Apple blocks Facebook update that called out 30-percent App Store ‘tax’
theverge.com
theverge.com
Credit card networks used to tell businesses “you’re not allowed to itemise or pass this fee on to your customers”; at some point (maybe 10–15 years ago? Can’t find a reference quickly) this was confirmed to be illegal in Australia: businesses are allowed to apply a surcharge to cover their transaction costs (and nothing more, though in practice I think many businesses just apply a flat rate like 1–2% which will be higher than their costs for some transactions), per https://www.accc.gov.au/consumers/prices-surcharges-receipts....
The relevant legislation only applies to certain payment methods, so it would probably not be directly applicable to Apple’s 30% tax, though perhaps other legislation might protect your ability to at least itemise it (I don’t know); but given that the payment are probably ultimately coming from such payment networks, I wonder whether Apple could become subject to this rule to at least some extent, so that e.g. they had to let you split out the card transaction fees from the rest of their 30% cut and itemise and charge it. (And the purpose of doing that would be to begin pushing them to reduce their absurd 30% tax. Thinking of that, I wonder how many people have complained to ACCC about the 30% tax—it can’t be zero—and why they haven’t come down on Apple like a ton of bricks yet, because what they’re doing is basically the same as what credit card networks did, only 20–50× as greedy and infinitely more anticompetitive since no alternative is permitted on Apple’s platform, whereas credit cards had cash and cheques as alternatives.)
You can argue that maybe it's unfair to FB, but you know what's even more unfair? Consumers being caught in the middle of a fight between Apple and FB. Consumers being manipulated so big tech corp A can try and force a behavior change by big tech corp B by pissing off its customers.
At the end of the day it's a phone that you call people on. Let the people who have purchased that phone be.
this is certainly no longer the case
That seems like a strange use for a phone...
Non-Sequitur if I've ever seen one.
The main gist is that FB is trying to use their customers to bring force to bear on Apple so they can make more money. They don't give a shit about the customers.
And the customers aren't paying more money. Some of us can disagree with Apple's approach to their walled garden without thinking that means FB should be empathized with here.
They're both shitty company's in their own way, but at least Apple isn't putting its customers in the middle of their fight.
THAT was the main gist of my comment, and what no one wanted to actually address.
In fact, I'd argue the phone aspect argues against what you're trying to say here. That you don't actually need to be able to see and respond to email immediately so having a phone is a moot point there.
In fact, this becomes even less so, because by having acquired enough market power that they can dictate terms to just about everyone through controlling a marketplace, this triggers additional safeguards against misuse of that power, and in particular, safeguards against misleading the consumer about their options.
It is not unlawful to acquire market power, but abusing it is a path to billion dollar fines.
IOW, you can't point to the consumer protections that they're breaking.
Thank you for admitting it.
Another function of Apple's rules is to protect the consumer from bad behavior by apps that lead the customer off-app to other payment flows for abusive services not under Apple's review.
If a company wants to do this, and the consumer wants to fall for it, that's between the company and the consumer. But if they promote it and lead the customer to it using wording and other elements situated on Apple's curated app platform, Apple becomes responsible for having allowed it, and it both hurts the consumer, so they are not protected, and taints the experience on the Apple device.
This built in consumer protection is part of why Apple has a reputation as having good user experience. By keeping the rules in place, Apple helps maintain the valuable reputation it has earned for having good user experience which includes, as a vital part, this consumer protection.
if you are native born, it is not trivial to renounce your citizenry nor to become a citizen in another country. Even before taking travel to that other country into account. you also don't really opt into native citizenry since you have no control of who or where you are born into.
Regardless of my personal thoughts on this article, this is a strange comparison to make.
This would be like Wal-mart putting up signs telling everyone they have to pay Visa fee's. It's irrelevant to the consumers, what they pay doesn't change.
This actually happens in Australia. Because AmEx charges an extra 1.75% to businesses, stores display a warning at checkout that using an AmEx card will incur an extra fee of 1.75%.
Edit: Here's an example graphic from the Australian Government website, explaining that it's illegal for a business to charge more than what it costs them:
https://www.accc.gov.au/sites/www.accc.gov.au/files/Surcharg...
I understand your point, but it's not applicable here.
