Meta takes a Lawful dig at Apple for its 30% commission rule!

Here’s Why Meta criticizes Apple for 'undercutting others' with its ad policy.

Apple Inc. was chastised by Meta Platforms Inc. for changing its App Store terms to take a cut of social-media advertising revenue, claiming that the iPhone maker was "undercutting others in the digital economy." The policy change, announced recently, requires users and advertisers to make an in-app purchase to "boost" posts in apps such as TikTok and Meta’s Instagram. Apple charges a 30% commission on in-app purchases, so a company like Meta would lose a portion of its ad revenue to the iPhone maker. Meta shares fell 3.4% in pre-market trading in New York after closing at $137.5. The stock of the company is down 59% year to date.

"Apple previously stated that it did not take a cut of developer advertising revenue, but has now apparently reversed its position," Meta, which also owns Facebook and WhatsApp, said in a statement. "We remain committed to providing simple ways for small businesses to run ads and grow their businesses on our apps."

Apple, which is developing its own advertising business, claims that requiring an in-app purchase for boosts is simply an extension of its current policies and that other apps already comply. "The App Store guidelines have been clear for many years now that the sale of digital goods and services within an app must use in-app purchase," the company said in a statement. "Boosting is a digital service that allows an individual or organization to pay to increase the reach of a post or profile, so an in-app purchase is required." This has always been the case, and there are numerous examples of successful apps."

According to Apple policy, apps that allow marketers to purchase ads and manage campaigns across multiple media such as television and billboards, addition to apps are not required to give Apple a cut. However, "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)," according to the company, "must use in-app purchase." According to the new rules, if an influencer pays Instagram to promote a personal post to more viewers via the iPhone app, Apple will take a cut. The social media companies have yet to announce how they will comply with the change.

Social media companies are already reeling from the impact of recent privacy changes to Apple's iOS software, which require companies to obtain explicit permission from users before collecting data about them. Meta, which uses such data to better target advertisements, estimates that the change will cost the company $10 billion in revenue this year. Nonetheless, the boost policy may be the first time Apple receives a direct cut of ad revenue. Apple has previously promoted advertising as a channel through which developers can earn as much money as they want from their customers.