Apple will temporarily stop taking a 30 percent cut on Facebook event fees

Illustration by Alex Castro / The Verge

Earlier this year, Facebook launched a new feature that let small businesses create paid online events. The company framed it as a way of helping organizations struggling with lost revenue during the pandemic, and said that because of the exceptional circumstances, it would not collect any fees on purchases for these events until August 2021.

But the social network also stressed that any payments made on iOS would be subject to Apple’s standard 30 percent platform fees, noting this meant less money for small businesses. As Fidji Simo, head of Facebook’s main app, said at the time: “We asked Apple to reduce its 30% App Store tax or allow us to offer Facebook Pay so we could absorb all costs for businesses struggling during COVID-19. Unfortunately, they dismissed both our requests and [small businesses] will only be paid 70% of their hard-earned revenue.”

Facebook’s framing of this policy as Apple vs the little guy seems to have worked, and the social network now says Apple will let it process payments for online events using Facebook Pay. That means no 30 percent fee for Apple and more money for businesses, at least in the short term. Facebook says all businesses are eligible except Facebook Gaming creators and that the policy will also only last until the end of 2020.

Apple confirmed the news to The Verge and said that collecting a fee from apps offering services that take place outside the app itself is a long-held App Store policy. Since the pandemic hit and more businesses have started selling virtual events, the iPhone maker has had similar disagreements with other firms. Facebook is not the first company it’s waived fees for until the end of the year, and Apple says it’s also done the same with Airbnb and ClassPass. Apple said in the case of Facebook Gaming creators it would not waive fees because these individuals’ business model has been unaffected by the pandemic.

Facebook planned to warn users about Apple’s 30 percent cut on its payment page. But Apple reportedly blocked the update as “irrelevant.”
Image: Facebook

This is a sideshow compared to Apple’s larger war with Fortnite creator Epic, but it shares the same target (Apple’s platform fees) and shows how companies are increasingly able to win new ground in this old battle. In this case, Facebook’s success seems to be in part due to the fact it’s been able to frame its motivations as altruistic while painting Apple as an avaricious monolith. (Epic is trying to do the same with its #FreeFortnite campaign and satirical ads.) But, of course, Facebook also stands to benefit if Apple drops its platform fees on iOS and gives freer reign to third-party payment systems.

The tech companies know that public sentiment will play a role in deciding the outcome of these battles and seem keen to engage their users. CEOs are being increasingly vocal about Apple’s business model, with Mark Zuckerberg recently decrying the company’s “stranglehold” on users’ phones. Notably, Facebook even tried to tell users about Apple’s 30 percent on the payment screen on its app, but says Apple blocked the change, citing an App Store policy that bars developers from showing users “irrelevant” information.

At least for now Facebook’s tactics seem to have worked, but it seems the company won’t stop here. A statement from Facebook spokesperson Joe Osborne made it clear that the firm thinks Apple’s concession are not enough. “Apple has agreed to provide a brief, three-month respite after which struggling businesses will have to, yet again, pay Apple the full 30% App Store tax,” said Osborne. In other words: expect to hear more about this in 2021.

Comments

I wonder how pricing discrimination laws surrounding margins would work here. If Apple offers it to Facebook, would they have to legally offer the same concessions to others for similar situations?

I’m not sure, but I can bet you that the Coalition for App Fairness or Epic will make that case. They already called out Apple for their backdoor deal with Amazon surrounding a 30% cut adjustment; I’d imagine this feeds into their argument that Apple is gatekeeping which developers can bypass the system using a subjective set of criteria that only benefits them in spite of their own App Store guidelines saying otherwise.

Except the deal with Amazon is public and used by a huge chunk of other video providers including Disney.

https://developer.apple.com/programs/video-partner/

It’s public now but it definitely wasn’t public in 2016 when the program was supposedly created.

True it wasn’t ‘public’ then but it wasn’t a sweetheart deal for Amazon either. It has been in use by a very significant portion of video providers for years.

So much for "level playing field for all developers". Apple’s defense of their app store monopoly is really showing its cracks.

Dont’ confuse Apple’s customers with their developers. Every developer can try to negotiate their own exceptions. If they don’t like it, they can leave Apple. Apple has to treat all customers the same but not all developers. The exceptions scale in parallel with the business opportunities for both sides. This is standard practice in all businesses.

