Apple’s New Ad Tax On The App Store Is A Direct Shot At Meta

Meta asserts that Apple’s new policy undermines its business. Here we are, just when I thought the relationship between Apple and Meta couldn’t become any more antagonistic. Apple quietly updated its App Store rules on Monday to require iOS developers to use in-app purchases — and pay Apple 30 percent — on “sales of ‘boosts’ for social media app posts.” This primarily affects Facebook and Instagram, where users can pay to promote their posts. Apple has never before directly taxed advertising in iOS apps. Meta is unhappy. Tom Channick, a spokesman for the company, sent the following statement to The Verge: “Apple continues to evolve its policies to expand its own business while undercutting competitors in the digital economy. Apple previously stated that it did not take a cut of developer ad revenue, but has changed its position. We remain committed to providing simple ways for small businesses to advertise on our apps and expand their operations.”

“Apple continues to modify its policies to expand its own business while undercutting competitors in the digital economy”

Paying to boost posts is a common feature of social apps like Twitter and TikTok, as well as Meta’s apps. Facebook and Instagram differ from Twitter, TikTok, and others in that they do not currently use Apple’s in-app purchase system for boosting posts. Apple reportedly pressured Facebook several years ago to begin routing these boosted post payments through the App Store, but Facebook resisted. (You can read more about this in this excellent Wall Street Journal article by Salvador Rodriguez.) However, Meta is correct in stating that Apple’s policy on paid boosts represents a public about-face. App Store head Phil Schiller testified in the Epic v. Apple antitrust trial last May that the company had never taken a cut of iOS developer ad revenue. That will no longer be the case moving forward. According to my discussions with Meta’s employees, the new policy should not have a significant effect on the business’s revenue. However, there is concern that Apple will eventually require the same rule for Meta’s standalone ads manager app due to the precedent set. Due to Apple’s current logic, this app is currently exempt from using in-app purchases for boosts, as the purchased advertisements are not displayed within the app. In a statement provided to The Verge, Apple spokesperson Peter Ajemian minimized the introduction of the new rule, stating that the App Store has always taken a cut of digital goods and services. Ajemian explained in his statement that In-App Purchase has been required for the sale of digital goods and services within an app for several years. “Boosting, which allows a user or organization to pay to expand the reach of a post or profile, is a digital service; therefore, In-App Purchase is required. This has always been the case, and there are numerous successful app examples.” This does not explain why Apple felt compelled to update its policy, but alas. Meta’s biggest advertisers won’t feel Apple’s latest squeeze. Respected ad industry analyst Eric Seufert predicts that those who purchase one-time boosts on Instagram and Facebook will be impacted the most, as they will have to pay more for the same level of distribution. Apple reduces the effectiveness of advertising spending for small businesses and influencers by inserting itself into the social media post-boosting process and charging a 30 percent fee. It is difficult to view Apple’s policy as anything other than another blatant attack on Meta, which has already lost more than $10 billion in advertising revenue due to the iPhone’s ad tracking prompt. Simultaneously, Apple is rapidly expanding its own advertising business by embedding ads in more parts of its ecosystem. Oh, and I forgot to mention that Apple will soon compete with Meta in the VR headset market.

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