Friday, August 28, 2020 [Tweets] [Favorites]

Facebook Rejected for Mentioning App Store Fee

Sam Byford (tweet, also: ArsTechnica, MacRumors):

Apple blocked Facebook from informing users that Apple would collect 30 percent of in-app purchases made through a planned new feature, Facebook tells Reuters. Apple said the update violated an App Store rule that doesn’t let developers show “irrelevant” information to users.

The feature lets Facebook users buy tickets for online events directly through the app.

Note that Facebook itself is not getting a cut, nor was it breaking the rules and linking to an alternate payment method. I think it’s quite relevant for customers to know when they buy something where their money is going. It’s hard to see how this unwritten App Store policy benefits anyone but Apple, who doesn’t want their customers to know how the system works. And it’s hard to see what Apple did to deserve the 30%. It’s not the one putting on the event, it’s not the one who helped the buyer discover the event, and it’s not the one transmitting the information. It’s more like Panasonic, back in the days of landlines, expecting 30% from the Sears Catalog orders you placed using the handset that you’d already paid them for.

Previously:

Update (2020-08-31): See also: Hacker News.

Juli Clover (also: Hacker News):

In a company-wide meeting, Facebook CEO Mark Zuckerberg on Thursday referred to Apple’s App Store as monopolistic and harmful to customers. Apple “blocks innovation, blocks competition,” and uses the App Store to “charge monopoly rents.”

Zuckerberg’s comments, which were said to 50,000 Facebook employees over a webcast, were shared by BuzzFeed News. Apple, said Zuckerberg, has a “unique stranglehold as a gatekeeper on what gets on phones.”

17 Comments

Old Unix Geek

I know, I should know better, but the level of ignorance displayed in the MacRumors comments is quite astounding. Reading seems to be an advanced skill for many "computer users". Perhaps most modern homo-sapiens need an audio baby-talk summary instead of articles.

They weren’t “rejected” they were Tim AAPL “curated” from the Tim AAPL user experience. Please like and subscribe Tim Apple on your Tim Apple device.

If you don’t speak Tim Apple and aren’t “inclusive” then you will be “curated” from the Tim Apple platform. And this all started with some SAG actor everyone “hates” even though “hate has no room on the platform.”

*Inclusive given to mean “you will emphatically agree with everything we do and agree to our terms or we will killswitch our device that you licensed for 100s of dollars.”

Seriously, I keep talking myself out of “new” Tim Apple devices and these “freeze peach” issues are the main reason. I don’t want Tim Apple the bank, TV broadcaster, “curator of freeze peach” or any of these other verticals, I want Apple the hardware company and nothing else.

@OldUnixGeek: hey SIRI play “circle of life” hit send.

Kevin Schumacher

Setting aside whether the 30% cut is good or bad, this is not an unwritten rule.

> 2.3.10 Don’t include irrelevant information, including but not limited to information about Apple or the development process.

I don't see an argument that the 30% cut is either not information about the development process (because it's part of the developer contract and/or because it's a cost of doing business as a developer for iOS), or, by phrasing it like Facebook did, that it's not about Apple. Whether it's relevant or not is a separate issue, and you're obviously free to argue that it's not relevant, but to the extent Apple it saying it is irrelevant, it then very clearly falls under this rule.

> I think it’s quite relevant for customers to know when they buy something where their money is going.

Again, leaving aside the question of whether the 30% itself is OK or not, do you ask your grocery store cashier to provide you an exact breakdown of who every cent you pay is going to? Do you demand to see a copy of the MasterCard acceptance contract specifying the various fees that the retailer pays when you swipe your card?

I get it, that the 30% itself is what's causing a lot of the consternation. But it's pretty disingenuous to act like consumers usually ever see more than a breakdown between sales price and tax for a purchase, or have any idea of the business costs involved in a transaction—often because much of that is hidden behind contract, NDA, and trade secret shields. (You would probably be gobsmacked to find out where the money from your grocery purchase goes, and how much money was spent, outside of the actual production costs, to put the package on the shelf in a place where you would see it.) The fact we even know about the 30% is progress in that regard. And any consumer who cares to can very, very easily discover that information themselves, if they aren't already aware of it from pop culture.

