Apple’s new App Store ad tax is aimed directly at Meta

Just when I thought the relationship between Apple and Meta couldn’t get any more hostile, here we are.

On Monday, Apple quietly updated its App Store rules to require iOS developers to use in-app purchases – and thus give Apple 30% – on “sales of ‘boosts’ for posts in a media app. social”. This primarily affects Facebook and Instagram, which allow people to pay to increase the reach of their posts. This is the first time Apple has directly taxed advertising in iOS apps.

Meta, of course, is not happy. Company spokesman Tom Channick sent The edge the following statement: “Apple continues to evolve its policies to grow its own business while undermining others in the digital economy. Apple has previously said it doesn’t take a share of ad revenue from developers and has now apparently changed its mind. We remain committed to providing easy ways for small businesses to advertise and grow their business on our apps. »

“Apple continues to evolve policies to grow its own business while undermining others in the digital economy”

Paying to boost posts is a common feature not only for Meta apps, but also for other social apps like Twitter and TikTok. The difference for Facebook and Instagram is that they don’t currently use Apple’s in-app purchase system to boost posts, unlike Twitter, TikTok and others. I’m told that several years ago Apple pressured Facebook to start routing these boosted post-payments through the App Store, and Facebook resisted. (You can read more about it in this great story by Salvador Rodriguez on The Wall Street Journal.)

Still, Meta is right that this policy on paid boosts is, at least publicly, a flip-flop by Apple. Last May, during the Epic vs. Apple antitrust lawsuit, App Store boss Phil Schiller said the company never took a cut of ad revenue from iOS developers. In the future, this will no longer be true.

Based on my conversations with Meta employees, the new policy should not have a significant impact on the company’s revenue. But the precedent set raises concerns that Apple will eventually require the same rule for Meta’s standalone ad management application. Due to current Apple logic, this app is currently exempt from using in-app purchases for boosts, as purchased ads are not displayed within the app itself.

In a statement shared with The edgeApple spokesman Peter Ajemian played down the significance of the new rule’s introduction, saying the App Store has long taken a cut in digital goods and services.

“For many years now, App Store guidelines have made it clear that the sale of digital goods and services within an app must use in-app purchase,” Ajemian said in the statement. “Boosting, which allows an individual or organization to pay to increase the reach of a post or profile, is a digital service – so of course in-app purchase is necessary. It has always been the cases and there are many examples of applications that do this successfully.

(That doesn’t explain why Apple felt the need to update its policy, but alas.)

Meta’s biggest advertisers won’t feel Apple’s latest squeeze. According to Eric Seufert, a respected advertising industry analyst, it will be individuals who buy one-time boosts on Instagram and Facebook who will be the most affected since they will have to pay more for the same level of distribution. “By inserting itself into the process of promoting social media posts and charging a 30% fee, Apple is reducing the effectiveness of ad spend for small businesses and influencers.”

I have no in-depth knowledge of Apple’s policy intent (please contact us if you have!), but it’s hard to see it as anything other than another blatant attack on Meta, which has already lost over $10 billion in advertising. revenue due to iPhone ad tracking prompt. At the same time, Apple is rapidly growing its own advertising business, serving ads in several parts of its ecosystem.

Oh, and did I mention that Apple is set to compete with Meta in VR headsets?

Update at 7:33 p.m. ET: Added Apple’s response.


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