Facebook Airs Its Apple Grievances

Posted on August 28, 2020 by Paul Thurrott in Apple, iOS, Social with 63 Comments

Facebook says that Apple rejected an app update that informed its own customers about Apple’s App Store fees. And the firm is warning advertisers that a major privacy-related change in iOS 14 will negatively impact ad performance.

“Now more than ever, we should have the option to help people understand where money they intend for small businesses actually goes,” a Facebook statement notes. “Unfortunately, Apple rejected our transparency notice around their 30 percent tax, but we are still working to make that information available inside the app experience.”

According to a Reuters report, Apple rejected an app update that included information about Apple’s 30 percent fee because it was “irrelevant.” But the app in question is a tool that helps influencers and businesses host online events as a way to make up for lost income due to COVID-19. So that information is, in fact, quite relevant because it explains why a huge chunk of the money they’d otherwise earn through the app was being siphoned away by Apple. For some reason.

Facebook says it asked Apple to waive its normal 30 percent fee so that it could pass along all of the revenue to business owners. But Apple declined.

Separately, Facebook is warning advertisers that they can expect weaker ad performance once Apple rolls out iOS 14 to its iPhone users. The social network’s advertising partners rely on an iOS feature called Identifier for Advertisers (IDFA) that targets users by interest and then tracks them if they interact with mobile ads. But Apple is making big changes to IDFA in iOS 14 for privacy reasons. And that will impact advertising-driven companies like Facebook and its partners.

“We expect these changes will disproportionately affect Audience Network given its heavy dependence on app advertising,” Facebook explains. “Like all ad networks on iOS 14, advertiser ability to accurately target and measure their campaigns on Audience Network will be impacted, and as a result[,] publishers should expect their ability to effectively monetize on Audience Network to decrease. Ultimately, despite our best efforts, Apple’s updates may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14. We expect less impact to our own advertising business, and we’re committed to supporting advertisers and publishers through these updates.”

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Comments (64)

64 responses to “Facebook Airs Its Apple Grievances”

  1. Avatar

    Thretosix

    30% is excessive for something they never had a part of other than being the platform the app is on. Google isn't innocent here either. I'm no fan of Facebook either, but kudos for making a stand.

  2. Avatar

    Andi

    I have a very pro consumer solution. Apple should let FB mention that 30% is going to Apple and that if you pay from the web all the money is going to the event host. I mean it's common sense transparency.

    • Avatar

      lvthunder

      In reply to Andi:

      Does any other store tell you 3.5% of your transaction goes towards the credit card companies if you use a credit card? Does Walmart tell you they get half and whoever made the product you bought gets the other half?

    • Avatar

      ontariopundit

      In reply to Andi:

      Yes, they should be transparent, and the Gap should have to clearly break down how much of a profit markup they put on their clothes.


      It seems to me that it's giant corporations that are trying to bolster their bottom line by going after Apple's bottom line. All's fair in business, as long as it's legal and ethical.


      Of course, I'd also like to see transparency in other aspects of business, not just the things that benefit giant corporations. But, of course Facebook will never advocate for meaningful transparency like highlighting profit margins!

  3. Avatar

    karlinhigh

    In reply to lvthunder:

    As far as I understand this, advertisers pay for each time an ad gets put up. (CPM, cost per 1,000 "impressions.") If they can't choose what demographics will see their ads, and have to pay for showing the ads to everyone, then small businesses and niche products simply get shoved out of the ad market. Their advertising budget gets burned immediately while showing their ads to people who don't care about their offer at all.

  4. Avatar

    scovious

    Showing the complete breakdown of where a product's costs are going and to whom they go should be law.

  5. Avatar

    Jogy

    In reply to lvthunder:

    There should be. Maybe on the receipt.

    Especially if the cut was not 3% but 30% - customers should be educated, not kept in ignorance. And developer should not be denied the ability to display this information if they choose so.

  6. Avatar

    Jogy

    In reply to lvthunder:

    Wrong. You pay $99 annually to be able to publish apps in the store.


    Visual Studio Community Edition is free for individuals and small businesses and is fully capable for developing mobile applications (for example with Xamarin for Android/iOS)


    > By updating I mean sending out the updates. Not creating the update itself.

    So, you claim that based on the revenue split (30/70) the effort in sending out an update for an application is equal to almost half of the effort to create that update???


  7. Avatar

    Andi

    In reply to lvthunder:

    What a ridiculous statement. App store updates cost Apple money and FB skimps on. FB pays a dev tax that Apple devised just for this purpose. The richest company in the world has 0 businesses that are losing money.

  8. Avatar

    Andi

    In reply to lvthunder:

    Walmart owns everything they sell you, Apple does not. Also in this case this is a relief effort from FB to help people during a pandemic; people that look at their financial statements and notice a big 30% gash and might falsely conclude FB ripped them off. Transparency in this situation is warranted.