And I'm not sure I believe you'd be here arguing for this sudden transparency if you didn't think the amount was outrageous. The fee has been around for as long as the App Store has, and I don't recall ever hearing serious argument about this type of transparency before. I believe it's more about the fact that the 30% is now considered to be too much, Apple is seen to be making more and more authoritarian-type moves lately, and so the fact that Facebook went out of their way to provoke Apple into saying no is causing a reaction of making the argument that of course this should be right on the payment confirmation screen, as if that's been obvious and pleaded for all along.

@Kevin The way that’s written, I don’t think it means that anything mentioning Apple is automatically irrelevant. I guess I see it as information about the payment, not about Apple. The point for the customer is not so much where the fee is going as that there’s lots of money not going to the event provider. Would it be “about Apple” if they said that 30% was deducted for payment processing but didn’t specify where it went (except to say, not to Facebook)?

If it were 3% there would be no issue because that would be in line with every other credit card charge. Everyone knows all their purchases have a few percent taken out. But at 10x that, it’s surprising. Many retail businesses do call out when different payment methods cost them different rates, i.e. please use cash for under $5. I’m not saying every app or business should do that, but they shouldn’t be forbidden from doing so.

I’ve always thought the 30% was too much. For stuff like this it’s outrageous. It’s one thing to charge that for buying an app and quite another for “content” that’s not even really part of the app, just displayed in the app’s window. It’s essentially a fancy Web browser. And the content may not even be consumed on that device.

You know you’ve crossed the line when you’ve made Facebook the sympathetic victim.

Kevin Schumacher

@Michael I do think Apple has a lot harder time justifying exclusion of an explanation like "Facebook takes no fee from this transaction. 30% is deducted from the total for payment processing."

I don't necessarily disagree the 30% is too much, as an abstract idea. I think we differ on whether Apple should be "allowed" to do it or not, or at least I'm not as sure as you that they shouldn't.

I recognize that some businesses choose to call out certain payment methods, though for a long time they weren't allowed to do that (per their contract with the card issuers), or in certain states they had to advertise a cash discount rather than a credit card surcharge, for example. But to me its more akin to a hypothetical landlord telling a business leasing property that the business can't put up a sign saying 30% of every customer's purchase is going straight to Joe Schmoe Realty, Inc. The app is designed by Facebook, but it's still running by way of Apple's platform, similar to how a store may be designed by a retailer but is still sitting on a slab, between walls, and under a roof that a landlord owns and can therefore make rules about what happens there. In this case it just so happens that the tenant business is allowing people to come in and sell things to others. Doesn't change that the activity is occurring on property owned by the landlord.

I guess I'm at a point where I'm still not sold that Apple doesn't get to dictate most things that happen on its platform. Some things need to change, and Apple does need to actually follow through on allowing developers to "challenge the guidelines"—though as far as I can tell there's no evidence Facebook had any real intention of challenging anything; they submitted it so that Apple would say no and they could point to it. This was a publicity stunt to hop onto the "Apple is bad to developers" train if I've ever seen one. It's also super coincidental that this rejection, despite happening several weeks ago per Facebook themselves, just became public today right after the iOS 14 privacy/ad thing started blowing up in their face yesterday.

I think the landlord analogy would be more accurate if the world only had two landlords, and if many businesses had to rent space from both landlords in order to make ends meet.

In such a scenario, the two landlords would have immense leverage over the economy: How much rent they could charge, what types of businesses were allowed, and so on. Because there are no other choices, the actions of these two landlords end up determining what kinds of business models are viable for the economy as a whole.

This kind of asymmetrical leverage is generally the type of thing we try to avoid as a society — either through competition or antitrust law — because it stifles innovation and keeps prices higher than they would be otherwise. We've been seeing these effects play out for years.

Alternatively, if there is some reason why a monopoly or duopoly makes sense (e.g. some kinds of utilities), we allow it, but only in exchange for a great deal of public oversight over the situation. However, in this case it's hard to see any societal or economic advantage in allowing Apple and Google to maintain sole control over the mobile economy.

>do you ask your grocery store cashier to provide
>you an exact breakdown of who every cent you pay
>is going to?

