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Tech giants escalate cold war over app commissions

By Reuters | August 16th 2020 at 00:00:00 GMT +0300

Facebook said on Friday that Apple had declined its request to waive a 30 per cent commission fee the iPhone maker charges apps listed on iOS devices, taking a shot at its fellow Big Tech peer as developers challenge the policy.

The move is the latest salvo in a long-running cold war between two of the world’s most powerful tech companies, which have clashed over their approaches to user privacy as both face regulatory scrutiny over alleged anticompetitive behaviour.

Facebook said it requested the waiver so that small businesses would not have to pay Apple’s cut for a new paid online events product the world’s biggest social media company is launching on its core platform.

Apple did not immediately respond to a request for comment.

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On Thursday, Apple removed popular video game “Fortnite” from its app store for violating its in-app payment guidelines, sparking a backlash online and prompting developer Epic Games to file a federal antitrust lawsuit challenging Apple’s rules.

Apple takes a cut of between 15 per cent and 30 per cent for most app subscriptions and payments made inside apps, though there are some exceptions for companies that already have a credit card on file for iPhone customers if they also offer an in-app payment that would benefit Apple.

Developers have long criticised the commissions, as well as Apple’s prohibitions on courting customers for outside sign-ups, and what some developers see as an opaque and unpredictable app-vetting process.

A mock-up of the new events product on iPhone, provided by Facebook, showed that the company planned to tell users that Apple would take 30 per cent of the purchase.

Google also typically takes a 30 per cent commission for payments within apps on its Android devices, although it was not immediately clear whether it would assess a charge in this case.

In its Android mock-up, Facebook noted only that it would not take a fee, without disclosing its arrangement with Google.

Google declined to comment on its fee arrangement for the product, and Facebook did not respond to the request for comment.

Facebook also did not say whether it had tried to make use of Apple’s “multiplatform” exceptions.

The disclosure is likely to touch a nerve with Apple, whose App Store rules bar developers from discouraging the use of its in-app purchase system.

Spotify in the past has said Apple rejected its attempts to communicate with users about the fee structures.

Earn revenue

Fidji Simo, who heads the core Facebook app, announced the tool in a media conference call featuring small business owners who praised it as a way to reach customers and earn revenue online during the coronavirus pandemic.

She said Facebook considered it “important to be transparent, when people are supporting small businesses,” as users might not be aware that part of their payments could be “going to an almost Sh200 trillion ($2 trillion) company.”

Asked if she thought Apple would approve the change, even with language about fees that could discourage users from using the in-app purchase mechanism, she said she expected to find out “in the next couple days.”

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