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Apple Will Cut Its App Store Commission Fee in Half for Small App Makers

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  • In January, Apple will launch its Small Business Program, which cuts its 30% App Store commission fee in half for developers with less than $1 million in annual net sales on its platform.
  • The move comes as Apple faces growing scrutiny from lawmakers and businesses slamming it for what they call anti-competitive practices in its App Store.
  • While some view the change as Apple extending an olive branch to developers, larger companies that have criticized its App Store policies, like Spotify and Epic Games, called the program a “‘window dressing” and a calculated move to preserve its monopoly.
  • According to the analytics firm Sensor Tower, the top 1% of app publishers generate 93% of the revenue across the App Store and Google’s Play Store.

Apple’s Small Business Program

Apple said Wednesday that it will cut its App Store commission fee in half for developers with less than $1 million in annual net sales on its platform.

The move is part of its new Small Business Program and will go into effect on Jan. 1.

Since Apple currently takes a 30% commission from the total price of paid apps and in-app purchases, this change cuts the fee down to 15% for small and new developers.

This is a pretty major move coming from Apple, and many are describing it as the company’s attempt at extending an olive branch to developers because lawmakers and businesses around the world are focusing intensely on its App Store business practices. Many have already faulted Apple for anti-competitive and unfair behavior.

Big Companies React

At first glance, it actually does seem a little surprising that Apple would do this. In its annual filing with the SEC last month, Apple said reducing its App Store commission rate could hurt its financial results since it’s a major revenue point for its business.

However, Apple will continue to charge top-grossing apps its 30% fee, so it’s very likely that the financial impact of this change could be minimal.

In fact, several experts note that apps are typically a sort of “winner-takes-most” kind of business. According to a 2019 estimate from the app analytics firm Sensor Tower, the top 1% of app publishers generate 93% of the revenue across the App Store and Google’s Play Store.

The top 1 percent of revenue-earning publishers earned 93 percent of all revenue

The news is definitely good for small businesses, especially those hurting amid the pandemic. It also opens doors for those looking to add more virtual offerings under their businesses. 

Still, the big companies who have been critical of Apple won’t see it as helpful. Epic Games, for instance, which is still in legal battles with Apple, released a statement criticizing the move.

“This would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments, again breaking the promise of treating all developers equally,” it said.

“By giving special 15 percent terms to select robber barons like Amazon, and now also to small indies, Apple is hoping to remove enough critics that they can get away with their blockade on competition and 30 percent tax on most in-app purchases. But consumers will still pay inflated prices marked up by the Apple tax.”

Spotify, which has also challenged Apple’s App Store fees before, also commented on the matter.

“Apple’s anti-competitive behavior threatens all developers on iOS, and this latest move further demonstrates that their App Store policies are arbitrary and capricious,” it said.

While we find their fees to be excessive and discriminatory, Apple’s tying of its own payment system to the App Store and the communications restrictions it uses to punish developers who choose not to use it, put apps like Spotify at a significant disadvantage to their own competing service. Ensuring that the market remains competitive is a critical task.”

“We hope that regulators will ignore Apple’s ‘window dressing’ and act with urgency to protect consumer choice, ensure fair competition, and create a level playing field for all,” it concluded.

See what others are saying: (CNBC) (The Verge) (Polygon)

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Uber Forks Over $19 Million in Fine for Misleading Australian Riders

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The penalty is just the latest in a string of lawsuits going back years.


Uber Gets Fined

Uber has agreed to pay a $19 million fine after being sued by the Australian Competition and Consumer Commission for making false or misleading statements in its app.

The first offense stems from a company policy that allows users to cancel their ride at no cost up to five minutes after the driver has accepted the trip. Despite the terms, between at least December 2017 and September 2021, over two million Australians who wanted to cancel their ride were nevertheless warned that they may be charged a small fee for doing so.

Uber said in a statement that almost all of those users decided to cancel their trips despite the warnings.

The cancellation message has since been changed to: “You won’t be charged a cancellation fee.”

The second offense, occurring between June 2018 and August 2020, involved the company showing customers in Sydney inflated estimates of taxi fares on the app.

The commission said that Uber did not ensure the algorithm used to calculate the prices was accurate, leading to actual fares almost always being higher than estimated ones.

The taxi fare feature was removed in August 2020.

A Troubled Legal History

Uber has been sued for misleading its users or unfairly charging customers in the past.

