Ecosystems

Apple, Facebook, Access And Echoes Of 2012 (And Zynga)

In the onslaught against Apple — and specifically, the 30 percent commission the tech giant collects each time someone pays for an app through its App Store — the hits keep on coming.

At the center of it all: Online gaming, and the way we access the latest popular diversions (or don’t).

Last week, as reported, Epic Games filed suit against Apple (and Google), alleging that commission structure, and the fact that Apple took the Fortnite app off its Apple Store after Epic offered a discounted way to buy Epic offerings, amounted to anti-competitive and monopolistic behavior.

This time around,  Facebook fired its own shot across Apple’s bow. The company said in a Friday (Aug. 14) blog post that it would waive fees on paid online events through “at least” the next year.

“For transactions on the web, and on Android in countries where we have rolled out Facebook Pay, small businesses will keep 100% of the revenue they generate from paid online events,” Facebook said in the post.

And, with a nod toward Apple, Facebook said that things will be different when it comes to offerings across the iOS:

“We asked Apple to reduce its 30% App Store tax or allow us to offer Facebook Pay so we could absorb all costs for businesses struggling during COVID-19,” continued the post. “Unfortunately, they dismissed both our requests and SMBs will only be paid 70% of their hard-earned revenue. Because this is complicated, as long as Facebook is waiving its fees, we will make all fees clear in our products.” Graphics and screenshots, we note, then show that, in one case (for apps via Android), Facebook does not take fees, while for apps accessed via iOS, “Apple takes 30% of this purchase.”

At issue, of course, is whether Facebook will process payments on its own for purchases made by Apple users. And by debuting Paid Online events, which creates a new revenue stream, Facebook is seeking to expand and cement its ecosystem, with a platform that keeps payments in house.

(Incidentally, as NBC reported on Friday (Aug. 14) Google has said that it will let Facebook process payments and sidestep the 30 percent fee that had traditionally been levied on app purchases across the Google online store.)

Echoes Of Zynga? 

The current spat over Apple, its fees and access to its App Store raises fundamental questions over how platforms, particularly those focused on end user access, and monetizing that access, should work.

And it has echoes for Facebook, too.

As reported in this space more than eight years ago, way back then, Facebook put an end to an early experiment in virtual currencies in 2012, via Facebook Credits (which had been introduced three years earlier in 2009), and opted to go back to local currencies.

It was a move that was billed as being an easier way for developers to get funds in pounds or dollars, among other currencies. Back then, too, the company had a policy of raking off 30 percent from all purchases (across currencies or credits).

Those credits, of course, were used in the then-wildly-popular Zynga game Farmville. But, in addition to being transferable across all manner of games, it also tied the game developer to Facebook, and vice versa. Because of the revenue sharing agreement, at one point, Zynga, through ad buying, accounted for 12 percent of the social media giant’s revenues in 2011. Facebook, for its part, helped generate almost all of Zynga’s revenues. Zynga began moving beyond Facebook in 2012, pivoting to offer an online destination other than Facebook — a standalone site, that as brandchannel.com detailed, gave access to games created and offered by third-party developers. Zynga, of course, became just one of many gaming firms that found presence on Facebook.

In the end, the “exclusivity” of such a relationship seemed to fray under chafing over 1) commissions and 2) constraints on payment choice. That led Zynga to try to expand its accessibility (though perhaps its late-to-the-party emphasis on mobile games was a headwind) to an end-user base beyond a marquee Big Tech name. There are echoes here as Facebook tries to make an end-run around Apple’s ecosystem — with ripple effects for gaming, yes, and, in some cases, revenue streams.

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