Facebook Strikes Deal to Skirt Apple's App Store Commission -- 2nd Update
September 25 2020 - 05:45PM
Dow Jones News
By Sarah E. Needleman
Apple Inc. said it is giving some businesses a reprieve from
paying a 30% commission on paid events and experiences through
mobile apps, a move that comes as the App Store owner faces
scrutiny from software developers and regulators over how its
digital marketplace operates.
The announcement Friday follows a Facebook Inc. statement
confirming that Apple approved its request to exempt businesses
hosting live online events through its app from being required to
pay a cut of sales to Apple.
Apple's move, which will last until the end of the year, is
significant because the company doesn't normally allow app
developers to process payments for in-app purchases themselves or
use third-party services, saying those alternative platforms could
pose security risks.
The technology company instead makes developers use its own
payment system and takes a 30% cut of sales from paid apps and
in-app purchases, as well as from digital subscriptions in the
first year. Apple has said that amount is in line with what most
other app marketplaces charge and helps cover the cost of store
services it provides, such as user privacy.
An Apple spokesman said the waiver is a recognition that some
app developers, including home-rental company Airbnb Inc., have
expressed interest in selling online experiences as the pandemic
halted many in-person gatherings and events. He said Apple would
closely monitor any customer issues and contact developers to
quickly and decisively resolve any that arise.
"To ensure every developer can create and grow a successful
business, Apple maintains a clear, consistent set of guidelines
that apply equally to everyone," the company said.
Since Apple launched the App Store in 2008, it has sought to
create clear guidelines for when it would collect a commission from
app developers. Apple doesn't impose its fee on companies that sell
physical goods through their apps such as clothing and coffee or
offer services like booking rental homes and car rides. Last year,
the App Store facilitated $138 billion in commerce in the U.S.,
with more than $116 billion going to developers, according to
Apple.
But app developers have increasingly described the fees that
Apple collects as excessive and called its App Store practices
monopolistic. Companies including "Fortnite" maker Epic Games Inc.,
Spotify Technology S.A. and Tinder-owner Match Group Inc. recently
formed a coalition dedicated to pushing legal and regulatory
changes to how app marketplaces operate.
In a statement, a coalition spokeswoman described Apple's
decision as a "distraction from the real issues in the App Store
ecosystem." While it is pleased with the move, she said, the group
believes no developers should have to "pay this unfair,
unreasonable, and discriminatory 30% App Tax, full stop."
Apple declined to respond to the group's comment.
Apple's waiver could fuel critics' arguments that the commission
doesn't need to be maintained at the current level, said R.W. Baird
analyst Colin Sebastian. He said Apple could be using this case of
online events to test the impact of lowering the fee on app
developers.
"A consistent commission is easier to defend in court, but
generosity generates goodwill," said Florian Mueller, an
independent analyst in Munich focused on antitrust issues. "Apple
appears to have realized that it didn't look good to be less
flexible than Google in this crisis-related context."
Facebook initially sought an exemption from Apple's commission
last month when it introduced a way for businesses to host paid
events through its live-streaming platform, a move the social-media
company said was aimed at helping those struggling through the
pandemic. At the time, Apple turned down Facebook's request, which
it made through an app update submission.
A Facebook spokesman said Apple's temporary exemption doesn't
last long enough and should apply to all businesses hosting paid
events through its app, not just those that had been selling
physical goods or services before the health crisis began.
Facebook said it wouldn't collect fees from paid online events
while businesses remain closed for the pandemic until at least
August 2021. Facebook already uses Facebook Pay to handle
transactions for paid events sold through its app through the
Google Play store.
Similarly, Airbnb added the option for businesses or individuals
to offer paid experiences through its app in response to the
pandemic and it, too, sought an exemption from Apple's commission
on such sales. A spokesman for Airbnb declined to comment on
Apple's plan.
Write to Sarah E. Needleman at sarah.needleman@wsj.com
(END) Dow Jones Newswires
September 25, 2020 17:30 ET (21:30 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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