December 2, 2022

Apple demands 30% cut on promotions and sponsored posts

Apple demands 30% cut on promotions and sponsored posts

Monopoly is a fun board game that you can play where you try to eliminate your opponents.

Monopoly is a fun board game that you can play where you try to eliminate your opponents.
picture: LightField Studios (stock struggle)

Apple released an update to its payment guidelines on Monday, requiring apps to use the company’s in-app purchase tool for “boosts” and promotional posts, meaning Apple will cut their sales by 30%. This move appears to be another policy that directly targets Meta (formerly Facebook).

A variety of applications allow users to promote their content for a small fee. Want more people to see your tweets, your dating profile, or the old video game you’re trying to sell? Twitter, Tinder, and eBay will sell you a “push” to raise it higher in the feed. For years, this seemed to fall into a gray area in App Store policies. Apps that sell “virtual goods” supposed to To use the iPhone’s in-app payment system, which comes with a hefty service fee. This was true for a long time. But that policy wasn’t always enforced when it came to boosts, and some apps, like Facebook, got away with taking payments directly and avoiding Apple’s hefty fees.

Some apps, including Twitter and Tinder, already use the in-app payment tool for boosts and promoted posts, but Facebook doesn’t. Apple will likely make a significant amount of change when it begins to enforce this policy more stringently, although Meta may challenge the change. The social media giant is already locked in a public battle with Apple over recent policy changes, and an adjustment to in-app payment requirements will likely add fuel to the fire. Another iPhone policy change last year that cost Meta billions of dollars in lost advertising revenue, which Apple is now working to absorb through a number of New advertising projects.

Meta spokesperson Tom Channick reportedly said in a comment to the edge. “Apple previously said it didn’t take a share of developer advertising revenue, and it seems to have changed its mind now. We remain committed to offering small businesses simple ways to run ads and grow their businesses on our apps.”

Apple initially declined to comment, but after this article was published and began to gain traction, the company backed down to share its thoughts. “For many years now, the App Store’s guidance has been clear that selling digital goods and services within the app should use in-app purchase,” an Apple spokesperson said. Peter Agimyan, in an email. “Boost, which allows an individual or organization to pay to increase the reach of a post or profile, is a digital service — so of course, an in-app purchase is required.”

This new update is aimed at ads that boost the visibility of social media posts, but there’s a cutout for more traditional types of ads, so Meta’s larger business model isn’t affected by the move. This policy is an example of Apple’s market power. They control the App Store, and this is the only official way to get your app on iPhones. Apple can charge developers whatever they want as long as they can get away with it. In some areas, you can’t get away with it: South Korean law enforcement raided Apple’s headquarters after persistent complaints of overcharging from iOS developers. Meta did not respond to a request for comment.

The enhancements policy update is part of a broader effort to crack down on apps, forcing developers to kiss Apple’s ring and use in-app payment or risk being kicked out of the marketplace.

Regulators in other countries, where competition rules are more stringent, have forced Apple to allow apps to use other payment systems that do not take such a large share of the revenue. Google faced scrutiny of similar policies in its Play Store and was fined up to $113 million this week for not allowing third-party payments. Last year, Epic Games won Major lawsuit against Apple After Fortnite was kicked out of the App Store for providing third-party payment options. A judge ruled that Apple cannot prevent app developers from including links to other payment systems.

Apple says it only takes this money to protect you. The company reviews apps for security, privacy, and fraud issues, including checking for payment systems. CEO Tim Cook has argued that it is expensive to maintain, and a 30% reduction is a reasonable fee because the money is needed to protect consumers, which benefits developers as well, as it creates a trusted marketplace.

Apple invented the App Store. Proponents (and Tim Cook) argue that the company should be able to ship what it wants. But looking at this another way, the App Store is not a single and regular service, but rather a gateway to every other iPhone app. Critics say 30% is a lot more than Apple needs to pay for an app review, and what’s really going on here is a monopoly trampling around, charging protection money to anyone who wants to cross the gates of Cupertino.

Update: 10/26/2022 9:40 a.m. ET: This story has been updated with a comment from Meta.

Update: 10/26/2022 1:55 ET: This story has been updated with a comment from Apple.