New Apple app store guidelines quietly released this week require promoted or boosted posts on social media to be treated as in-app purchases. The outcome of this is that Apple is then entitled to 30% of all the revenue generated from them.
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What has Apple said about boosted posts?
In article 3.1.3(g) Apple has stated that “Digital purchases for content that is experienced or consumed in an app, including buying advertisements to display in the same app (such as sales of “boosts” for posts in a social media app) must use in-app purchases.”
Image Credit – Apple
Additionally, in an email to Gizmodo, Apple spokesperson Peter Ajemian added “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 required”
How has Meta responded to the news?
Meta’s company spokesperson Tom Channick said to The Verve “Apple continues to evolve its policies to grow their own business while undercutting others in the digital economy. Apple previously said it didn’t take a share of developer advertising revenue, and now apparently changed its mind. We remain committed to offering small businesses simple ways to run ads and grow their businesses on our apps.”
Apple and Meta were reportedly in talks back in August over the categorisation of “boosted” posts. As we can see this was never resolved with Apple claiming they were like any in-app purchase, whereas Meta claimed they were ads. Facebook considers a boosted post an ad on the basis that boosted posts require a budget to be shared with a wider audience.
A boosted post is typically a post which Facebook will promote to a larger audience, which is great for maximising visibility and growing your audience. A traditional ad on Facebook gives you far greater control including ad types, campaigns etc.
Meta has also filed complaints with the FTC arguing that ATT (AppTrackingTransparency) is an anti-competitive policy. This policy has reportedly cost Meta an estimated $10bn in lost revenue in a year. ATT enabled users to choose which apps were allowed to track their behaviour across other apps. If you opted to not be tracked, then this stopped apps from collecting an ID number. This had a significant impact on app downloads. If you were using ATT, then the tracker would not note that you downloaded the app in response to an ad on a given social network. This has helped Apple which is now able to sell businesses advertising space and claim the full profits for themselves.
It is worth noting that not only has Meta lost revenue due to ATT, but more than $65bn has also been wiped off its market value after Meta reported in Q3 that its profits halved. Meta’s profits have dropped due to the recession and businesses spending less on Facebook advertising, as well as stiff competition from TikTok.
What about other companies?
Before this change came in, some apps like Twitter and TikTok were already using in-app payments for their promoted posts, and it can be sensed that the new guidelines are intended to target Meta.
This isn’t the first time Apple has been questioned over the 30% in-app fees. In 2020, they were embroiled in a battle with Epic Games when their Fortnite game offered V-bucks (the game’s in-app currency to buy items for their characters) at a discount. You could go through the Apple store and buy 1000 V-bucks for $9.99 or if you went direct to Epic, 1000 V-bucks would cost you $7.99. Apple then removed Fortnite from its app store. Apple won the case and was awarded the 30% commissions that were lost, however, they had to allow app developers to inform their users of other ways to pay in the app.
What do we think?
Firstly, while Apple and Meta continue to debate the issue, we wouldn’t be surprised if this issue continues to drag on for years with the potential for it to end up in a court of law.
Another thing we can see is that this issue has consequences for businesses that advertise on Facebook. Facebook will not want to lose 30% of its boosted post revenue, and we fear this cost could be passed on to advertisers. As said earlier due to ATT Facebook has already lost an estimated $10bn in profits and this new rule will likely see Facebook losing billions more in revenue.
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