Apple (NASDAQ: AAPL) agreed to temporarily suspend taking a 30% cut of paid online events organized by small businesses and hosted on Facebook (NASDAQ: FB) app.
According to Facebook, Apple’s decision will only last until December 31. Gaming companies are excluded from the temporary moratorium since they are not hurt by the COVID-19 pandemic.
Initially, Apple said its longstanding policy was non-negotiable. The Cupertino-based tech giant stressed that digital products must be purchased using Apple’s in-app payments system. It means everyone must pay Apple’s 30% fee. However, after weeks of a stand-off with the social network giant, Apple temporarily reversed its decision.
Apple has been blocking an update to the Facebook app because it displays a warning to users that a cut of their transactions for paid events would go to Apple.
Facebook plans to help small business with paid online events
The dispute began when Facebook asked Apple to waive fees on paid online events to support businesses and creators.
On August 4, Facebook announced its plan to support small businesses that are being hurt by the COVID-19 pandemic. The social network giant wanted small business owners to host paid events like networking sessions, cooking classes, workout sessions, and happy hours on their Facebook page. Demand for these kinds of online events has soared since the coronavirus hit.
Facebook claimed it is giving page owners “the ability for businesses, creators, educators, and media publishers to earn money from online events on Facebook. Now Page owners can create an online event, set a price, promote the event, collect a payment, and host the event, all in one place.”
This plan was “designed to make it easier for millions of people and small businesses to make money on Facebook.”
On August 14, Facebook amended its statement saying, “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 SMBs will only be paid 70% of their hard-earned revenue. While Facebook is waiving fees for paid online events we will make other fees clear in the product.”
On Friday, September 25 Facebook said businesses will be able to keep all of their paid online event earnings from now until December 31. Facebook Pay will process all paid online events purchases, meaning that businesses and creators will not pay the 30% Apple App Store tax for the remaining three months of 2020.
All businesses are eligible except gaming creators. Facebook will not collect any fees from paid online events while businesses remain closed for the pandemic, until at least August 2021.
Apple issues a statement or a rebuttal
A spokesperson for Apple told CNBC that it reversed its decision on the Facebook event fees “due to the pressures businesses are facing from the pandemic and that Apple wants to give those businesses more time to adapt to digital business models.
Additionally, the spokesperson said the App Store rule that requires a 30% fee does not apply to ticket real-world events, only digital events and Facebook has until the end of the year to implement in-app payments for real-world events. Airbnb and ClassPass also have until the end of the year to add the in-app payments for events.”
“The App Store provides a great business opportunity for all developers, who use it to reach half a billion visitors each week across 175 countries. To ensure every developer can create and grow a successful business, Apple maintains a clear, consistent set of guidelines that apply equally to everyone,” according to the Cupertino-based tech giant in a statement.
Apple vs. Facebook
On the other hand, Facebook spokesperson Joe Osborne said, “This is a difficult time for small businesses and creators, which is why we are not collecting any fees from paid online events while communities remain closed for the pandemic.”
“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.”
Facebook executives have become increasingly critical over Apple’s App Store rules, saying the company has a monopoly over how apps work across over an estimated one billion devices in use.
Facebook CEO Mark Zuckerberg reportedly said in an August all-hands meeting that Apple has “this unique stranglehold as a gatekeeper on what gets on phones” and that the company charges “monopoly rents” to app makers.
Apple vs. Microsoft and Google
Apple has blocked Google and Microsoft (NASDAQ: MSFT) from launching new streaming video game services on the App Store. It is arguing that each game should be submitted individually for a fee. Microsoft and Google want their consumers to be allowed to stream a library of console games through one app to a device.
“This remains a bad experience for customers. Gamers want to jump directly into a game from their curated catalog within one app just like they do with movies or songs, and not be forced to download over 100 apps to play individual games from the cloud,” a Microsoft spokesperson told CNBC earlier this month.
Apple vs. Developers
On Thursday, tech companies including Spotify (NYSE: SPOT), Match Group (NASDAQ: MTCH), the maker of dating apps like Tinder, Epic Games, and Basecamp announced they had created a nonprofit group called the Coalition for App Fairness.
The coalition wants to force Apple to make changes that will reduce costs to consumers by lobbying for regulation to prevent app platforms/marketplaces from charging developers “unfair, unreasonable or discriminatory fees or revenue shares.”
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