If not then what you just said is bullshit.
Sure, it doesn't change how much it ends costing me, but I get a better idea of the costs associated.
But we both know they won't, so instead they're trying to put pressure on Apple's customers to force Apple to allow them to do what they want.
And the funny thing is that Apple is actually the one thinking about the customers. The recent privacy changes is what prompted this. It's literally two tech companies fighting.
It boggles my mind that people think FB has some moral or ethical upper hand here.
At some point Apple and google will have full control of all access to the web and content.
Other stuff will be more like what we think of as the dark web now
But this is irrelevant to the current topic.
This is not a binary thing. It's not like you either have the information or not. It's more like you either have little or no information, satisfying level of information or it can even be an overwhelmingly detailed amount of information. Depending on how much and of what kind of quality of info you have, you can have varying level of leverage. So in effect and by definition that info is not irrelevant.
I don't get an itemized list of all the vendors the restaurant had to pay in order to bring me my meal, I just get a bill for the cost of the food.
It's only complicated if you make it complicated, which you kind of have to do in order to rationalize the belief that FB is being wronged here.
Yes, that's how it is. And you are the proof of it.
Have you ever seen an itemized transaction cost of 5¢ + 1-2% of total? Living in Sydney I never have. Literally every time it’s a written note on the till or verbally after they ring you up; “$5 minimum on card” or “50¢ charge” is always the pattern.
The rapid and endemic noncompliance, and fleecing of consumers, seems to be what happens when you have “deregulation” and literally no enforcement of behaviors.
What I was quoting was the letter of the law, which is, I suspect, regularly violated. As a society we just let it slide, because we understand roughly what’s being done and why, and know that the differences are slight. But if it was presented as a percentage and was over 2% for Visa/Mastercard, I imagine some would start asking questions, because that’s more than one would expect.
Of course customers demanded the convenience of paying with cards, and since the bill could not be itemized, shopkeepers had a hard time explaining the ramifications to the customers.
You can certainly “pass the costs on to the customer,” but what the card companies wanted to avoid was a line item resulting in a higher price for card users.
These rules were legally stricken in my US state years ago. But businesses understand no one has a appetite for seeing that they’re paying more with plastic, so they just go up on prices. The only exception I’m aware of is gas stations who advertise their per gallon price ad cash only and the a smaller, more costly price for credit cards, on the same sign.
Edit: on reflection, I guess it’s also possible that the fees from the small deliveries are sufficient to fully subsidise the bigger deliveries, and that regular shoppers aren’t subsidising anything. But this wouldn’t hold for any businesses that offer unconditional “free shipping” while also allowing you to pick up or buy in-store.
Edit: it is also possible that it may not need a subsidy at all. You view delivery as the luxury, but remember that stores cost money too. There's a reason some stores have gone online-only or online-primarily.
If you charge them all the same, those paying by cheaper methods are subsidising those that pay with more expensive methods.
The credit card companies want people that pay with cash to subsidise them, so that people will use their cards because of how convenient they are. It’s that simple.
It seems to me fairly obvious that it is a bad idea to allow them to require that, and various jurisdictions have agreed and forbidden them from doing so. Then it’s up to the business to decide whether they will favour convenience at a certain cost to themselves and their cash-paying customers, or if they will keep prices as low as they can for everyone, and charge each customer what they actually cost. Some will decide one way, some the other. In some industries, transaction fees are very substantial, due to things like low volume and low value transactions not giving them scope to get better rates from the banks, or just having very thin margins. If anything, these businesses show that you can successfully pass card fees along to customers.
(People often dislike credit card surcharges saying “I want to know what you’re going to charge me ahead of time”—the same sort of reasoning that leads to “free shipping” which is in fact just the same type of subsidy, where locals that pick up or are cheaper to deliver to subsidise those further away. The US clearly doesn’t care about knowing what you’ll be charged anyway, since prices typically exclude sales tax and sales tax is extremely convoluted, so that the sticker gives you only a hint as to what the price may be. Tipping is another related evil. There is, however, a counterargument to my point here: sometimes subsidy is necessary for equity, as when postal services charge flat rates without taking their actual costs into account, so that people in rural areas are not penalised. This whole argument is about the difference between equality and equity.)
