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Understanding Meta’s Decision to Pass on the Apple Tax to Advertisers on Facebook and Instagram
A recent announcement by Meta, the parent company of Facebook and Instagram, reveals their intention to pass on Apple’s 30% service charge to its customers. This decision is seen as Meta’s attempt to leverage advertiser outrage in its ongoing battle with Apple over in-app purchase fees.
The Pay-to-Boost Option
Meta had been finding ways to circumvent Apple’s rules regarding in-app purchases by offering a pay-to-boost option for advertisers. However, due to increasing pressure from Apple, Meta now faces a choice: comply with Apple’s guidelines or remove boosted posts from its apps. In order to continue offering the pay-to-boost option, Meta has decided to increase the cost of in-app purchases, thereby passing on the additional charges to its advertisers.
The Impact on Advertisers
Advertisers who wish to avoid the upcharge have the option of paying to boost posts through the web versions of Facebook and Instagram. However, Meta recognizes that many customers prefer the convenience of in-app purchases, especially on Apple devices. As a result, advertisers who choose this option will now have to pay more for the privilege.
The decision to raise prices for iOS boosts is part of Meta’s larger strategy to challenge Apple’s dominance in the iOS app economy. Meta, along with other tech giants like Epic Games, Spotify, and Match, aims to offer its own payment systems in their respective apps, rather than being obligated to use Apple’s in-app purchases, which come with a 30% commission on sales. By passing on Apple’s 30% charge to small business advertisers, Meta hopes to gather more support in its ongoing battle with Apple.
Changes in Payment and Availability
Shifting to Apple’s in-app purchases means that advertisers will now have to pay upfront for boosted posts, instead of after they have run. Advertisers will need to add prepaid funds to their accounts, which will be subject to the 30% fee. However, adding funds from the web will not incur this fee. Initially, these changes will only apply to Meta’s apps in the U.S., with plans to expand to other markets later in the year.
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The Meta-Apple Conflict
The conflict between Meta and Apple has been escalating as Apple has made strides in its advertising business, directly impacting Meta’s revenue. The introduction of App Tracking Transparency, which allows users to opt out of app tracking, has resulted in Meta losing market share as Apple’s advertising business has grown. Meta has consistently voiced concerns that Apple’s policies would negatively impact its ad revenues, and has been pushing for changes in how Apple operates. Despite these challenges, Meta has recently rebounded, reporting significant profit growth and announcing its first-ever dividend.
In addition to its battle with Apple, Meta has also criticized Apple for its compliance with the new EU regulation, the Digital Markets Act. Meta’s CEO, Mark Zuckerberg, has expressed skepticism about developers opting into Apple’s DMA rules, deeming them “so onerous.”
Apple has responded to Meta’s criticisms by stating that the App Store has always required in-app purchases for digital goods and services. Apple asserts that it has worked with Meta to provide them with sufficient time to comply with its guidelines.
