Facebook announced on Friday that Apple has rejected its request to waive a 30% commission tax fee, which the iPhone maker charges apps on its devices.
The request coincides with Facebook’s (FB) launch of a new events feature for businesses to earn money from online events. The feature will allow page owners to create an online event, set a price, promote the event, collect payment and host the event, all in one place.
The tool is part of Facebook’s initiative to help small and medium-sized businesses (SMBs) bring their products to customers online as social distancing mandates are still in place during the coronavirus pandemic. As part of the launch, the social media platform will not collect any fees from paid online events for at least the next year, the company said.
“We asked Apple (AAPL) 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,” said Facebook App head Fidji Simo in a blog. “Unfortunately, they dismissed both our requests and SMBs will only be paid 70% of their hard-earned revenue.”
While Facebook is waiving fees for paid online events, it will make other fees clear in the product, the company added.
As a result, for transactions on the web and on Android in countries where the social media platform has rolled out Facebook Pay, small businesses will keep 100% of the revenue they generate from paid online events.
Page owners can host events on Facebook Live to reach broad audiences. Facebook is also testing paid events with Messenger Rooms for more personal and interactive meetings, it said.
“In testing, we’ve seen businesses use Facebook to host expert talks, trivia events, podcast recordings, boxing matches, cooking classes, intimate meet-and-greets, fitness classes and more,” Simo added.
Shares in Facebook have surged 27% this year as the social media network has been benefiting from a user boom during the coronavirus pandemic, which accelerated the need for remote social engagement as well as for online business and working tools.
Looking ahead, the $287.81 average analyst price target implies shares could advance more than 10% in the coming 12 months.
Rosenblatt Securites analyst Mark Zgutowicz recently reiterated a Buy rating on the stock with a $325 price target (24% upside potential) as the social media platform is “paddling out to a big holiday wave”.
“While stimulus spend fatigue may soon set in, Facebook is well-aligned to the now everything e-commerce world and looks to be walking into a can’t miss holiday compare that perhaps only Apple IDFA [Identifier for Advertisers] could disrupt,” Zgutowicz wrote in a note to investors. “Further, while potentially not as large as the first consumer stimulus, we suspect #2 will be in route preholiday spending, setting up a potentially big 4Q against an enticing compare.”
Overall Wall Street analysts have a bullish call on Facebook. The Strong Buy consensus boasts 30 Buy ratings versus 4 Hold ratings and 1 Sell rating. (See Facebook stock analysis on TipRanks).
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