Apple's new ad tax on the App Store is a clear jab at Meta
Recent modifications to Apple's App Store policies have yet again an impact on Facebook's ad business.
The new rule, which went into effect on Monday, states that businesses like Meta, the owner of Facebook and Instagram, are permitted to provide apps that let users purchase advertising campaigns in specific apps without using Apple's payment system. However, it views purchasing an advertisement in a social media app as a digital purchase from which Apple retains a 30% cut.
Meta wasn't happy with the change. A Meta spokesman told CNBC that Apple 'continues to change its policies to build their own business while undercutting others in the digital market.'
The incident is the most recent clash between Apple and businesses like Meta, which believe that Apple wields excessive control over mobile distribution and the constantly expanding and altering regulations of the App Store, the only place where programmes can be downloaded for iPhones.
Apple and Meta have been at odds for years, but it just recently become more acrimonious after Apple added App Tracking Transparency to the iPhone operating system. The privacy option enables users to refuse to provide an individual device ID that can be used to measure ad performance to app developers like Meta. According to Meta, the adjustment might cost it $10 billion this year.
The two companies now appear prepared to compete in the consumer electronics market after Meta revealed the Quest Pro headgear and Apple has been working on a rival VR headset for years that may debut next year.
According to Apple, the company already thought that social boosts were the kind of digital purchase that required Apple in-app purchases before the new rule was announced. Therefore, the rule is more of a clarification than a new restriction, the company told CNBC.
According to an Apple official speaking to CNBC, 'the App Store criteria have been clear for many years now that the sale of digital products and services within an app must employ In-App Purchase.' 'Being a digital business, boosting, which enables an individual or organisation to pay to improve the reach of a post or profile, inevitably necessitates an in-app purchase. This has always been the case, and there are several instances of applications that accomplish it well.'
According to The Wall Street Journal, Meta, when it was still Facebook, haggled with Apple about social media boosts and whether they would be included by its regulations on digital sales because this particular restriction has long been divisive.
Several social networking companies provide boosting functions. However, the majority already make advantage of Apple's in-app purchase feature, which lists promoted posts on Apple's App Store for $9.99. TikTok also offers in-app purchases for the sale of coins, the money used to promote posts.
According to Meta, Apple's latest explanation that it takes a cut of all ad revenue, not just app sales, goes too far. According to Meta, Apple executives have previously stated that they don't take a percentage of advertisements, some of which were produced as part of the Epic Games trial over App Store policies.
'Apple previously stated that it didn't take a cut of developer advertising money, but it suddenly seems to have modified its position. We're still dedicated to giving small businesses easy methods to use our apps to serve ads and expand their operations 'CNBC was told by a Meta spokeswoman.
Not every advertisement that is seen through the Facebook or Instagram applications must be paid for by Apple. However, according to The Verge, which originally reported Meta's complaint, the company obviously feels targeted by Apple's growing control over its platforms and is concerned that the firm would claim that it is entitled to a share of Meta's overall ad revenues through its advertisements manager software.
The size of the boost market is unknown. Most large advertisers purchase ads using specialised portals or apps. The creator of Mobile Dev Memo and industry observer Eric Seufert stated on Monday that he believes it represents a 'negligible proportion of income' for the social media businesses.