    • Avatar

      sglewis

      In reply to Andi:
      Walmart owns everything they sell you, Apple does not.


      Incidentally... that only accounts for the retail store. Walmart.com has many third party sellers, and while I don't know what the cut is, Walmart, like Amazon almost certainly takes something off the top there in exchange for providing access to the marketplace. Amazon takes more still if they also warehouse the product for you.


      And that's the one case where Apple doesn't levy a charge. When Amazon or similar companies sell physical goods through a purchase inside the app.


      Amazon found a way 'around' that with Kindle. The way was you can't buy a Kindle book inside of the Kindle app, but you can go to Amazon.com, check out, and it appears in your app. As a consumer, would I rather have the convenience of in-app purchases without a premium charge... sure, but I'd much rather have today's phones and app stores then the frameworks we had 10-15 years ago.

  9. Avatar

    SvenJ

    In reply to lvthunder: Again this is one of those tricky things. If you signed up for a for-pay class, hosted by Facebook, through the iOS Facebook app, Apple would get a cut. Normally, Facebook charges for these classes as well, but they offered to 'waive' the cost currently to help out small businesses. They suggested Apple allow Facebook Pay within the iOS Facebook app so they could make good on the offer, or that Apple not collect the trithe (3 x tithe?). The former is a violation of Apple's terms, the latter potentially perilous, providing special treatment for Facebook customers. Capitulating either way would put Apple in the position of providing preferential or inconsistent treatment. Allowing the Facebook pay would set Facebook up for collecting 100% of the fee once they decide to charge once again and set the precedent for other pay options for in app purchases. I'm not making any judgment on Apple's practices here, but Facebook has presented Apple options that they could not accept without violating their own terms. So, Facebook set it up to out Apple as a bad guy. Epic did the same, IMHO.


  10. Avatar

    bluvg

    In reply to lvthunder:

    A blanket 30%, though? And far worse, rejecting the ability simply to let customers know it when they buy something?

  11. Avatar

    davidlbangs

    In reply to lvthunder:
    I honestly don't know what you are arguing for: You seem to be saying that this info should be kept secret (Apple can block app that reveals it) while simultaneously saying that everyone should know the information already. Really, maybe think what message you are trying to send.
  12. Avatar

    Jogy

    In reply to lvthunder:

    Note that businesses that accept credit cards are allowed to pass that "tax" to the customers, for example the Arco gas stations: "a surcharge may be added of 3.5% to cover the Visa, MasterCard, Discover and American Express discount fees."


    On the other hand, Apple is actively preventing app developers from even informing the users about that tax, not to mention the ability to pass the surcharge to the customers.

  13. Avatar

    curtisspendlove

    In reply to lvthunder:

    My understanding is that it is a generic platform that can be used by organizations as they see fit.


    Some will use it for business as usual, maybe like Kickstarter. And others will use it for non-profit fundraising.


    Perhaps the App Store percentage should change based on exempt or non-exempt status?


    This is part of my point. People thing this 30% thing is simple. It really isn’t.

  14. Avatar

    codymesh

    the world is better off without facebook anyway.

  15. Avatar

    Oreo

    While I think Apple’s App Store should be regulated, I don’t get Facebook’s premise: AFAIK all of Facebook’s apps are free, so they don’t have to pay Apple anything. Am I missing anything? Them being hurt by Apple’s privacy measures is something I *do* understand, though, and fully support.

  16. Avatar

    dftf

    Seems a little ironic to me that many people on here have been defending Apple, saying their 30% cut is perfectly reasonable, given that they built iOS, the marketplace, established the trust and reputation with users, and so-on.


    But when Facebook simply want to add some text into their app to make users aware of their cut, they disagree and think Facebook should not be allowed to mention this.


    If it's reasonable, then surely no-problem in Facebook saying "Apple receives 30% of this donation" surely?

  17. Avatar

    IanYates82

    In reply to lvthunder:

    Actually it's petty common at many Australian retailers to disclose if you pay by credit card then you're adding a small fee. Online retailers have that too, airlines, etc


    You can pay cash and avoid it, or use a debit card, or just accept the credit card fee.


    So here, at least, it's very irksome that Apple keeps this kind of thing from its users.

  18. Avatar

    jimchamplin

    It just feels like two mob bosses having a beef with each other over how they run their protection rackets.

  19. Avatar

    nbplopes

    In reply to lvthunder:


    On the first point, actually it does work that way in many cases.


    On the second point, the thing is that the App Store is not really selling the product in question so this is really unknown territory. In fact App Store sells no products or services.


    If you want to equate the App Store to the analog space, try a Shopping Mall where each resident store is required to use the shopping center payment system for every transaction. The rent of each store space instead of being payed as monthly fixed fee is a cut on each transaction that goes through the payment system, case in case 30%/15%. In other words, 30%/15% of the resident store revenue.