No, I already know that. 100% of the money is going to the grocery store, unless I pay with a credit card, in which case a small percentage goes to a payment processor. That all makes sense, and is what people expect.

However, I would be pretty fricken surprised if I paid my groceries with my Apple credit card, and 30% of the money went to Apple. I sure as hell would like to know if that were the case!

If you buy stuff on an iPhone, that's often *exactly* what will happen, and it's weird, and unexpected, and people need to understand that this is what happens. It's also pretty obvious that Apple depends on people not understanding it. Apple doesn't want their own customers to know that this is what actually happens.

Isn’t this more like showing the service charge on a bill at a restaurant for a big group say? I mean, if the restaurant tacked on 30% without telling you, I think you’d want to know why.

Also, pretty sure it’s standard practice for ticket websites to show you the breakdown of ticket prices versus booking fee.

"However, I would be pretty fricken surprised if I paid my groceries with my Apple credit card, and 30% of the money went to Apple. I sure as hell would like to know if that were the case!"

Indeed, there are grocery stores and other stores that refuse to accept credit cards and/or debit cards. And they tell customers exactly why: the fees are too high.

The difference in this case is that Facebook can't refuse to accept Apple's payment system.

Old Unix Geek

@Kevin Schumacher

Your analogy doesn't work. I bought that iPhone. Apple sold it. Therefore it cannot continue to claim rent the way a landlord can.

The closest analogy to your claim, would be if there were only two mall owners in a country, and they each sold $600 multi-year passes for people to enter their malls, while simultaneously renting the stores in the mall to the individual store fronts. Only shareholders in those landlord would accept such a situation. It reminds me of the bad old days of company scrip and company towns. They have been outlawed in most of the world for good reason.

Apple made a profit from selling its phones. It is pure greed and rent-seeking for it to claim that it is owed money for any transaction that occurs on devices it made. Capitalism doesn't work without regulation. Indeed, without regulation and enforcement, neither markets, nor their constituents of money and property exist. This is clearly a place where governments have been derelict in their duty to regulate the marketplace.

@Kevin I don’t think this is like a mall or store or landlord situation at all because there’s a duopoly. It’s more akin to a utility like an electric company, and those are highly regulated because even though they own the wires I have no choice but to use them. There’s a limit on how much profit they can make. They’re not allowed to deny me service because I’m using their power to watch a TV show that they don’t like or because I used it to type something that mentions them. They don’t get a cut of all commerce facilitated by the energy coming through their wires.

Of course these are publicity stunts from Facebook and Epic. That’s pretty much the only option when power is so asymmetric that dialog and negotiation are impossible. And, yes, Facebook and Epic are not the most sympathetic victims, but victims without 10-figure valuations get squashed like bugs.

Kevin Schumacher

@Lukas
"No, I already know that. 100% of the money is going to the grocery store, unless I pay with a credit card, in which case a small percentage goes to a payment processor. That all makes sense, and is what people expect."

100% of the money goes to the grocery store at the point of purchase, yes (well, not even technically then, because of the way credit cards work) but that is not where a large percentage of the money ultimately goes. There are distributors, and wholesalers, and manufacturers, and whatever other middlemen exist.

I'm foreseeing a counterargument of, that's not what we're talking about, we're talking about where the money initially goes. Except in that case, 100% of an in-app purchase in any app initially goes to Apple, but that's not what the point is here. Some percentage (ranging from 70% to 85%) eventually goes to the developer, who may then pass some or all of it on to somebody else, so it is relevant who the money ultimately goes to if we're going to say it's relevant that 30% of this event ticket goes to Apple. And therefore, the grocery store analogy holds.

@Adrian
"I mean, if the restaurant tacked on 30% without telling you, I think you’d want to know why."

Nothing is being tacked on in this example, as far as I can tell—the event creator set a price of $10 or whatever, and then 70% would go to Facebook who passes it on to the event creator. And the argument against the 30% being so large in the first place is that companies can't tack on 30% to the prices and survive (except the very largest ones, such as what YouTube was doing for a while).

"Also, pretty sure it’s standard practice for ticket websites to show you the breakdown of ticket prices versus booking fee."

