made it easier for users to block businesses from tracking their iPhone usage to collect data for specific digital ads. Facebook warned that the feature would slow the growth of its advertising business and hurt businesses that rely on Facebook ads.
“They can just decide that we can’t launch new apps at any given time,” Mosseri said of Apple. “We have seen a number of articles and even some lawsuits and their influence and power over the developers in recent months.”
Facebook CEO Mark Zuckerberg made similar comments to employees during a hands-free meeting this summer, according to leaked audio of the meeting obtained by BuzzFeed. Zuckerberg said at the August meeting that Apple has “this unique domain as a gatekeeper for what gets to phones” and that the company collects “monopoly rents” from app makers, according to the report.
Facebook also argued on Friday that Apple should allow users more control over the default apps used on the iPhone for basic services like sending text messages. Apple’s latest iPhone software update, iOS 14, has a new feature that lets you select default third-party apps for web browsing and email, but not other basic features.
In an interview with The Information, Facebook’s vice president in charge of its Messenger app said the company has repeatedly asked Apple over the years to give iPhone users the option to select Messenger as their app. default messaging, something that Google already allows on Android devices. The call echoes the antitrust complaints Microsoft faced in the late 1990s and early 2000s about how it packaged its own default apps for web browsing and other PCs with key features in the Windows operating system. .
But the irony in Facebook’s recent criticism of Apple should not be missed: Facebook is also facing formal antitrust investigations from the Federal Trade Commission and nearly every U.S. attorney general, not to mention a number of regulatory threats across the globe. world.
Everyone else against Apple
It’s not just Facebook targeting Apple. Several other companies building iPhone apps are also targeting the App Store’s fee policies.
The most prominent case comes from Fortnite maker Epic Games, which sued Apple after Epic deliberately violated Apple’s App Store policies by offering its own payment system within the iPhone version of Fortnite. Apple removed the Fortnite app from the App Store, and the two are now locked in a legal battle over the decision.
On Thursday, a group of tech companies including Spotify, Match Group (which makes dating apps like Tinder), Epic Games and Basecamp announced the formation of a nonprofit group called the Coalition for App Fairness. The group’s goal is to push for legal changes that regulate app markets so that they can’t charge developers “unfair, unreasonable or discriminatory fees or revenue shares.”
Two other tech giants, Microsoft and Google, have their own problems with Apple’s App Store rules. Apple has blocked the two companies from launching their new streaming video game services on the App Store, arguing that each game included in the service must be shipped individually. But that’s against the very nature of gaming services, which allow you to stream a library of console games in one app to your mobile device.
“This is still a bad experience for customers. Players want to jump right into a game in their selected catalog within an app, just like they do with movies or songs, and not be forced to download more than 100 apps for play individual games from the cloud. “a Microsoft spokesperson told CNBC earlier this month.
