Meta Platforms Inc. criticized Apple Inc. for changing its App Store terms to take a portion of social-media advertising revenue, saying the iPhone maker was “undercutting others in the digital economy.”
The policy change, disclosed this week, requires users and advertisers to make an in-app purchase when they pay to “boost” posts in apps like TikTok and Meta’s Instagram. Apple takes a commission of as much as 30% on in-app purchases, meaning a company like Meta would lose a portion of its ad revenue to the iPhone maker.
Shares of Meta fell 3.4% during pre-market trading in New York on Wednesday after closing Tuesday at $137.5. The company’s stock is down 59% for the year to date.
“Apple previously said it didn’t take a share of developer advertising revenue, and now apparently changed its mind,” Meta, which also owns Facebook and WhatsApp, said in a statement Tuesday. “We remain committed to offering small businesses simple ways to run ads and grow their businesses on our apps.”
Apple, which is building its own advertising business, said that requiring an in-app purchase for boosts is just an extension of its existing policies — and that other apps already comply.
“For many years now, the App Store guidelines have been clear that the sale of digital goods and services within an app must use in-app purchase,” the company said in a 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 required. This has always been the case and there are many examples of apps that do it successfully.”
Other social media companies with the option to boost posts, including TikTok and Twitter Inc., also didn’t immediately respond to requests for comment.
According to Apple’s policy, apps for the sole purpose of letting marketers purchase ads and manage campaigns across different media — say, television and billboards, in addition to apps — aren’t required to give a cut to Apple. But “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 purchase,” the company said.
For instance, if an influencer pays Instagram to promote a personal post to more viewers via the iPhone app, Apple would take a cut, according to the new rules. The social media companies haven’t yet said how they will be complying with the change.
Social media companies are already reeling from the impact of recent privacy changes to Apple’s iOS software, which requires that companies ask users for explicit permission to gather data about them. Meta, which relies on such data to better target ads, has said that the change will trim $10 billion from this year’s revenue.
Still, the policy for boosts could be the first time Apple gets a cut of ad revenue directly. Apple has previously touted advertising as an area where it lets developers take in as much revenue as they want from their customers. Bloomberg