The price is not being advertised as $10 plus $3 service fee, as in the case of TicketMaster prices, for example, because again, it's not a fee that's being added on to what the event creator would charge. You don't see breakdowns of the ticket charge showing that the band pays Live Nation X% of the ticket revenue to manage the event. You see a $3 TicketMaster service fee, and a $2 print at home fee, and whatever else is added on on top of the original ticket price.

@Old Unix Geek
You buying a piece of hardware is unrelated to whether Apple can or should charge a fee on transactions that occur using software and physical platforms that Apple created that exist independently of the device you hold in your hand. My landlord analogy was not spot-on, but your idea that you bought the hardware and therefore Apple doesn't get to charge anything more for anything, even if that thing costs them more money (such as payment processing or maintaining servers or providing bandwidth) is completely wrong, and I don't think anybody who is arguing that 30% is too much would actually agree with you that 0% is the right amount.

@All
Yes, the landlord analogy was not perfect. But for those arguing that it's like a utility and we highly regulate utilities because people have no other option, that applies to some utilities, such as power and water, in some areas. It does not usually apply to things like high-speed internet service and cable TV, where in the majority of the US, consumers have one option, and assuming that one option is a cable company, it is typically very lightly regulated, with prices and fees often escalating out of control.

@Kevin There would be regulation if high-speed Internet providers were preventing customers from accessing unapproved sites or trying to take 30% of transactions made over their wires.

Old Unix Geek

@Kevin Schumacher

You seem to have missed the entire point of the article. The point is not that Apple should not be paid for further services users decide to use. The point is that app developers do not want to use Apple's payment processing at all, and if that were allowed, Apple would be owed nothing. But Apple forces every app to use their services, as a pre-condition of availability on any iOS device. Not only that, but Apple also requires app-developers to lie by omission to their users: you may not tell them about our fees, you may not disparage Apple. That is not so dissimilar to how the Mafia operate: if you don't pay us for a set of services we specify you must buy from us, your shop will burn down, and if you tell the cops, we'll break your fingers.

If Apple believed some users only wished to trust it, I could understand Apple requiring app-developers to include an option for an Apple payment service with a 30% surcharge. But Apple refuses to allow that option because it wants to tax every transaction.

I'm surprised how many Apple users seem to feel the need to justify Apple's immoral behaviours. It reminds me of citizens of totalitarian states justifying the decisions of the powerful, even when everyone can see they are unjustifiable. At least in totalitarian states there is a good reason: a Gulag... can avoiding buyer's remorse go this far?

>There are distributors, and wholesalers, and manufacturers,
>and whatever other middlemen exist.

That's not the same at all, and you yourself point that out in the very next paragraph.

If I give money to a grocery store, obviously the grocery store decides what to do with that money. If I give money to an event via the Facebook app, apparently, for some insane reason, *Apple* decides what to do with that money, and just takes 30%, without even allowing Facebook to explain this to me.

>100% of an in-app purchase in any app initially goes to Apple

How is that relevant in any way? If I pay in cash in a grocery, 100% of the money initially goes to the person sitting at the cash register. I would be rather astonished if they just took 30% of that money.

Honestly, this is the kind of discussion where it's just very difficult for me to even understand how anyone could defend Apple here. Apple

- forces everyone on their platform to use their payment system
- takes 30% even for stuff that has nothing to do with Apple in any way and is at least two degrees removed from them
- and then prevents people from explaining that to their own users.

Each of these three things would be damaging to developers and users on their own, but taken together, it's deceitful, abusive behavior. Defending this harms the people who use Apple's devices, and the developers who support these devices.

Yes, the landlord analogy was not perfect. But for those arguing that it’s like a utility and we highly regulate utilities because people have no other option, that applies to some utilities, such as power and water, in some areas. It does not usually apply to things like high-speed internet service and cable TV, where in the majority of the US, consumers have one option, and assuming that one option is a cable company, it is typically very lightly regulated, with prices and fees often escalating out of control.

So because the FCC has done a poor job regulating Internet service, the US government should also do a poor job regulating smartphone app stores?

Internet access and apps on a phone are increasingly reaching the ‘basic needs’ bracket. This year especially, where millions of students can’t even attend school without Internet access, should make that crystal-clear.

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