Apple’s recent conflicts over the size of the cut it takes from iOS App Store developers potentially reflects problems the App Store could create for digital-only offerings such as virtual events. It’s a situation associations should keep an eye on.
If you’re a person who reads technology news on the internet, you’ve likely heard a whole lot about the iOS App Store lately—in part because one of the players in a high-profile conflict has been very effective at public relations of late.
Epic Games blew up the internet a week and a half ago by adding in-app payments for its extremely popular online game Fortnite that specifically worked around the App Store, preventing Apple from taking an aggressive 30 percent cut from the app. Apple responded by removing Fortnite from the App Store. Epic responded by filing a lawsuit against the company and almost simultaneously posting a parody animation of Apple’s famous “1984” ad. (It’s escalated from there.)
Over the weekend, Apple got into another conflict with a developer that associations are likely to know—the makers of the blogging platform WordPress, which was prevented from posting updates to its app until it added in-app purchases to the tool. Backlash ensued, and on Saturday, Apple backed down.
Apple is known for taking a 30 percent cut of in-app payments for digital services, but not physical ones.
These situations both point to a potentially dynamic situation that could lead to courtroom battles in the coming months. It could also create headaches for app publishers, including associations. But buried a bit further down in the headlines is a conflict around this whole saga that associations should keep an eye on as they try navigating the digital world amid COVID-19.
The Potential for Virtual Charges
Here’s the gist: Apple is known for taking a 30 percent cut of in-app payments for digital services, but not physical ones. In other words, if you rent a cabin on Airbnb using your iPhone, Apple doesn’t generally take a cut, but if you take part in a class on Airbnb, as that company has been recently offering, Apple wants 30 percent of revenues. (Which, understandably, has made Airbnb unhappy.)
Facebook ran into this very problem around the time the Fortnite battle royale blew up, after it launched a paid online events service for small businesses. The company made a point of waiving the fees it might usually charge, which Android developer Google also agreed to.
But Apple chose not to go along with Facebook’s endeavor—a fact Facebook chose to publicize.
“We asked Apple to reduce its 30 percent App Store tax or allow us to offer Facebook Pay so we could absorb all costs for businesses struggling during COVID-19,” Facebook Vice President Fidji Simo, the head of the Facebook app, wrote in a blog post. “Unfortunately, they dismissed both our requests and SMBs will only be paid 70 percent of their hard-earned revenue.”
A lot of organizations known for specializing in physical events are making a transition to virtual alternatives at this time, and associations may find themselves mining similar territory to Airbnb and Facebook—after all, the structure of both of those offerings is very similar to what one might expect from a virtual event.
And at least one vendor that associations might have actually used in the past could be affected by Apple’s stance: According to a report from The Telegraph, Apple recently asked Eventbrite, the popular online ticketing platform, to plan to start giving a 30 percent cut in transactions for virtual events.
A Problem for Developers Big and Small
Now, you might be looking at this situation and wondering why you should have to worry about what these large companies, most with valuations in the billions, are doing on the App Store. After all, who’s going to feel sympathetic for Facebook right now, considering they were in the same congressional hot seat that Apple was just last month?
The truth is that companies of this scale are likely in a position where they can speak out, if not quite in the way Epic did. These companies, having developed successful iOS apps for years, likely have personal relationships with Apple that go beyond an automated approval. And despite that, they’re still running into aggressive responses regarding an aggressive fee.
I worry what smaller developers that don’t have personal relationships with Apple (or Google, which is also feuding with Epic) might run into at this time. And this may include associations, or the vendors associations use. (It wouldn’t be the first time Apple policy created headaches for association-sector developers.)
Because of this rule, in-app purchases for virtual events could lead to lower revenues on iOS compared to the web, or require that iPhone or iPad users pay a premium.
As I noted in my coverage of a recent report from Tagoras, many associations are dipping their toes into the pool of virtual events for the first time right now, and there is potential, given the rush of this situation, to fall into a trap like this around in-app purchases.
This saga is bigger than any one iOS developer, but it could create problems for associations that haven’t been following the headlines.