Facebook tests App Store rules, Apple fights sideloading
originally published on 11/06/21
Facebook skirts Apple’s fees with creator subscriptions
Facebook is challenging Apple by avoiding App Store fees. The social network this week introduced a new feature that allows creators to share custom subscription links, giving them a way to collect direct payments from fans and make money from their work. When a fan signs up through the link, the creator keeps all the money, minus only taxes. As the links are on the web, these subscriptions aren’t being processed through Apple’s in-app payments system — which could be in possible violation of App Store policies.
But Facebook believes that these links are compliant because it’s the creators who are generating the revenue, not Facebook itself. Plus, the company isn’t removing the ability for users to sign up for a creator subscription through the native in-app payments system.
This would also be in line with the recent decision in the Epic Games lawsuit, where the court ruled that Apple can’t stop developers from adding links to alternative payment systems inside their apps alongside Apple’s own. Currently, Apple is in the process of asking the court to not enforce the deadline on compliance with its decision, as the case is now under appeal by both parties.
Facebook may be correct that it’s not breaking the rules, so long as it’s not taking a cut of transactions. Clubhouse earlier this year launched a similar payments feature that allowed users to virtually tip their favorite creators. Because creators kept all the revenue (minus only the card processing fee), Apple did not intervene.
But further down the road, Facebook could find a way to capture some of that subscription revenue — either by a cut of the payment itself, or via the payment processing fees with Novi, or even both. The company’s digital wallet platform Novi has only so far launched limited support for cross-border payments between the U.S. and Guatemala (and has been criticized for failing to live up to its original crypto ambitions). But Novi’s long-term plan is to monetize by offering lower fees than credit and debit cards, compared with traditional providers. Facebook could easily get Novi in front of creators, if it chose. First, however, it has to get its foot in the door and start the payment flow without being blocked by Apple. (Facebook said it won’t collect any fees through 2023.)
Facebook and Apple have been critical of each other’s business models, with Facebook accusing Apple of using its privacy changes as cover to allow itself to carve out a place for itself in the digital advertising business where Facebook and Google lead. CEO Mark Zuckerberg made no bones about the fact that Facebook believes Apple’s commissions are bad for creators, saying: “As we build for the metaverse, we’re focused on unlocking opportunities for creators to make money from their work,” Zuckerberg wrote in a Facebook post. “The 30% fees that Apple takes on transactions make it harder to do that, so we’re updating our Subscriptions product so now creators can earn more.”
Apple rails against sideloading
Apple’s head of software engineering Craig Federighi gave a keynote address at the Web Summit 2021 conference this week where he spoke out against the idea of “sideloading” apps — meaning, simply, installing an app outside of Apple’s App Store. The speech was given in response to the EU’s draft legislation that proposes Apple open up iPhone to third-party app stores. He argued Apple’s position on the matter, which is that sideloading will put users’ privacy and security at risk and that Apple’s App Store’s vetting process will better protect users.
“Instead of creating choice, it would open up a Pandora’s box of unreviewed malware-ridden software and deny everyone the option of iPhone’s secure approach,” he said. At one point he called apps installed from the web, “a cybercriminal’s best friend,” and painted a picture of how compromised devices could become networks, and malware could threaten government systems, public utilities and enterprises.
Apple is, to some extent, correct that allowing users to download apps from the web could weaken the current state of iPhone security. But, by comparison….