Apple to developers: social media post “boosts” must be IAPs, subject to platform fees

Apple released iOS 16.1 to the public yesterday, and as part of that release, the company published eleven updates to its App Store guidelines. Among those changes is a new directive that requires developers to process advertising and promotional purchases that occur within a consumer-facing app, such as social media post “boosts,” as in-app purchases (IAPs), allowing Apple to extract a platform fee from those transactions. From the developer guidelines (emphasis mine):

This guideline shouldn’t come as a surprise; back in August, the Wall Street Journal reported that Apple attempted to persuade Meta (then Facebook) to route all “post boosts” through Apple’s in-app purchasing machinery which, again, would entitle Apple to extract its platform fee on that advertising revenue. From the WSJ:

The companies also haggled over whether Apple was entitled to a piece of Facebook’s sales from so-called boosted posts, said people familiar with the matter. A boost allows a user to pay to increase the number of people that see a post on Facebook or Instagram. Facebook, which considers boosts ads, has always contended that boosts are a form of advertising, in part because they are often used by small businesses to reach a bigger audience, said one of the people.

This new guideline, by my reading, excludes any transaction that takes place outside of a consumer-facing app, such as through an advertising management system like Meta’s that is mostly used either on the web or through the dedicated Ads Manager app. Given the history — with the above-reported negotiations as well as the fairly clear motivations behind Apple’s App Tracking Transparency (ATT) privacy policy, which has created a tremendous commercial headwind for Meta — it’d be natural to assume that this new policy change is directed primarily at Meta and the post “boosting” functionality within the Facebook and Instagram apps.

But many prominent social media apps natively offer boosting functionality — not just Instagram and Facebook but also Twitter and TikTok, among many others — and not all of these apps currently process boosts as IAPs (note that many datings apps already route “boosting” or other forms of promotional functionality through the IAP system). Per the new guideline, these social media apps will have to either transact these promotions as IAPs or direct users to a web-based purchase interface. Worth noting: Apple does demand that developers pay a marginally-reduced fee for off-platform purchases of in-app content, and it could apply those rules in this case, too.

It’s difficult to quantify the impact of this change on the companies named above, none of which breaks out “boost” revenue as a standalone line item. My intuition is that in-app boosted posts represent a negligible proportion of revenue to the social media category broadly and that this guideline change is fairly immaterial in terms of absolute monetary impact.

As a symbolic gesture, though, this new guideline carries substantial consequence. Apple is reifying its central role in the “economic miracle” that the App Store precipitated, to borrow Tim Cook’s characterization. Potentially instigated by the App Store Perestroika or by the reported decline in Apple’s App Store revenue last quarter, Apple is asserting its right to extract a fee from any commercial activity that takes place on its platform — or as a result of its platform, as in the case of off-platform purchases — in a format that resembles the economics of feudalism. This new guideline advances that position.