In 2016, the company paid California-based prosecutors up to $25 million for misleading riders about the safety of its service.

An investigation at the time found that at least 25 of Uber’s approved drivers had serious criminal convictions including identity theft, burglary, child sex offenses and even one murder charge, despite background checks.

In 2017, the company also settled a lawsuit by the Federal Trade Commission (FTC) for $20 million after it misled drivers about how much money they could earn.

In November 2021, the Justice Department sued the company for allegedly charging disabled customers a wait-time fee even though they needed more time to get in the car, then refused to refund them.

Later the same month, a class-action lawsuit in New York alleged that Uber charged riders a final price higher than the upfront price listed when they ordered the ride.

See what others are saying: (ABC) (NASDAQ) (Los Angeles Times)

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Report Finds That Instagram Promotes Pro-Eating Disorder Content to 20 Million Users, Including Children

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According to the study, even users hoping to recover were given eating disorder content because they were “still in Instagram’s algorithmically curated bubble.”


Instagram Promotes Eating Disorder Content

Instagram promotes pro-eating disorder content to millions of its users, including children as young as nine-years-old, according to a Thursday report from the child advocacy non-profit group Fairplay.

The report, titled “Designing for Disorder: Instagram’s Pro-eating Disorder Bubble,” studied what it called an eating disorder “bubble,” which consisted of nearly 90,000 accounts that reached 20 million unique users. The average age of the bubble was 19, but researchers found users aged nine- and 10-years-old that followed three or more of these accounts. Roughly one-third of those in the bubble were underage. 

According to Fairplay, Instagram’s parent company Meta derives $2 million in revenue a year from the bubble and another $228 million from those who follow it. 

“In addition to being profitable, this bubble is also undeniably harmful,” the report said. “Algorithms are profiling children and teens to serve them images, memes and videos encouraging restrictive diets and extreme weight loss.”

“Meta’s pro-eating disorder bubble is not an isolated incident nor an awful accident,” it continued. “Rather it is an example of how, without appropriate checks and balances, Meta systematically puts profit ahead of young people’s safety and wellbeing.”

Researchers identified the bubble by first looking at 153 seed accounts with over 1,000 followers that posted content celebrating eating disorders. Some used phrases like “thinspiration” or other slang terms like “ana” and “mia” to refer to specific eating disorders. Others included an underweight body mass index in their bios. 

Those seed accounts alone had roughly 2.3 million collective followers, 1.6 million of which were unique. Of those unique users, researchers looked at how many seed accounts each followed to determine that nearly 90,000 accounts were part of the eating disorder bubble. Those accounts totaled over 28 million followers, 20 million of which were unique.

These pages posted content ranging from memes and photos of extreme thinness to screenshots of progress on calorie counting apps. One user said they were on their third day of eating just 300 calories. 

Others, including children under the age of 13, put their current weights and goal weights in their account bios. Some wrote that they “hate food” or were “starving for perfection.”

Content’s Impact on Children

Fairplay claimed that many of those in the bubble wanted to recover but were essentially trapped in Instagram’s algorithm. 

“Many of the biographies of users in the bubble talk about wanting to or being in recovery, wanting to get ‘better’, to ‘heal’ or being aware of how unwell they were,” the report said. “However, these users are still in Instagram’s algorithmically curated bubble. They will still be feeding content from other accounts in the bubble, including the seed accounts, that normalizes, glamorizes or promotes eating disorders.”

The report also showcased the firsthand account of a 17-year-old eating disorder survivor and activist identified as Kelsey. Kelsey wrote that it was impossible to “imagine a time when the app didn’t have the sort of content that promotes disordered eating behavior.” 

“I felt like my feed was always pushed towards this sort of content from the moment I opened my account,” Kelsey continued.

“That type of content at one point even got so normalized that prominent figures such as the Kardashians and other female and male influencers were openly promoting weight loss supplements and diet suppressors in order to help lose weight.”

Kelsey said Instagram delivered that content without any relevant searches, but posts about body positivity needed to be actively sought out. 

The report concluded by arguing that there needs to be legislation that regulates platforms like Instagram by requiring them to prioritize user safety, particularly for children.

Meta and Instagram have long been accused of disregarding child safety. Last year, a whistleblower unveiled documents that revealed the company knew of the harm it posed to young people, specifically regarding body image. A Meta spokesperson told The Hill that they were unable to address the most recent allegations in Fairplay’s report.

