Mark Zuckerberg takes a few jabs at Apple for allegedly “suffocating innovation” with its platform regulations

When discussing his intentions for the metaverse during today’s keynote speech at the company’s Facebook Connect 2021 event, Facebook (aka “Meta”) CEO Mark Zuckerberg took many thinly disguised punches at Apple and the wider app industry. He specifically blamed app platforms and their accompanying fees for “suffocating innovation,” while also defending Facebook’s decision to keep some of its own prices higher as it invests more in its developing virtual reality ecosystem and Oculus Quest Store.

His comments come in the wake of Apple’s recent app privacy reforms, which have hurt Facebook’s ad revenue. With the introduction of App Following Transparency, Apple has given users the ability to prevent apps from tracking them across other apps and websites. However, Facebook has conceded that this shift has resulted in a decrease in income.

Apple

Now, Facebook sees the value in partnering with Oculus to build up its own app platform in order to provide a new income stream — one in which the platform benefits rather than the developer having to pay commissions. And one whose business cannot be destroyed by the vagaries of a competitor’s strategic adjustment.

Zuckerberg agreed that the moment has come to make this shift, noting that “creating things isn’t enough” in recent years.

“We also need to assist in the development of ecosystems so that millions of individuals with a stake in the future may be rewarded for their efforts and benefit as the tide rises — not just as consumers, but as producers and developers,” he added. “This moment has also been humbling since, despite our size, we’ve learnt what it’s like to develop for other platforms. And living under their norms has had a significant impact on my views on the IT business,” Zuckerberg concluded.

“Most importantly, I’ve come to feel that a lack of choice and exorbitant fees are suffocating creativity, preventing individuals from creating new products, and slowing down the entire internet economy,” he continued.

These remarks appear to be directed at Apple and Google, whose platforms Facebook’s main products are mostly based on. In-app purchases, such as when users subscribe to creators, buy badges, or tip streamers directly, need Facebook to pay fees to the app stores. While both Apple and Google have reduced their fees for smaller companies, media providers, and subscription applications, the normal split (platform/developer) remains at 70/30.

Facebook has also been precluded from developing other products that may have raised income, such as its newest gaming service, due to App Store limitations.

Last year, when it introduced Facebook Gaming for iOS without games, the firm attacked Apple’s regulations. Apple doesn’t allow applications that incorporate other apps or games because it would reduce the company’s ability to make money from third-party developers. As a result, instead of playing mini-games like Android users, Facebook Gaming iOS users could only watch streams.

The true fear for Facebook’s future is that its ad income may be jeopardised by platform policy changes that are outside its control.

These earnings have allowed Facebook to invest in other areas while keeping its programmes free, according to Zuckerberg.

“We provide our creator and commerce tools for free or for a little price in order to encourage as much creativity and commerce as possible.” And it’s worked so far. “Our products are loved by billions of people,” he said. “On our platform, there are hundreds of millions of enterprises.”

According to Zuckerberg, the business now aims to follow the same strategy to building its metaverse ecosystem, either subsidising or selling gadgets at cost to make them more widely available to customers. In contrast to Apple’s App Store, Facebook claims it would permit sideloading and connection to PCs to give customers and developers more options rather than lock them within its platform. (Of course, many creators will select the Quest Store for the purpose of discovery, which is why Facebook is confident in making this claim.)

He also stated that, if feasible, Facebook will keep developer and creative service prices low. However, when he drew out the company’s next business model, Zuckerberg cautioned that this wouldn’t always be the case. Some costs will stay higher due to the company’s large investment in this new environment, he added.

“We’ll need to maintain some costs higher for a period of time to ensure that we don’t lose too much money on this programme overall,” Zuckerberg added. “After all, while a rising number of developers are now successful, we plan to invest many billions of dollars in the metaverse for many years before it achieves scale.” Our ambition is that, if we all work together, the metaverse will reach a billion people, host hundreds of billions of dollars in digital commerce, and provide jobs for millions of artists and developers within the next decade.”

In other words, Facebook’s strategy is to emulate Apple by monetizing developer income on a large scale.

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