Apple Is Charging In-App Fees for Boosted Posts

In its latest operating system update, Apple said it's taking a cut of boosted posts, a format available on social networks like Facebook, Instagram and Twitter, where users and companies can pay these platforms to have their posts amplified more widely. Apple said in a post on the App Store review guidelines accompanying the new iOS release on Monday that boosted posts are in-app purchases, meaning they fall under Apple’s policy of taking a 30% cut from in-app purchases. By charging this fee, Apple can pick up more dollars from platforms to bolster its App Store revenues while hobbling competitors and appearing to offer clear guidelines to any regulators concerned with its opaque practices. Most apps make money by selling subscriptions or products to users and via advertising. While Apple takes a cut from the first two lines of business, apps are entitled to keep all their advertising revenue, something Monday's guidelines confirmed. However, the notion that boosts constitute in-app purchases versus an advertising channel is contentious. Apple and Meta had reportedly been working on a revenue sharing arrangement where Apple would get a cut of an ad-free subscription version of Facebook, The Wall Street Journal reported in August. A point of disagreement between the companies was whether boosted posts were ads—Meta said they were, while Apple said they weren't, the Journal reported, and a deal never materialized. Mobile Marketers Pivot Away From Paid Media After Apple Upends Industry Meta is not the only app that has a boost business. Other social networks like TikTok also allow users to pay to amplify posts, and dating apps also have boost features. While boosts are not necessarily a huge driver of revenue, especially for giants like Meta, Apple’s move to include them within the services they can extract fees on amounts to a flex of market power, sources told Adweek. “Boosts are likely a tiny percent of sales, and they can still happen, either with a 30% markup or outside the app,” said Thomas Petit, an independent app development consultant. “This news shows that Apple will do anything to maintain the status quo and enforce fees are paid on digital goods.” An Apple spokesperson said that boosting is a digital service that falls under the in-app purchase policy. "Boosting, which allows an individual or organization to pay to increase the reach of a post or profile, is a digital service — so of course In-App Purchase is required," the spokesperson said. "This has always been the case and there are many examples of apps that do it successfully.” Why Apple is targeting boosted posts The move to subject in-app boosts to fees could be viewed both as an expansion of Apple’s purview or a clarification on what it considers within its right to tax. Part of this confusion stems from the lack of clarity Apple provides around its policies, according to a browser engineer who requested anonymity because his company doesn't permit talking to press. “The IAP [in-app purchase] rules were always haphazardly enforced, like most of Apple’s highly subjective rules,” the engineer said. “There is market confusion over where Apple takes clarity over its policies. Apple can at any time provide a great deal of clarity.” As regulators place Apple under more scrutiny, it benefits the company to tighten up areas where its policies are inconsistent so it can’t be accused of enforcing its rules differently for different customers, the engineer added. Another interpretation is Apple wanted to incentivize more ad manager apps on its platform and wanted to specify exactly what it defines as advertising as a result, said Alex Bauer, head of product and market strategy at mobile ad-tech company Branch. "Advertisers can start/manage ad campaigns using a mobile app, but without having to use IAPs to pay for the whole campaign," Bauer said, "but Apple didn't want that policy to apply to something like individual users going to Facebook app and buying a one-off boosted post within Facebook’s main app." A (possible) alternate path Apple’s new policy isn’t all politics, though. It also represents a new stream of revenue for the company as its App Store business falters. In Q3 2022, the App Store’s revenue fell 2.3% from the prior year period, according to app analytics firm SensorTower (Apple doesn't break out App Store revenue on its balance sheet). Contributing to this decline is the macroeconomic headwinds affecting the digital media landscape more broadly, and Apple’s own App Tracking Transparency framework, which deprecated the mobile identifiers powering ad targeting on iPhones, Petit said. App install campaigns are now less efficient, meaning less people are downloading apps and making the in-app purchases that Apple takes a cut of, he added. Other business incentivizes the policy: Apple is building out its own ads business. The company recently added inventory to its App Store, and there have been reports that the company is hiring ad-tech engineers and opening up inventory on Apple TV. Against this backdrop, it doesn’t hurt to undermine the revenues of some of the biggest digital advertising giants, the engineer said. “It’s a great benefit to [Apple] to hamstring the effectiveness of their competitors,” he said.