    Considering space/infrastructure required for residents to operate their business, the space provided is only a very small fraction of what is required to host their services. Consider for instance the technical infrastructure required for Netflix of Spotify. Even a small digital business needs far more technical infrastructure than the one provided by this Shopping Mall, third party cloud services so on and so forth. A small fraction of the technical infrastructure than does not cost such a small fraction of the revenue generated.


    In conclusion, considering that this Shopping Mall occupied and US Market share of 1 in 2 Americans (market share), this the reason why it cannot be ignored by digital businesses to the point of actually agreeing with the fee, heck you need to agree with whatever fee really or just run out of business. The option would be to leave 50% of the US mobile market behind.


    Have fun.


    PS: The payment system of this shopping center (In App or non In App) is mandatory to all resident non free digital businesses. Both single platform and multi platform.


  20. Avatar

    nbplopes

    I guess this only applied to the Government right?


    “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

  21. Avatar

    spiderman2

    time for netflix to join the fight and put the enemy down

  22. Avatar

    jtdennis

    I'm not at all sad that Facebook is going to be losing out on being able to track users in iOS.

  23. Avatar

    anoldamigauser

    Another case of the pot calling the kettle black. None of these companies can claim the moral high ground here.

    I do not really want to see ads at all, but if I have to see them, I would rather they were relevant. The problem is that for all the information they collect, they cannot seem to show me things that I am interested in? Maybe if they targeted the ad to the site, rather than the individual, they would be more relevant. If I am on a technology site, how about showing ads for technology products? Match what I am showing an interest in at the moment rather than trying to predict what I want from what I looked at in the past.

    The algorithm they use to target me is more like pseudo-intelligence than artificial intelligence.

  24. Avatar

    jdjan

    Come on. Facebook stating that “Unfortunately, Apple rejected our transparency notice” while simultaneously complaining about new iOS 14 user privacy features damaging their ability to spy on, ahem, I mean, track their users and monetize them. Really? Does anyone else see the irony in this?

  25. Avatar

    beckoningeagle

    I agree that with the first point, a notice about the 30% charge should be allowed. On the other hand, not being able to track people is a good thing.

  26. Avatar

    ronh

    The problem is how do sites make money without ad revenue...

  27. Avatar

    jbinaz

    I was a bit confused at first, but now I get it. This isn't actually the Facebook app, which is free. It's some other app that FB has created. This issue seems to hit on the big points: Apple taking 30% cuts of in-app revenue and who controls the customer. I think I come down here: Apple deserves some sort of a cut, but maybe not 30%, and less on the recurring subscription fees than the initial fee. And, they don't own the customer - they're merely a delivery mechanism for someone else's product.


    Lots to sort through, though, and I'm pretty sure that if Apple doesn't solve the issue on their own, regulators will force the point (whether right or wrong).

    • Avatar

      lvthunder

      In reply to jbinaz:

      What Facebook wants to do is have you create an event that you charge for like say an online class teaching you about painting for instance since you can't go take an in person class. They wanted Apple not to take a cut out of that and Apple declined.

  28. Avatar

    Jogy

    In reply to lvthunder:

    "Apple been updating the Facebook app" ???

    I thought the app was being developed and updated by Facebook, Apple are only publishing it.

    Also, developers pay annual fee for being able to publish apps to Apple store, so it is untrue to claim that Apple is not getting paid.


    Anyway, the point here is not about the removal of the 30% Apple tax, but just about being able to inform the users about it - and I fully agree with this idea. When any app store (Apple's, Google's, or any other) has a stated policy to take a a cut from the app purchases, then the developer should be allowed to inform the user about it on each purchase.


    • Avatar

      lvthunder

      In reply to Jogy:

      That $99 you pay just pays for the tools to develop the apps. Microsoft charges $1,199 the first year and $799 every year after that for Visual Studio.


      By updating I mean sending out the updates. Not creating the update itself.

  29. Avatar

    Jogy

    In reply to lvthunder:

    Maybe Apple know their users - that most of them do not pay attention and are unaware of that Apple tax. Otherwise why would they make steps to hide it?

    • Avatar

      lvthunder

      In reply to Jogy:

      There isn't a sign at any place that accepts credit cards that says 3.5% goes to the credit card company. There are generally small places that sometimes charges you a fee to use a card. Why should Apple be any different?

  30. Avatar

    bluvg

    Very classy, Apple, very classy.

  31. Avatar

    beckoningeagle

    In reply to lvthunder:

    "Any" is a very broad word, I just asked 6 people in the office I am currently at, 5 of them iOS users, none of them knew the correct answer. Can't ask anyone else at the moment since everyone else is not at the office because of COVID, but I'll put it up in some chats and see who comes up with the answer.


    Edit:


    I just finished a non-scientific survey using WhatsApp to ask a lot of people. I am up to 31 replies, 3 correct answers. I am going to stop updating the survey since 31 is a big enough sample.

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