October 30, 2020

Apple backs down on taking 30% cut of paid online events on Facebook

Apple backs down on taking 30% cut of paid online events on Facebook

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Facebook has temporarily shamed Apple out of taking a 30 percent cut of paid online events organized by small businesses and hosted on Facebook—things like cooking classes, workout sessions, and happy hours. Demand for these kinds of online events has soared during the COVID-19 pandemic.

Apple says that it has a longstanding policy that digital products must be purchased using Apple’s in-app payments system—and hence pay Apple’s 30 percent tax. In contrast, companies selling physical goods and services are not only allowed but required to use other payment methods (options here include Apple Pay, which doesn’t take such a big cut).

For example, an in-person cooking class is not a digital product, so a business selling cooking class tickets via an iPhone app wouldn’t have to give Apple a 30 percent cut. But if the same business offers a virtual cooking class, Apple considers that to be a digital product and demands a 30 percent cut—at least if the customer pays for the class using an iOS device.

Last month, Facebook announced it would start offering a new feature for small businesses to host paid online events. Facebook has waived any fees for the first year, allowing small businesses to pocket 100 percent of the revenue. But Apple refused to budge on its 30 percent take.

The issue came to a head in late August when Facebook revealed that Apple wouldn’t even allow Facebook to inform users about Apple’s 30 percent take. Facebook wanted to have a message on the checkout screen that said “Apple takes 30 percent of this purchase.” But Apple deemed this message “irrelevant” and forced Facebook to remove it before approving Facebook’s update.

The reprieve is only temporary. Apple says it has given Facebook until the end of the year to switch from Facebook Pay to in-app purchases—and hence start paying Apple 30 percent—for online events. Apple is extending the same courtesy to Airbnb and ClassPass.

However, this grace period isn’t available for Gaming Creators, which Apple argues are not brick-and-mortar businesses that have been affected by COVID-19.

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