The thing I really hate is rewards card schemes, which seem to be a big thing in the US (Australia has them, but not so much and not with such large rewards). Those things are a textbook tragedy of the commons, and the whole system should be illegal, because it’s a blatant scam, charging high card fees so that you can give some of the extra back to your customer: it’s outright theft of commonly 1–2% of transaction value in the US, and making everyone that’s not using one of subsidise those that are… unless card fees are extra.
But all this has still been talking about amounts under 5%. Apple’s talking about not 0.5–5%, but 30%. Suppose company A has a product that they wish to receive $98 for, and they sell it on two platforms with an equal share of transactions: but while users of platform B pay a 2% transaction fee, users of platform C pay a 30% transaction fee. One pricing model you could adopt would be to have transaction fees extra: one platform’s users pay $100, the other $140. This lets each pay the cost. But if you can’t pass the transaction fee on, you’ll be charging users of both platforms $120, and each user of platform B is now directly subsidising each user of platform C by $20. Platform B users are unlikely to be happy to hear this. Platform C is now effectively collecting large sums of money from people that don’t even use their platform.
(In practice, you may wish to bundle the cost of the cheapest common transaction fee for simplicity, providing a baseline cost; this would be 0% for cash, and 2% over these hypothetical platforms B and C, which would lead to you perhaps charging “$100” (rather than “$98 + $2 transaction fee”) and “$100 + $40 platform C tax”, and pocketing $98 in each case.)
[0] The merchant is paying employees to handle it: take time to count it at the register and make change; take time to re-count a register in the back with a witness; take time to count it again before making the deposit. And actually, the bank has very detailed fees listed on commercial accounts for handling cash and checks in deposits. (The bank takes time to count it to make sure the deposit is correct.) So the "cost of a cash transaction" is greater than zero; it's the sum of all those fees divided by the number of transactions - you could even proportionally apply those fees depending on the transaction amount or possibly even the configuration of the cash (it's easier to verify a single $100 than to count 100 $1 bills, for example.)
For example, the 30% fees almost surely breaks this law which was made to break up abusive rent seeking like credit card taxes and now app store taxes:
> Any abuse by one or more undertakings of a dominant position ... directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CEL...
Essentially it is unlawful to display a price that excludes hidden mandatory extras or is otherwise greater than the actual price a consumer will pay, and also unlawful to surcharge for card transactions above either your blended cost of doing so or actual cost on a per-transaction basis (the controls are scoped particularly to Visa and Mastercard, Amex has a bit more latitude). The ACCC loves prosecuting these cases and has scored many judgments against major brands on that basis.
However, there is no requirement to itemise your price components, including those that are effectively surcharges for a given channel (as opposed to card scheme), nor is it illegal to simply be expensive, or to have market power, so Apple may well within those rules believe it can coerce merchants on its platform.
The wheels are more likely to come off in other areas of the ACL, particularly those related to misuse of market power, unfair contract terms, and unconscionable conduct intended to mislead the consumer or distort a marketplace. These are rather more subjective and harder to prosecute since no absolute test applies; if anything it is Apple’s sheer scale and documented arrogance that might bring them into play.
It's one thing to charge a 30% app tax to sign up for "Jasper's Cooking Class" on an iOS device, but it's even worse to ban disclosure of that tax. Forbidding that speech is certainly 1984-esque.
The problem is, the chick with the hammer wouldn't make it past the cheap seats today.
They CANNOT force you to remove transparency and visibility of the line items. I understand that they want to hide the 30% cut and not being called out.
They can also split the receipt in three parts:
A) you purchased:
Pizza $15, Salad $15, Soft drink $3
B) Other fees:
Apple's 30% fee $10
C) Taxes:
VAT $3
Edit: it just hit me. Don't write that ONLY in the receipt. Write it up front, BEFORE a user completes the transaction. Total price of ticket $10. Analysis.. X, Y 30% Apple's fee, VAT.
If I'd take your analogy it'd be more like the government forbidding walmart to say how much VAT is in the purchase price for a can of coke.
I'm not making any specific case, rather just feeling curious about how this impacts consumer rights and expectations. As a purchaser, I think it might be fair to know that $3 goes to apple when I buy a $10 cooking class using Facebook.
