Apple’s 30% Service Fee on Meta Ad Boosting
It's no secret that Meta has come to dominate the media platform scene.
In 2020, the Federal Trade Commission even filed a lawsuit against Meta, accusing it of acquiring a “monopoly” through anti-competitive practices, such as purchasing Instagram and WhatsApp.
But just last week, Apple set a new precedent for anti-competition in iOS apps—which stands to hurt more than just large tech competitors.
Understanding Apple's New Policy
Pedro Pavón, Meta’s Global Director of Monetization of Ads Privacy and Fairness, took matters into his own hands via Threads (@flasheeto) to explain Apple’s new policy and its implications for users.
Boosted posts, which are ads created from pre-existing posts on user profiles (on Facebook and Instagram), have become a goldmine for small businesses.
These businesses rely heavily on post-boosting as a lucrative form of advertising.
However, Apple’s new policy throws a wrench in the works: businesses boosting posts on the Facebook or Instagram iOS apps must now pay a 30% additional fee straight to Apple, thanks to their changing in-app payment rules.
How Small Businesses Can Avoid the Fee
This fee can be avoided by boosting posts directly on Facebook.com or Instagram.com on a computer or mobile web browser, but the inconvenience is clear.
Apple is playing a dangerous game, using privacy as a pretense to gain unfair advantages in the ad industry.
The United States Department of Justice recently echoed Pavón’s concerns, stating, "Apple wraps itself in a cloak of privacy, security, and consumer preferences to justify its anti-competitive conduct.”
Privacy Washing and Its Impact
This tactic, known as privacy washing, is evident in Apple’s App Tracking Transparency requirements, which force every iOS app competing with Apple to prompt users with a rigid, all-or-nothing choice about whether the app can access user data to show personalized ads.
Yet, Apple does not hold its own apps to the same standard, even though it still shows personalized advertising to users on some of its apps. That’s simply unfair.
Anti-Steering Rules and Their Consequences
Moreover, Apple has imposed anti-steering rules, preventing apps from linking to cheaper non-Apple payment options.
This not only makes it much more difficult for apps to keep costs down for their users but also hinders their ability to build their own in-app purchasing tools.
As a result, Apple forces users onto its in-app payment system, allowing them to collect massive fees from apps. This unfair practice is a blow to the affected apps and their users.
Expert Insights from Pedro Pavón
“It’s clear to me,” says Pavón in a Thread, “that Apple is creating a highly-controlled system that limits user choices, increases costs for users and app developers, and reduces competition for Apple.”
The Future of Fair Competition in the Digital Marketplace
In an era where tech giants like Meta are scrutinized for anti-competitive practices, Apple’s actions raise significant concerns about the future of fair competition and user choice in the digital marketplace.
The potential for these actions to tip the scales further in favor of monopolistic giants is a cause for apprehension.
Apple’s momentum, fueled by its new service fee, began increasing as the company expanded to advertisers worldwide on July 1, 2024.
Will the scales of justice balance, or will they tip further? Only time will tell.
FAQs
What is Apple's new 30% service fee on Meta ad boosting?
Apple's new policy imposes a 30% fee on businesses boosting posts via the Facebook or Instagram iOS apps. This fee is due to changes in Apple's in-app payment rules, which require businesses to pay Apple for transactions made through their apps.
How can small businesses avoid paying Apple's 30% fee on boosted posts?
Small businesses can avoid the 30% fee by boosting posts directly on Facebook.com or Instagram.com via a computer or mobile web browser. This method bypasses the in-app payment system imposed by Apple.
What is privacy washing, and how is Apple accused of using it?
Privacy washing refers to the practice of using privacy concerns as a pretext for anti-competitive behavior. Apple is accused of privacy washing through its App Tracking Transparency requirements, which impose stricter data access rules on competing apps while exempting Apple's own apps from the same standards.
What are anti-steering rules, and how do they impact app developers?
Anti-steering rules prevent apps from linking to cheaper, non-Apple payment options. This makes it difficult for app developers to keep costs down for users and hinders their ability to develop their own in-app purchasing tools. As a result, developers are forced to use Apple's in-app payment system, which includes high fees.
What are the broader implications of Apple's new policies for the digital marketplace?
Apple's new policies raise significant concerns about fair competition and user choice in the digital marketplace. By imposing high fees and restrictive rules, Apple is seen as limiting competition and increasing costs for both users and app developers. This could potentially tip the scales further in favor of monopolistic giants, affecting the overall health of the digital economy.