Facebook says 'Apple tax' is a burden on small businesses

Facebook has called out Apple for introducing more stringent privacy rules into its iOS operating systems, which allow users to turn off tracking by apps. Photo / AP

Facebook has become the latest company to attack Apple for taking a 30 per cent cut of in-app purchases, arguing that small businesses will suffer from the iPhone maker's decision not to waive fees during the coronavirus pandemic.

The social media company said on Friday that Apple had refused its request to waive a commission fee for businesses using its new online events feature.

It also said Apple declined to let it use its own payments technology, Facebook Pay, to process payments for businesses — which it said it would have done for free.

"During these times when businesses are struggling, Apple requires apps on iOS to use its payment system and takes a 30 per cent fee on transactions," Fidji Simo, head of the Facebook app, said. "For paid online events that means that small businesses and creators will [forego] 30 per cent of every dollar they earn."

Apple did not immediately respond to a request for comment.

Facebook's swipe comes just a day after Fortnite parent Epic Games sued Apple over the 30 per cent "Apple Tax", arguing that Apple was placing "oppressive terms and conditions" on app developers and had "foreclosed any alternative to reach" its 1bn users.

It has piled more pressure on Apple at a time when antitrust regulators in both the US and Europe are already investigating allegations of monopolistic behaviour.

Apple maintained it was not trying to generate profits per se by applying the fee to these digital purchases, but had to enforce guidelines that have been in place for a decade to all parties. It does not apply the fee to bookings on "real world" things like rental houses or in-person fitness classes.

Facebook is seeking to affix a label to in-app purchases of online events on which Apple has charged a fee — although it is unclear whether Apple will allow it to do so, since such disclosures are against its rules.

"When 30 per cent of [a purchase from a local business] is going to . . . [an] almost $2tn company, that's relevant information for people to have," Ms Simo said.

"If Apple wants to take that cut they should be open about it . . . So I hope it goes through, but we'll see in the next couple days," she added.

Facebook has taken shots at Apple in the past for hurting small businesses. On an earnings call last month, Facebook called out Apple for introducing more stringent privacy rules into its iOS operating systems, which allow users to turn off tracking by apps.

David Wehner, Facebook's chief financial officer, said that the change would hurt revenues, particularly in the fourth quarter, by making it "harder for app developers and others to grow using ads on Facebook".

"We are concerned that aggressive platform policies will cut that lifeline at a time when it is so essential for small business growth and recovery," he said.

Airbnb and ClassPass have levelled similar criticisms at Apple's fees in recent weeks. In trying to adapt to a shelter-at-home environment, the rental home and gym apps each introduced "virtual" experiences aimed to help struggling businesses.

The Apple critique was part of Facebook's launch of a new feature that will allow businesses to charge users to attend online events, such as yoga classes, live music sessions or talks. Businesses will be able to livestream the events on the main Facebook platform, while the company is also testing allowing smaller events on Messenger Rooms, its recently launched video chat feature.

Written by: Hannah Murphy and Patrick McGee in San Francisco

© Financial Times