Meta vs. Apple: New Ad Guidelines Aim to Bypass App Store Commissions

Meta Platforms Inc META has introduced new guidelines for small businesses advertising on Facebook and Instagram to circumvent fees imposed by Apple Inc AAPL. 

The company suggests purchasing ads through a web browser instead of the iOS apps for Facebook or Instagram to avoid Apple’s commission, which Meta indicates will be implemented this month, Bloomberg reports. 

Apple’s policy mandates in-app purchases for advertisers wanting to “boost” social media posts for increased visibility, with Apple taking up to a 30% cut from these in-app purchases. 

This policy intensifies the rivalry between Meta and Apple, two of Silicon Valley’s major competitors, with Meta criticizing Apple for negatively impacting the digital economy and exerting excessive control over its App Store.

Apple CEO Tim Cook has criticized Meta’s privacy practices, which depend on user data for ad sales. 

An iOS update in 2021, restricting third-party data collection, resulted in a significant ad revenue loss for Meta, estimated at $10 billion. 

Apple’s strict App Store policies have also faced criticism from other companies, including Spotify Technology SA SPOT and Epic Games Inc, for being unfair. 

Although Apple has modified its European policies to meet new regulations, the adjustments have sparked additional complaints.

Apple’s policy will initially apply in the U.S. and expand to other regions later this year, requiring advertisers to prepay for ads through iOS apps. This change will primarily impact Meta’s smaller advertisers, for whom boosted posts may be the sole advertising method.

In an earnings call in 2022, Meta CFO Dave Wehner said Apple’s privacy changes would be a $10-billion headwind to Meta’s business.

Interestingly, Meta also challenged a supervisory fee set by the European Union, which amounts to 0.05% of its annual global net income.

This fee is intended to support the EU’s efforts to ensure compliance with the newly implemented Digital Services Act (DSA), a regulation requiring companies like Meta to intensify their content moderation practices.

The European Commission has identified this levy as affecting 20 significant online platforms and two major online search engines. 

Price Action: META shares traded higher by 2.95% at $487.27 on the last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Mark Zuckerberg Meta CEO. Image made via photos on Shutterstock