The social media giant generates the majority of its revenue from ads, and targeted advertising plays a crucial role in generating the desired ROI for advertisers. However, in order to serve targeted ads, a platform/website/app needs to collect personal data from users, including their behavior on the Internet. With Apple’s ATT, tracking iPhone user data is no longer an easy task, and this has drastically affected Facebook’s ad revenue book.
To make matters worse, Apple has recently updated its App Store Review Guidelinesforcing iOS developers to use in-app purchases and thereby giving Apple 30 percent of the sales of promoted posts in a social media platform.
Digital purchases of content that are experienced or consumed in an app, including the purchase of ads to display in the app itself (such as “push” sales for posts in a social media app) must use in-app purchase.
It is the first time that Apple directly taxes advertising in iOS apps
All social media platforms including Facebook, Instagram, Twitter, TikTok and others allow their individual users and brand pages to boost their posts (including images, videos, text posts) to extend reach. However, it’s important to note that Apple’s updated App Store policy will have a direct impact on Facebook and Instagram, unlike other social media companies like Twitter and TikTok. This is due to the fact that Facebook and Instagram do NOT use Apple’s in-app purchase system to promote posts, while Twitter, TikTok and others do. It’s interesting to know that just a few years ago, Facebook turned down Apple’s request to route payments to power posts through the Apple Store.
Meta attacks on Apple
Meta (Facebook’s parent company) has publicly expressed its anger at Apple several times in the past. In December 2020, Facebook released a full-page ad arguing how Apple’s iOS 14 privacy changes are bad for small businesses. In early 2021, The Information reported that Facebook has been preparing an antitrust lawsuit against Apple over its App Store rules.
“Apple continues to evolve its policies to grow its own business while undermining others in the digital economy. Apple previously said it doesn’t take a cut of ad revenue from developers, and now it’s apparently changed its mind. We remain committed to offering small businesses easy ways to post ads and grow their business on our apps,” said a Meta spokesperson.
It’s hard to say whether Apple is legally allowed to do so or whether it takes advantage of owning the entire ecosystem, but the decision to pocket a portion of ad revenue stands in stark contrast to Apple’s previous position. During the Epic vs Apple antitrust test In May of last year, Phil Schiller, the man responsible for leading the growth of the Apple Store and Apple Events, claimed that the Cupertino giant had never taken a cut of ad revenue from iOS developers. The statement, however, would no longer be true.
The new guidelines may not have a worrying impact on Facebook’s revenue book, but the company is quite concerned that it will have a far-reaching impact. This could be just the tip of the iceberg, as Apple would like to tie Meta’s standalone ad manager app to the same rules in the future. According to Apple’s own guidelines, an app is currently exempt from having to use in-app purchases to get boosts because the ads that are purchased are not displayed in the app itself.
“For many years now, app store guidelines have been clear that the sale of digital goods and services within an app must use in-app purchase. Boosting, which allows a person or organization to pay to increase the reach of a post or profile, is a digital service, so an in-app purchase is of course required. This has always been the case and there are plenty of examples of apps doing this successfully,” Apple spokesman Peter Ajemian said in an interview with Apple. the edge.
Experts believe that Apple’s new guidelines will greatly affect individual advertisers, mainly influencers and small-brand advertisers, who post to Instagram or Facebook infrequently. Facebook will pass the charges on to them to achieve the same level of distribution through the post boost feature.
Impact of Apple iOS privacy changes
Apple’s privacy changes to the App Store, known as Application Tracking Transparency (ATT), have boosted their search ad business, finally breaking the Facebook-Google ad monopoly in the online search market. According to InMobi’s Appsumer, the adoption of Apple Search Ads (ASA) raised nearly four percentage points year over year to 94.8%. On the other hand, Meta ad adoption decreased three percentage points to 82.8% over the same period. The trend was also evident in portfolio share, with Apple’s search ad business gaining 5 percentage points to reach a 15% share, while Meta declined four percentage points, still leading with a 15% share. 28%.
In February of this year, Facebook’s chief financial officer, David Wehner Estimate a total loss of $10 billion in 2022 that may occur on Facebook due to Apple iOS privacy changes.