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

Barry Diller (via IAC)

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.

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.

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.

Follow AppleInsider on Google News

69 Comments

tmay

said about 2 years ago

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...

JFC_PA

said about 2 years ago

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.

Dave Cummings

said about 2 years ago

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

pulseimages

said about 2 years ago

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 Tinder, Match.com, Meetic, OkCupid, Hinge, PlentyOfFish, Ship, and OurTime totalling over 45 global dating companies. They had total revenue of over $2 Billion in 2019.