Edit: chrismorgan below posted a much more informative comment in this vein while I typed.
A lot of in-app purchases are for less than $3. Doesn't Apple need to pay Visa a $0.35 transaction fee, plus ~3% of the purchase price.
On a < $3 purchase, that's 15%+ already.
Basically in Europe it is illegal to levy an unreasonable tax for generic services like this. The same applies to Apple.
The users wouldn't need to decide whether it's reasonable, they could just ignore it. Not allowing information to get to the user is a different thing though.
At the end of the day there are costs associated with doing business online. If Facebook was able to have their own payment processing pipeline, and still charged no cut, that's them processing payments at a loss, and subsidizing it with other income streams.
The Apple cut doesn't just cover payment processing though, (in Apple's opinion at least) it also covers the costs of maintaining the app store, reviewing apps, developer tooling etc.
There's really two separate questions here, is 30% as a cut for the entire App Store ecosystem reasonable, and is it reasonable to charge a cut paying for the entire ecosystem to someone who really is only "getting" the payment processing parts of it.
In a sense, when Facebook is providing this kind of platform, they're essentially competing with the App Store. Instead of whomever is running "Jasper's Cooking Class" making a cooking class streaming app and posting it to the App Store platform, they're able to use the Facebook platform to provide the same service. Because this becomes sort of a platform-in-a-platform, it starts getting expensive pretty quickly, because you have to pay for both.
Of course, the people behind "Jasper's Cooking Class" (presumably Jasper himself) are probably not in a position to make an app and posting it to the App Store, so Facebook providing a lower barrier to entry is probably a good thing for the market as a whole, but they're not doing it out of the good of their hearts, it's still a very deliberate business decision, aimed at keeping people on Facebook, where the users are monetized in other ways.
I understand Apple's position in this case. Yearly subscription is just a symbolic payment, and, frankly, I don't think it covers the costs of Apple's employees who spent their time verifying my org's account. So what is left are the fees from app sales themselves.
But what about apps that are free, or pretend to be free like Facebook? Their creators still find ways to make money, but in a way that evade's Apple's fee system. Why should FB and others in a better position that traditional app developers? Both groups use the same infrastructure and both should pay similar fees (although frankly, these fees are way too high, and I think everybody except Apple agrees on that).
Do you think the landlord should be allowed to make them remove the sign?
If it's accurate, what's the harm in the public knowing about it? If it's a two square meters stand in a food court, the public might find the landlord to be insane. If it's a five thousand square meter super market, I'm sure the public will find that appropriate.
Keeping the Apple tax secret suggests that Apple believes the public wouldn't find them appropriate, either because "the public doesn't understand" (easy to fix by writing a blog post) or because they aren't appropriate (given Apple's profit margins, I lean towards this).
Also, I find the idea that a blog post is an easy fix for the public not understanding what the developers are paying for with Apple's 30% cut to be a huge simplification. At the very least a major ad campaign would probably be necessary, and even that's probably only gonna reach a subset of their users.
Sure, a single blog post might not reach everybody. But at the same time, lots of people won't care, and everybody that searches for "Apple Tax 30%" on the web will find their blog post. Maybe they can get Bono to write a song about it! ;)
I found https://news.ycombinator.com/item?id=24302003 informative on the topic.
I don't think that Apple is arguing that e.g. Facebook wouldn't be allowed to say on their website how much commission they pay to Apple. Apple also says quite openly that and how much they take [1]: Developers earn 70% of sales from in-app purchases and Apple collects a 30% commission. That page actually looks like the blog post I mentioned: explaining to users why Apple's share is appropriate.
[1] https://www.apple.com/ios/app-store/principles-practices/
More seriously though, I'm not sure if anyone outside of Apple could actually tell if the app store as an organization is revenue neutral or not. Certainly their services revenue has been growing over time
https://www.statista.com/chart/14629/apple-services-revenue/....
I'm curious which rule this is and to what or whom the information needs to be irrelevant to to be in breach.
"You must not directly or indirectly target iOS users to use a purchasing method other than in-app purchase, and your general communications about other purchasing methods must not discourage use of in-app purchase."
