Expedia chairman attacks Apple's 'disgusting' 30% commission fee

Posted:
in iOS edited May 23
Barry Diller, the chairman of IAC and Expedia, spoke against Apple's App Store fee on Friday, accusing the iPhone maker of overcharging companies with its 30% App Store fee.

Barry Diller (via IAC)
Barry Diller (via IAC)


An interview with Diller, chairman of the two companies, featured remarks attacking Apple and its policies on Friday. According to the chairman, companies that exist in the App Store are "overcharged in a disgusting manner."

"The idea that they actually justify it by saying We spend all this money protecting our little App Store. I mean, it's criminal," said Diller speaking to CNBC. "Well, it will be criminal."

Diller complained about Apple's "quasi-monopoly," and compared Apple's 30% fee to a credit card company, which would take a fee of around 2% on transactions. "It's irrational, 30%. I mean, it makes no sense," he insisted.

"Match, little Match.com, pays $500 million a year to Apple top go through their store," Diller continued. "Does that seem rational to you?"

The chairman refers to the dating site that span out from IAC in 2020. Match Group testified against Apple at a Senate hearing in April, accusing it of anticompetitive conduct in being a supposed gatekeeper of the App Store.

Expedia reportedly takes between 15% and 25% of a consumer's hotel reservation transaction for itself.

Further into the interview, Diller proposed that Apple be regulated to preserve competition, but not necessarily to be broken up."Regulation, proper regulation, makes sense" to him, insisting "when you have size and power, you've got to have regulation."

The interview took place ahead of the testimony of Apple CEO Tim Cook, who faced questioning about the App Store and Apple as a company in its lawsuit against Epic Games.

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Comments

  • Reply 1 of 69
    tmaytmay Posts: 5,498member
    Oh dear...

    Barry Diller also owns Expedia.com

    "HOW DOES EXPEDIA MAKE MONEY?

    Expedia makes its money in a few different ways. The largest of those ways is through hotel bookings, which the company is mainly known for allowing users to do. A whopping 70% of Expedia’s revenue is generated from hoteliers (people who own or manage hotels). The way that Expedia get’s here in the first place is through a simple supply and demand strategy. Expedia buys up a large number of rooms at a discounted cost and then advertises the bookings through their website as the cheapest you’ll find in the market.

    An example would be Expedia pushing for a 7-night all-inclusive trip to a remote island in the Caribbean. Expedia reaches out to a hotel on the island and buys up a block of, say, 100 rooms at a discounted price (because everything is cheaper in bulk). Expedia than buys a large number of plane tickets going to that island, usually at little to no discount. Then Expedia offers the deal to 2 people at a price like $1,700, which is most likely going to be at least marginally cheaper than it would through other sites. People get a good deal and Expedia is able to fill more plane seats and hotel rooms. And Expedia has only paid a part of what they charge the people for the service, meaning they profit from every transaction.

    Another way that Expedia makes money is through commission fees. Because Expedia always offers the lowest price (or at least a lower price than the hotel will offer), people will be far more willing to actually take a trip in the first place. So hoteliers are far more inclined to sell rooms to Expedia because some money is better than no money. The commission fees are usually between 20% and 25%.

    An example of the way that this works is that if a hotel sells a room (in this example we will use just one room, but in reality, it would be far more) to Expedia for $100 and Expedia gets the room booked, then Expedia will collect that $100 and pay the hotel $75 (if the fee is 25%). They will say that that $25 goes towards customer service, marketing, and various other business functions.

    HIDDEN FEES?

    Expedia makes a little on the side through fees. These fees aren’t hidden, but they’re also not in your face. They can get away with this because they don’t charge users a fee to actually book the hotel, or whatever it is that they are booking, in the first place. These fees include:

    • Cancellation fees when canceling a booking more than 24 hours after booking
    • Fees on some airlines for overweight baggage
    • Wi-Fi fees in some hotels
    • Off resort excursion fees
    • Fees for parking at particular venues
    • Meal fees at hotels
    • Fees at hotels for things like spas, gyms, and pools.

    HOW DOES EXPEDIA GET ITS DATA?

    Does Expedia have full-time employees whose sole responsibility is to troll the internet to find hotels that they can buy rooms from, and then contact those hotels and reach an agreement for those rooms? Definitely not. Expedia has a third party sourcing organization that does all that for them. This method is called “Merchant Inventory.” They have local contractors, essentially the ‘boots on the ground’ people that are collecting data about hotels in different areas as well.

    I'm thinking that this guy needs to have his business model exposed...

    edited May 22 pulseimagesfotoformatAlexMorelloBeatsmwhitedv8orS12rob53uraharaScot1
  • Reply 2 of 69
    JFC_PAJFC_PA Posts: 645member
    Then he can remove his apps from the Apple platform and purchase one of the hundreds of other cellphones available for his own use. 