I don’t think it’s quite that simple. In some cases, Apple’s developers are their customers, you know? And some customers are using software built by developers on the platform.

Personally, I think this comes down to us looking at these web sites or operating systems as simple services that charge a teeny fee and less as the large software platforms that they are. As a developer/customer, you can effectively build software on top of Apple’s platform and Facebook’s platform, in-tandem. This turns these big corporations into scaffolding that developers making money are subject to prior to being able to directly engage with their own customers.

Engage with that and you’ll understand better why the conflict here isn’t choosing to work with Apple or Facebook and more that you’re choosing how best to engage with your own customers that are only exposed at the behest of Apple and Facebook.

And that’s exactly the problem we have here : who are apples customers? Those who purchase hardware or those who develop and sell apps through apple? What is their primary business? Cause if it’s the hardware then they’ve used that dominant position to get a grip on paid software services and build another dominant position.

Why would developers be considered customers? They are vendors because they are providing a product to Apple’s end customer through Apple’s App Store. Calling developers customers of Apple only muddies the water unnecessarily. By joining the app store, they are going into a business arrangement with Apple subject to all the normal terms of B2B. It’s completely different than the vendor/customer relationship.

If I create software for your phone, how do I get that software to my customer? In any other industry I can sell directly to that customer. But for an iPhone user, I must sell to the customer via Apple. You can hee and haw about walled gardens and Apple’s rights, but at the end of the day this is no different than me trying to sell a car radio to someone but being forced to go through Ford to do it.

No one is confusing anything. Tim Cook lied when he told the House Antitrust Subcommittee:

We treat every developer the same. We have open and transparent rules… It’s a rigorous process, because we care so deeply about privacy and security and quality.

Updates coming through that this applies to all developers.

The fact that they think saying how much the apple tax costs is irrelevant is pretty telling.

Shows how much influence has a fall event on Apple adjusting its public strategy. Another move before the new iPhone launch.

And the Epic 28-th is on Monday. We’ll see.

Because there is no actual event this year, I don’t think that is related. The heat is on Apple right now from all sides, and this one in particular is a bit of a bad look. It’s still a bad look because it’s only 3 months, but it’s a reaction to the bad publicity around this, expertly played by Facebook here since they stopped taking any money from the event due to COVID so Apple was against a wall here to do the same, and boy did they begrudgingly do it.

Apple reacts before its public events. That is already a precedent. Yes, a virtual event is a public event.

Yeah, I mean a physical event. Mind you, iPhone events don’t have many if any Devs ala wwdc so there wouldn’t be audible boos from the crowd if there was a groundswell of anger from Devs, so they would be safe either way.

It’s a bit silly to expect company A to change their business just because company B decided they wanted to waive fees on their own products, esp when these (App Store vs Events) aren’t even competing products.

Apple should be applauded that they decided to waive the fees, but under no logical reasoning should people have "felt" like they should need to have done so.

It’s a bit silly to have Corona lockdown.

Yeah, covid makes the circumstances quite a bit different. Apple looks bad when they are the only ones taking money when another stopped taking money due to covid.

Once again, Event’s is Facebook’s product, they are directly interfacing with the businesses that are affected by COVID using their platform.

In this scenario, Apple’s product is the App Store, and they take a fee of transactions across all apps. That’s a cost of using their product, which Facebook uses for distribution. Do you expect VISA and Mastercard to now waive their fees for anyone who uses Facebook Events and pays using their credit cards? No? Haven’t been up in arms about it? Then maybe realize that Facebook is playing you.

Apple is clearly not "the only ones" taking money, literally every single company along Facebook’s Events stack to enable that product is taking their share of the pie.

Credit card fee is about 10x inferior to the App Store fee, for an equivalent added value in this case. The only reason Apple takes this much on something completely irrelevant to their platform or products, is because they abuse their market position.

Apple don’t want people to know that having an iPhone means 30% of every spending goes to Apple. That’s a massive tax. Customers allow it because they mostly don’t know about it when they pay. That’s why Apple hates that Facebook told people about the fee, and that’s why Apple had to give up once people started to be aware.

Imagine defending this BS.

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