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Facebook says Apple in-app fees hurt businesses during Covid

Facebook Inc. joined a growing list of developers to publicly criticize Apple Inc. over its revenue-sharing policy for in-app purchases, suggesting the iPhone maker’s fee structure is hurting small businesses during a global pandemic.

By: Bloomberg | August 15, 2020 3:47:46 pm
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Facebook Inc joined a growing list of developers to publicly criticize Apple Inc. over its revenue-sharing policy for in-app purchases, suggesting the iPhone maker’s fee structure is hurting small businesses during a global pandemic.

The social network on Friday rolled out a paid events feature in 20 countries, offering businesses the ability to charge users for access to live video streams, like a yoga class or seminar. Facebook said that Apple didn’t agree to waive its usual 30% fee for all transactions that take place within apps on its devices, and won’t let Facebook process the payments using its own technology for iOS users.

Alphabet Inc.’s Google didn’t waive its 30% fee on its Android mobile operating system, either, though the internet search giant will let Facebook process payments through its own product to avoid those costs, said Fidji Simo, the executive running Facebook’s main app. Facebook won’t take a cut of revenue generated from the feature, she said.

“We went through our usual channels to suggest strongly to them to waive their fee or to let us use Facebook Pay — one of the two — and they declined,” Simo said about Apple in an interview. Simo called Apple an important partner, and said Facebook relies on Apple’s App Store to distribute its own apps, while noting the company disagrees with Apple’s revenue structure.

“Helping small businesses recover from Covid is a critical thing that all tech companies should help with,” she said. “The reason we’re calling them out here is we hope they join us and end up waving their fees, so that’s really the goal here.”

Apple didn’t respond to requests for comment.

Facebook’s complaints come a day after Epic Games Inc., the creator of Fortnite, sued Apple and Google after both companies removed Fortnite from their respective app stores over a payment dispute. Epic tried to circumvent Apple and Google’s in-app payments systems to lower costs by avoiding the 30% in-app fee, which was a violation of each company’s rules.

Gamemakers Give Apple the Antitrust Grilling Congress Didn’t

Apple gets its 30% commission for digital goods, but doesn’t take a cut for facilitating the purchase of services like in-person classes or ride sharing, as the company requires developers to let users pay with a credit card. Now that in-person business has gone virtual due to the pandemic, Apple’s rules let it charge the fee through its payment network. These App Store charges have been a focus of regulatory inquiries about the company’s market power. At a July antitrust hearing in U.S. Congress, Apple Chief Executive Officer Tim Cook said, “we will work with people that happen to move from a physical to a virtual world because of the pandemic.”

Facebook and Apple have openly criticized one another multiple times in recent years, with Apple working to limit the data Facebook can gather from iOS devices and positioning itself as a stronger advocate for user privacy. In 2018, Cook criticized Facebook’s targeted advertising business model, saying that Apple “could make a ton of money if we monetized our customer — if our customer was our product.” Shortly after Facebook’s Cambridge Analytica scandal, when asked what he would do if he were Facebook CEO Mark Zuckerberg, Cook replied, “I wouldn’t be in this situation.”

Zuckerberg responded by criticizing Apple’s expensive phones and fees. “I think it’s important that we don’t all get Stockholm syndrome and let the companies that work hard to charge you more convince you that they actually care more about you,” he told Vox’s Ezra Klein. “Because that sounds ridiculous to me.”

In early 2019, Apple temporarily cut access to Facebook’s internal apps, creating chaos at the company, after the social network violated Apple’s App Store guidelines.

Facebook has long been wary of Apple and Google, since it must follow each company’s respective rules in order to operate in their app stores. It’s one of the reasons Facebook has started to build its own hardware devices, and why it’s working on software programs for augmented reality and virtual reality. Simo said Friday that Facebook is willing to play by Apple’s rules even if the company disagrees with them. “When developers go circumvent the rules on alternative payment methods, it doesn’t go well,” she said.

Facebook has been pushing more aggressively into live video features given the widespread impact of the coronavirus, which has forced people indoors and online. Simo said Facebook had twice as many Facebook Live videos in June as it did one year ago. Facebook’s paid events feature was highlighted by Zuckerberg on the company’s first-quarter earnings call in late April, and has been in testing. Facebook is considering expanding paid events to its videoconferencing feature, called Rooms, and also to its Instagram photo-sharing app.

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