    Problem solved. 
    pulseimagesBeatsmwhitegenovelleGRKosturdewmeuraharaKTRp-dogzeus423
  • Reply 3 of 69
    Dave CummingsDave Cummings Posts: 37unconfirmed, member
    It’s funny how they like to call Apple out about the 30%, acting like the other app stores don’t do the EXACT same thing 
    pulseimagesBeatsGRKosturrob53dewmeJFC_PAlkruppp-dogmattinozzeus423
  • Reply 4 of 69
    pulseimagespulseimages Posts: 436member
    The hypocrites are coming out of the woodwork in droves. Match.com is hardly small, it owns and operates the largest global portfolio of popular online dating services including TinderMatch.comMeeticOkCupidHingePlentyOfFishShip, and OurTime totalling over 45 global dating companies. They had total revenue of over $2 Billion in 2019. 
    rob53dewmeuraharaAnilu_777Alex_Vkillroyaderutterwatto_cobra
  • Reply 5 of 69
    I also find Expedia fees for everything over priced as well
    rob53uraharaBeatsAnilu_777killroyikirwatto_cobra
  • Reply 6 of 69
    tmaytmay Posts: 5,498member
    The hypocrites are coming out of the woodwork in droves. Match.com is hardly small, it owns and operates the largest global portfolio of popular online dating services including TinderMatch.comMeeticOkCupidHingePlentyOfFishShip, and OurTime totalling over 45 global dating companies. They had total revenue of over $2 Billion in 2019. 
    https://www.wired.com/2011/12/match-iphone-app-pulled/

    Ten years later, and Match.com users still have the option of using Apple's app for subscriptions. One would think that some dating site users actively avoid subscribing through Match.com's website, hence Apple's well deserved commission fees.
    Beatsdocbburkkillroywatto_cobra
  • Reply 7 of 69
    JapheyJaphey Posts: 988member
    “Little App Store”…lol

    How brave of him to ride the coattails of those who actually had the guts to take a stand. 
    Beatszeus423killroyikirwatto_cobra
  • Reply 8 of 69
    It’s funny how they like to call Apple out about the 30%, acting like the other app stores don’t do the EXACT same thing 
    Exactly, the other app download stores on android charge the exact same 30% (because all they know is to copy Apple), yet where is Diller’s outrage, why isn’t he calling those stores’ commissions “disgusting”?

    Why isn’t he calling Expedia’s 20%-25% commission “disgusting”?

    Someone should suggest to the government to investigate Dillers’ business’ “disgusting” commission structures.
    GRKostururaharaBeatsdocbburkzeus423killroyaderutterstevenozikirjony0
  • Reply 9 of 69
    If it is not rational for Diller to pay $500 million in the market, then he should not be doing it.
    Beatszeus423killroywatto_cobra
  • Reply 10 of 69
    What on earth is Expedia? I actually don’t know because I mostly buy / book stuff directly. Why pay the middlemen?

    IMO, most actors popping up in connexion with this case are actually redundant. That is, I personally wouldn’t even notice their absence were they to be removed from the App Store. I do admit I’m the odd one out, though, because I don’t game (on mobile) and mostly use stock apps, with some web shortcuts when needed, - almost as one did with the original iPhone back in the day. I prefer to do my stuff on the Mac, and I’m not big on third-parties there, either. If there’s a website for something, I’ll stick to it.
    edited May 22 mwhitebaconstangAlex_Vkillroystevenozjony0watto_cobra
  • Reply 11 of 69
    darkpawdarkpaw Posts: 212member
    Diller ... compared Apple's 30% fee to a credit card company, which would take a fee of around 2% on transactions. "It's irrational, 30%. I mean, it makes no sense," he insisted.
    The credit card company takes 2% because they're only doing the transaction. What about all the other stuff, like hosting the apps, marketing, employing people to review apps, paying for bandwidth, paying for R&D, paying for the tools the developers use? Add it all up, and it's not as though 2% would cover it.

    This guys should've kept quiet, because now that I'm reading about Expedia's business model and how they make their money, I'm not gonna use them.
    AlexMorellotmayGRKosturgregoriusmuraharaBeatsdocbburkbaconstangDogpersonkillroy
  • Reply 12 of 69
    I wasn’t sure I bought the Microsoft influence in this, but this is totally a Microsoft shill in my book. What a sham. 

