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.”
Small businesses can use Facebook Pay, avoiding Apple’s 30 percent cut
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.