Facebook Strikes Deal to Skirt Apple's App Store Commission -- Update

By Sarah E. Needleman 

Facebook Inc. said Apple Inc. approved a request to give businesses a temporary reprieve from paying a 30% commission on paid online events, a special arrangement that comes as the App Store owner faces criticism over how its digital marketplace operates.

The agreement, which runs through the rest of this year, allows Facebook to use its own payment system to process transactions for the live events.

Apple doesn't normally allow app developers to process payments for in-app purchases themselves or through third parties, as it has said that external services could pose security risks.

The technology giant instead makes developers use its own payment system and takes a 30% cut of sales from paid apps and in-app purchases as well as from digital subscriptions in the first year. Apple has said that amount is in line with what most other app marketplaces charge and helps cover the cost of store services it provides such as user privacy.

Facebook last month introduced a way for businesses to host paid events through its live-streaming platform, a move the social-media company said was aimed at helping those struggling during the pandemic to switch from selling real-world goods to online experiences. At the time, Facebook said it asked for but didn't get an exemption from Apple.

Facebook on Friday said Apple reversed course, allowing businesses that host paid events such as cooking lessons or musical performances through its app to skirt the App Store commission. However, the deal excludes businesses that make videogames or do game-related streaming on Facebook. Facebook also said it wouldn't collect any fees from paid-event hosts until at least August 2021.

"This is a difficult time for small businesses and creators," said a Facebook spokesperson in a statement.

Write to Sarah E. Needleman at [e-mail]

(END) Dow Jones Newswires

September 25, 2020 12:29 ET (16:29 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.