Ahead of Apple looking to launch its own DSP, they are looking at other ways to capture additional ad revenue. In a highly contentious move, Apple amended its payment guidelines last week. The amendment requires all “promoted” or “boosted” social media posts to be treated as in-app purchases. Through this change, Apple now entitles itself to a 30% share of all revenue generated.
Apple’s app policy requires that any apps that sell ‘virtual goods’ leverage iPhone’s In-App Payment system. This system comes with the hefty service charge of 30%. Boosted social posts have fallen into a grey area over the years, with no clarification on what qualifies. This change allows Apple to enforce any charges they deem necessary.
While Twitter is already using this In-App Payment tool, the shift in terminology by Apple is not welcome news for other social media companies. In particular, Meta, who have been suffering financially for over a year now, due largely to Apple’s AppTracking Transparency (ATT) policy. Meta has consistently highlighted the impact that ATT has had on small businesses that rely on Facebook and Instagram to drive business.
The enforcement of this change will be interesting, as right now the policy only looks to target individual users or accounts, rather than traditional advertisers. This puts the target squarely on the small businesses that Meta is looking to protect. In an interview with The Verge last week, Meta spokesperson Tom Channick had this to say with regard to these changes:
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.
Tom Channick, Meta
New Twitter owner, Elon Musk, simply tweeted “30% is a lot” in response to this move.
This is not the first time that the 30% fee has been challenged by companies. In 2020, Epic Games, owners of the hugely successful game Fortnite, sued Apple over their App Store practices. Epic Games’ founder, Tim Sweeney, had previously challenged the imposed revenue split by Apple, but opted for a more aggressive approach in August 2020. Epic Games looked to bypass Apple’s fees for their game Fortnite, by changing the way players could make in-app purchases.
Apple picked up this change, the consequence seeing Fortnite being removed from the App Store. The result was Epic Games’ lawsuit against Apple. In the end, Judge Yvoone Gonzalez Rogers ruled in favour of Apple on 9 of the 10 counts put forward by Epic Games. However, Rogers ruled against Apple in regard to anti-steering, citing that Apple could not stop developers from informing its users of alternative payment options within apps.
While the result may not have gone the way Epic Games were hoping, seeing them appealing the ruling, the case has helped to highlight a number of contentious issues with Apple’s practices. Questions around Apple’s ownership and enforced usage of their App Store only have seen many call this anticompetitive, with a growing list of lawsuits highlighting this. Google is also experiencing something similar in regard to their app store, being fined $113m USD last week for not allowing third party payments within their Play Store.
Apple claims that the 30% fee is designed to cover all app reviews to ensure user privacy is protected. However, 30% is a very high amount, likely far higher than needed for simple app reviews. However, this is operating within an environment that is regulated almost exclusively by Apple, a monopoly able to establish its own processes and fees. With many countries looking for increased regulation of big tech, this is yet another situation that could highlight the importance of a governing body that can work for everyone’s interest, just simply one side.