His business went virtual. Then Apple wanted a cut.


ClassPass built its business at local gyms to help people book exercise classes. So when the epidemic forced the closure of gyms across the United States, the company shifted to virtual classrooms.

Then Classpass received a related message from Apple. Because the classes sold on its iPhone app were now virtual, Apple said that a person close to ClassPass was entitled to 30 percent of the sale at no charge, according to a person close to ClassPass who spoke out of fear of upsetting Apple. . The iPhone maker said that it was only enforcing the decade-old rule.

According to two people familiar with the two-person issue, Airbnb experienced similar demands from Apple, offering an “online experience” business, increasing the in-person experience that began in 2016.

Both AirBnB and ClassPass have discussed Apple’s demands with the offices of House MPs who are investigating whether Apple took control of its App Store as part of an annual antitrust investigation into the largest tech companies How to set up, according to three people who spoke on condition of anonymity. Discuss private conversation.

Those lawmakers are set to grill Tim Cook, Apple’s chief executive officer, and chief executives of Amazon, Facebook and Google at a high-profile hearing on Wednesday.

Apple’s disputes with smaller companies point to the control of the world’s largest tech companies that have shifted to the online lives brought on by the epidemic. While the rest of the economy is struggling a lot, the epidemic has affected their businesses more.

With millions more employees working from home, Amazon and Google are selling more online cloud space, with revenue for Amazon Web Services and Google Cloud increasing in the first quarter of the year, which included the onset of the epidemic. Facebook and YouTube, which is part of Google, have increased traffic in some of the Internet’s largest gathering venues, as people cannot use it socially in person.

Apple has also brought in more revenue from its online-services business, mostly behind its App Store, and its Macs, iPads and iPhones have become even more important devices.

With the gym closed, ClassPass dropped its specific commission on the virtual class, with 100 percent sales at the gym, a person close to the company said. This means Apple would have made its cut from hundreds of struggling fitness centers, yoga studios and boxing gyms.

Apple said that with Airbnb and ClassPass, it was not trying to generate revenue – although it is a side effect – but was instead trying to enforce a rule that first came out in 2010 with its app guidelines Was published on

Apple said that exempting the commission in these cases would not be appropriate for many other app developers who have paid fees for similar businesses for years. Due to the epidemic, Apple stated that it gave ClassPass to comply by the end of the year and was continuing to negotiate with Airbnb.

The company said in a statement, “Apple maintains a clear, consistent set of guidelines to ensure that every developer can create and grow a successful business”.

Classpass was told that it would have to follow the rule this month, according to a person close to the company. Instead, it stopped offering virtual classes in its iPhone app, because those classes were subject to Apple’s commission according to Apple. As a result, fewer potential customers now view classes advertised by their gym partners.

In 2016, Airbnb started offering travelers “experiences” with locals in their holiday destinations, such as guided tours, bar crawls, and cooking classes. In early April, as an epidemic trip planned and the company’s bottom line, AirBnB began selling virtual versions of similar experiences, although it quickly expanded that business, such as eating with well-known chefs Cooking classes and training sessions with Olympic athletes.

Later that month, Apple reached out to say that the company would have to pay Apple’s fees when online experiences were sold in Airbnb’s iPhone app, a person familiar with its exchanges said.

Apple said that it is believed that Airbnb had long intended to offer virtual experiences – not that the business was created simply because of the epidemic – and that it would do so again after the world returned to normal. will continue. Apple also reported that Airbnb never paid Apple any money despite the fact that it built its multi-dollar business with the help of its iPhone app.

Airbnb is still in talks with Apple. In June, Airbnb’s chief executive, Brian Chesky, said the online experience offering was the company’s “fastest growing product” and generated $ 1 million in revenue. Apple said that if both companies could not come, it could remove Airbnb’s app from the App Store.

Many companies and app developers complain that Apple forces them to pay their commissions to join the App Store, which is important for reaching around 900 million people with iPhones. Apple said that the App Store had 500 million visitors from 175 countries each week.

For months, economists and lawyers in the Justice Department have held meetings with companies and app developers about the App Store as part of an investigation into its antitrust at Apple. Music service Spotify and another large company that declined to be named said they had recent conversations with the attorney general of several states about the issue.

Unlike Spotify, Airbnb and ClassPass do not offer services that compete directly with one of Apple’s digital products.

Many companies complain that they also call Apple’s capricious enforcement subject to its rules, which could cause their app to be removed from the App Store, killing some of their business. If the app removes the app from the store, the developer cannot acquire new app users and update the app already on people’s phones, ultimately rendering them broken.

Apple said that a small fraction of the iPhone app was subject to its commission, which, according to a study released by Apple last Wednesday, is in line with the fee for other platforms. For example, AirBnB charges a 20 percent commission on experiences.

“If you are not in the App Store today, you are not online. Your business cannot function. So they are the gatekeepers of something that every company wants, ”said Andy Yen, chief executive of ProtonMail, an encrypted email service based in Switzerland, that competes effectively with Apple’s own email service. “If you want to pass through their door, they are going to charge you 30 percent of your revenue.”

Mr Yen said his company had been battling Apple with its commissions since 2017, with Apple occasionally banning the ProtonMail app on iPhones. To account for Apple’s fee, ProtonMail began charging 30 percent more for subscriptions purchased on its website versus its iPhone app, which are not subject to Apple’s fee. “The only way we could support this fee was actually passing on the cost to the customer,” he said.

But when ProtonMail told iPhone users about the low price on its website, Apple banned its app. Then, when the company tried to clarify that 30 percent of the subscription price went to Apple, Apple again restricted its app. “You only hide something like this if it’s wrong,” Mr. Yen said.

When asked about the experience of ProtonMail, Apple said that its rules require some payment applications to prohibit users from using their payment systems and instructing people to purchase their products or services elsewhere.

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