2.3.10 has a bit about not including "irrelevant information about Apple or the development process." It's under the Metadata section, but still:
"2.3.10 Make sure your app is focused on the iOS, Mac, Apple TV or Apple Watch experience, and don’t include names, icons, or imagery of other mobile platforms in your app or metadata, unless there is specific, approved interactive functionality. Make sure your app metadata is focused on the app itself and its experience. Don’t include irrelevant information, including but not limited to information about Apple or the development process."
Apple can change the guidelines at any time. They make up 'rules' to their own benefit. And selectively enforce existing ones so major players get a free pass.
Developers have no recourse, other than leaving the platform.
Are Facebook not a major player on iOS?
Here's a few examples of Apple selectively enforcing their rules.
Apple agreed to charge Amazon a 15 percent fee instead of the standard 30 for subscriptions https://www.theverge.com/2020/7/30/21348108/apple-amazon-pri...
Apple allows WeChat include Mini Programs. These are 3rd party web pages the user can install that are tightly integrated with WeChat features. They're basically apps that run within WeChat. In my opinion this violates the app store premise BUT WeChat is so crucial to Chinese users Apple can't pull the app. So they bent and rewrote the rules to allow it. http://www.globaltimes.cn/content/1137321.shtml
But, when Facebook tried this with Facebook Gaming, which does something really similar to WeChat Mini Programs, they got banned by Apple. https://www.nytimes.com/2020/06/18/technology/apple-ios-face...
Apple allows Chinese customers to make app store purchases using WeChat Pay or Ali(baba) pay. Meanwhile in the US, it's impossible to pay using the competing Facebook pay / Google pay. https://www.wsj.com/articles/apple-app-stores-chinese-custom...
There's also the Hey fiasco https://news.ycombinator.com/item?id=23542937 and the Wordpress fiasco https://news.ycombinator.com/item?id=24238856 . Meanwhile, Gmail and Netflix are unaffected.
Likewise, after Fortnite added an alternative payment option that avoids Apple's 30% tax, Apple banned not only Fortnite, but engine updates for all apps that use the Unreal Engine. That's the opposite of what Tim Cook told congress.
> Epic Games also called out Apple on Tim Cook’s testimonial at the recent Congressional hearing.
> “Just over two weeks ago, Apple’s CEO Tim Cook was asked during a Congressional hearing whether Apple has “ever retaliated against or disadvantaged a developer who went public about their frustrations with the App Store”. Mr. Cook testified, “We do not retaliate or bully people. It’s strongly against our company culture.” But Apple has done just that,” it said in the statement.
https://tech.hindustantimes.com/gaming/news/apple-continues-...
I've been using Macs for 7 years (they gave them at job) but would never buy any apple hardware myself. They just dont have any benefits.
Which probably means "we make them up on the spot as needed to serve our interests."
When I buy something and get a bill, I like to know how much of the price goes to taxes, if anything else at least for the transparency.
This. If Apple thought their fees were reasonable they wouldn't be so insistent on hiding them from users.
I believe it's because they surcharge on Apple platform because of that fee, thus they want to show why they have to surcharge.
It's like saying that websites shouldn't show shipping if they got a physical store because at the physical store they didn't show the shipping rate they got there....
It's possible though that the 30% Apple fee could include the transaction fee, I guess they could round it up to 28% but then your comment right now would probably be that the number is incorrect as transaction fees are variable between cards.
Walled garden and enforcement of strict rules to protect the user is one thing, but walled garden to protect profits hits a little different.
They have a complete monopoly on distribution for all iOS devices and are willing to remove certificates for OSX programs. For all we know, they will remove SSL certificates for HTTPS websites on Safari if a company oversteps their bounds too much.
Congress will do nothing about this, and the EU and other governments are busy legislating other problems.
The EU already has legislation, and will absolutely be passing further legislation on it in the next year to eighteen months.
https://www.macrumors.com/2020/08/13/apple-news-web-links-re...
EU made laws to reduce credit card fees to stop American credit card companies from extracting a tax, also GDPR to stop American companies from bullying Europeans. I totally expect they will do something similar for app store taxes if American companies don't stop bullying European companies soon.
I m also surprised how people nitpick over apples rules as if they re some kind of laws. They re not , nobody voted for them and if enough ppl complain they may change
This is incredibly draconian.