    Who is the judge? Is there a mailing address for them? Can we start writing advocacy letters on Apple’s behalf? Maybe Apple Insider needs to be posting that address. 
    AlexMorellotmayBeatszeus423killroyjony0watto_cobra
  • Reply 13 of 69
    bloggerblogbloggerblog Posts: 2,111member
    If Match pays Apple $500M it means that Match is making over $1.5B through the Apple store.
    Using his logic, one can criticize Match.com for “overcharging” their customers.
    Barry is just another sour grapes CEO who is unable to develop a strong platform that produces high profits  
    AlexMorelloBeatszeus423killroyjony0watto_cobra
  • Reply 14 of 69
    genovellegenovelle Posts: 1,297member
    Barry Diller, the chairman of IAC and Expedia, spoke against Apple's App Store fee on Friday, accusing the iPhone maker of overcharging companies with its 30% App Store fee.

    Barry Diller (via IAC)
    Barry Diller (via IAC)


    An interview with Diller, chairman of the two companies, featured remarks attacking Apple and its policies on Friday. According to the chairman, companies that exist in the App Store are "overcharged in a disgusting manner."

    "The idea that they actually justify it by saying We spend all this money protecting our little App Store. I mean, it's criminal," said Diller speaking to CNBC. "Well, it will be criminal."

    Diller complained about Apple's "quasi-monopoly," and compared Apple's 30% fee to a credit card company, which would take a fee of around 2% on transactions. "It's irrational, 30%. I mean, it makes no sense," he insisted.

    "Match, little Match.com, pays $500 million a year to Apple top go through their store," Diller continued. "Does that seem rational to you?"

    The chairman refers to the dating site that span out from IAC in 2020. Match Group testified against Apple at a Senate hearing in April, accusing it of anticompetitive conduct in being a supposed gatekeeper of the App Store.

    Further into the interview, Diller proposed that Apple be regulated to preserve competition, but not necessarily to be broken up."Regulation, proper regulation, makes sense" to him, insisting "when you have size and power, you've got to have regulation."

    The interview took place ahead of the testimony of Apple CEO Tim Cook, who faced questioning about the App Store and Apple as a company in its lawsuit against Epic Games.

    Stay on top of all Apple news right from your HomePod. Say, "Hey, Siri, play AppleInsider," and you'll get latest AppleInsider Podcast. Or ask your HomePod mini for "AppleInsider Daily" instead and you'll hear a fast update direct from our news team. And, if you're interested in Apple-centric home automation, say "Hey, Siri, play HomeKit Insider," and you'll be listening to our newest specialized podcast in moments.
    Where did the customer come from. Apple!  Don’t use an app signup on your site and have a web app. These people are real clowns
    AlexMorellouraharatmayBeatszeus423killroyaderutterjony0watto_cobra
  • Reply 15 of 69
    pmasterpmaster Posts: 10member
    This is so funny….kettle calling the pot black. 

    I’m in the hotel business, and I guess it’s not criminal when they charge us 30% commissions for the hotel rooms. Some market they earn up to 50% commissions on each hotel reservation. 
    Beatsdocbburkmattinozzeus423baconstangDogpersonAlex_Vkillroyaderutterrandominternetperson
  • Reply 16 of 69
    JFC_PAJFC_PA Posts: 645member
    pmaster said:
    This is so funny….kettle calling the pot black. 

    I’m in the hotel business, and I guess it’s not criminal when they charge us 30% commissions for the hotel rooms. Some market they earn up to 50% commissions on each hotel reservation. 
    Which is why I try and book direct whoever possible. Especially at smaller operations. 
    BeatspmasterDogpersonkillroybloggerblogjony0watto_cobra
  • Reply 17 of 69
    BeatsBeats Posts: 2,642member
    pmaster said:
    This is so funny….kettle calling the pot black. 

    I’m in the hotel business, and I guess it’s not criminal when they charge us 30% commissions for the hotel rooms. Some market they earn up to 50% commissions on each hotel reservation. 

    Is there a way for people like you to speak up against him here?!
    pmasterkillroy
  • Reply 18 of 69
    lorca2770lorca2770 Posts: 36member

    Goodbye Expedia and all its sister and dependent companies, Tribago, etc
    Did you guys know that the airlines are trying to avoid those parasites with better prices. Check it out

    zeus423BeatsAlex_Vkillroyikirwatto_cobra
  • Reply 19 of 69
    rasoraso Posts: 2member
    Shows you how little he knows about his own business. Since the Expedia app sells physical goods/services it can use it’s own payments methods and pay nothing other than the $99/year developer fee to Apple.

    What would happen if the hotels on Expedia put messages on their pages that said call us directly and save 30%.
    docbburk9secondkox2pmastertmayzeus423BeatsbaconstangapplguyAlex_Vhydrogen
  • Reply 20 of 69
    It's hard to understand what the subtext of all this criticism is. I almost get the sense that these companies that are piling on Apple might suspect that Apple is going to lose its lawsuit. Or, they somehow believe that all this complaining is actually going to help Apple lose.
    baconstangAlexMorellowatto_cobra
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