“We’re not able to fully address this report because the authors declined to share it with us, but reports like this often misunderstand that completely removing content related to peoples’ journeys with or recovery from eating disorders can exacerbate difficult moments and cut people off from community,” the spokesperson said.

See what others are saying: (The Hill) (CNet)

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Etsy Sellers Strike Amid Increased Transaction Fees and Mandatory Offsite Advertising

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“What began as an experiment in marketplace democracy has come to resemble a dictatorial relationship between a faceless tech empire and millions of exploited, majority-women craftspeople,” an Etsy seller wrote in a petition. 


Thousands of Etsy Sellers Shut Down Shops

Roughly 15,000 Etsy sellers are closing up their online shops starting Monday in protest of several grievances they have with the platform, including a new fee increase.

Starting on Monday, transaction fees are getting boosted from 5% to 6.5% on the platform. CEO Josh Silverman sent a memo claiming that this hike will allow the company to “make significant investments in marketing, seller tools, and creating a world-class customer experience,” but sellers have been frustrated by the change. 

“Etsy’s last fee increase was in July 2018. If this new one goes through, our basic fees to use the platform will have more than doubled in less than four years,” seller Kristi Cassidy wrote in a petition calling for a strike. As of Monday morning, over 50,000 Etsy sellers, customers, and employees had signed the petition.

“These basic fees do not include additional fees for Offsite ads – which started during the first wave of the pandemic,” Cassidy continued. 

Offsite ads allow Etsy to advertise sellers’ products on other websites like Google. Sellers who make over $10,000 a year reportedly have no way of opting out of the program and Etsy takes at least 12% of sales generated through the promotions. 

“Etsy fees are an unpredictable expense that can take more than 20% of each transaction,” Cassidy wrote. “We have no control over how these ads are administered, or how much of our money is spent.”

Etsy became a pandemic success story as online shopping rose amid lockdowns. Many turned to the platform to purchase masks and other goods, prompting its stock, sales, and number of sellers to rise. 

“It’s really obnoxious to tell us sellers, ‘Hey, we made record profits last year and we’re gonna celebrate by raising your fees a whole bunch,’” Bella Stander, a maps and guidebooks publisher who sells on Etsy, told the Wall Street Journal.  

What Etsy Sellers Are Demanding

Currently, there are over five million sellers on Etsy. Cassidy hopes that if enough of them unite, the company will have to respond. 

“As individual crafters, makers and small businesspeople, we may be easy for a giant corporation like Etsy to take advantage of,” she wrote. “But as an organized front of people, determined to use our diverse skills and boundless creativity to win ourselves a fairer deal, Etsy won’t have such an easy time shoving us around.”

In the petition’s list of demands, it asks that Etsy cancel the transaction fee increase, allow sellers to opt out of offsite ads, and provide a transparent plan to crack down on resellers who take up space on the platform.

It also demanded that Etsy end its “Star Seller Program,” which impacts how sellers can interact with their buyers.

“Etsy was founded with a vision of ‘keeping commerce human’ by ‘democratizing access to entrepreneurship.’ As a result, people who have been marginalized in traditional retail economies — women, people of color, LGBTQ people, neurodivergent people, etc. — make up a significant proportion of Etsy’s sellers,” Cassidy wrote.

“But as Etsy has strayed further and further from its founding vision over the years, what began as an experiment in marketplace democracy has come to resemble a dictatorial relationship between a faceless tech empire and millions of exploited, majority-women craftspeople.”

In a statement to Yahoo Finance, an Etsy spokesperson claimed that sellers were the company’s “top priority.”

“We are always receptive to seller feedback and, in fact, the new fee structure will enable us to increase our investments in areas outlined in the petition, including marketing, customer support, and removing listings that don’t meet our policies,” the spokesperson said. “We are committed to providing great value for our 5.3 million sellers so they are able to grow their businesses while keeping Etsy a beloved, trusted, and thriving marketplace.”

The strike was a trending topic on Twitter Monday morning. Many sellers took to the social media site to pledge their support to the movement. 

Many sellers are urging buyers to refrain from using the site for the remainder of the week, which is how long the protest is currently scheduled to last.

See what others are saying: (The Wall Street Journal) (Yahoo Finance) (TechCrunch)

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