I know it's Apple's platform but when ¼ of Earth uses that platform, letting one company have that much power and control seems dangerous.
(I love sevenths in decimal. One seventh is 0.1̅4̅2̅8̅5̅7̅, two sevenths 0.2̅8̅5̅7̅1̅4̅, three sevenths 0.4̅2̅8̅5̅7̅1̅, &c. Just remember 7 × 2 = 14, 14 × 2 = 28, 28 × 2 = 56 and change the six to a seven for some reason and start again with that, and rotate the whole lot as necessary. It’s just beautiful.)
Firstly, why are your numbers wearing hats? (I know it represents a repeating number, but how do you type numbers with hats? I assume you're not copy-pasting 5̅7̅1̅ whenever you want to write it out. Is there a shorthand on MacOS?)
Regarding the 7's, I don't understand the pattern from 0.142857 to 0.285714 to 0.428571. Are you saying that 0.428571 is easy to remember, somehow? Or derivable from 0.285714? In fact, did you write out these numbers without using a calculator?
I see what you're saying with 7 x 2 = 14, x 2 = 28, x 2 = 56. And I see that if you change 56 to 57, then yes indeed it does match the ending of 0.1̅4̅2̅8̅5̅7̅, and then you can repeat the pattern of 7 x 2 = 14, which matches the ending of your 0.2̅8̅5̅7̅1̅4̅ number. But what's the connection to 0.4̅2̅8̅5̅7̅1̅? It's unclear how to use your trick to go from 7̅1̅4̅ to 5̅7̅1̅. Or even why that's helpful in general, or what the overall connection is between all of these seemingly unrelated things.
Thanks for sharing!
for 2/7, take the second lowest number (2), and rotate it to the front: 285714 for 3/7, third lowest (4): 428571 for 4/7 it then becomes 571428 and so on
This seems to hold up with my calculator. Pretty cool.
The 7x2, 14x2, 28x2 is jus a trick for remembering what these numbers are and their order. (142856, +1).
<Multi_key> <asciicircum> <underscore> : "̅" U0305 # COMBINING OVERLINE
now back to apple: for that 30% you're quite literally getting the permission to keep working.
It would be interesting to see how much is apple actually getting on top of publicly-available, practically retail prices.
While the downsides are fairly obvious - there are a few things that this would improve.
i suppose more transparency on them getting a cut, and/or decreasing the size of the cut are plausible.
https://www.washingtonpost.com/business/economy/us-judge-app...
https://www.gov.uk/government/news/card-surcharge-ban-means-...
The same is pretty inevitable for Apple at this point.
If Apple was seriously concerned about their users, they would not be concerned about apps mentioning the 30% cut - which is a truth!
I can understand the 30% tax being tough for indie publishers but when I see companies like hey.com and FB & Epic taking this stance, I feel like they are being treated exactly how they will treat others if they were in position of power in the relationship.
I'm not even one to usually complain about that, but this certainly gives off a double-standards vibe.
https://thenextweb.com/facebook/2015/07/22/facebook-throws-s...
[0] Side note: I do think that Epic is guilty of anticompetitive practices here, because if your game uses the Unreal Engine, they roll the 5% engine royalty into that 12%, giving a huge advantage to using their product on their store: https://www.polygon.com/2018/12/4/18125498/epic-games-store-...
[1] https://www.polygon.com/2018/12/3/18123649/valve-steam-reven...
It's like calling out the taxi companies for being more expensive while Uber and Lyft are still subsidizing rides with VC and IPO money.
"Sweeney also said that Epic Games makes approximately 5% profit from that 12%, and this could grow to 6-7% as the store grows."
They chose 12% specifically as a balance between profit and undercutting the competition.
0: https://twitter.com/shroudschair/status/1120464329239867392?...
1) You can install programs in Windows without Epic's permission.
2) Epic allows their games to be distributed through Steam or other platforms.
That's not really the same role. Epic are currently pushing hard to drive adoption of their store, whereas Steam's position is already entrenched, as is Apple's.
As mFixman points out, Epic also lack the monopolistic position that Apple have over iOS devices.
They tried in 2013. (HTC First.) It was an unmitigated failure, with perhaps as few as 15k units shipped.