Meta wants you to download apps directly from Facebook: boon or bust?
Meta, a Big Tech behemoth and ad tech giant with over $100 billion in annual ad revenue, is now planning to enter the sparsely populated app store market, The Verge reports. The reason? Ironically, the same EU privacy legislation called the Digital Markets Act (DMA), which is designed to curb the power of “gatekeepers” to which Meta itself belongs.
However, when it comes to app stores, the market is largely divided between two major players — Google and Apple — a state of things commonly known as a ‘duopoly.’ That duopoly is now coming apart at the seams, at least in the EU, where the DMA will take full effect next year. The law prohibits “gatekeepers” from favoring their own services, including by preventing users from installing competing app stores and making their own app store the default and only option.
This applies to Apple and Google to varying degrees. Google allows sideloading on Android, although it makes sure that this option isn’t very attractive to developers by bundling its in-app billing system with the Google Play Store. Apple, on the other hand, has long been a walled garden. And after March 6, 2024 — the date by which ‘gatekeepers’ must comply with the DMA — it will have to allow sideloading on iOS as well.
Meta’s app store ambitions
Not much is known about Meta’s plans when it comes to the inner workings of its own app distribution system, but its main goal is clear: to let users download apps directly by clicking on Facebook ads without having to visit Apple’s App Store or Google Play Store first.
Meta claims that by eliminating this one step in the download process, it will increase chances of users installing an app. Meta has been touting this new method as a convenient shortcut that would boost conversions for developers, and consequently, their revenue. This reasoning seems logical and might as well work for those who still, for some reason, prefer to hang out on Facebook and want less hussle when downloading apps.
Meta reportedly plans to run the first pilot of its new ad app install scheme with a small group of Android app developers later this year. As for iOS, the turn for Apple lovers to experience what we will tentatively call ‘the Meta’s app store’ will come later, apparently when the dust settles over the DMA’s enforcement.
A lure for developers: no commission
It’s no secret that we at AdGuard have always been citical of the dominant position both Google Play Store and Apple App Store have carved out for themselves on the market: developers are charged high commission that can reach up to 30%, have to undergo obscure review processes, face arbitrary decisions to ban their apps on flimsy grounds, and, in general, be ready to compromise everything for the privilege to stay listed in the app store. All that probably applies more to Apple, but when it comes to the hefty cut that both companies take for themselves, Apple and Google are equally shameless.
Meta apparently wants to take advantage of the long-simmering row between developers and established app stores by reportedly charging them… nothing. At least at first. If Meta really does not take a cut of the apps’ in-app revenue, this would also allow developers to use an in-app billing system of their choice. This, again, would set it apart from the Apple and Google Play stores in a good way.
Apple and Google have both been under increasing pressure to allow alternative in-app payment systems on their platforms. They have given in a bit, such as allowing users in South Korea to pay for in-app purchases using third-party systems. Last year, Google extended this option to more countries including India, Japan, and the European Economic Area. These changes can be seen as testing the waters in anticipation of the DMA, which requires gatekeepers to allow other in-app payments to work on their platforms. So far, however, concessions from Apple and Google have come with heavy strings attached — developers still have to pay them a commission, albeit at a slightly discounted rate, and tell them about all payments they receive. All of this makes using other payment systems less attractive. So if Meta’s own app distribution platform lets developers use different ways to get paid, and with fewer hoops to jump through, it could make a big difference.
So far, it sounds a bit like a fairytale, doesn’t it? Apps that you can install directly from a Meta ad with a single tap, no developer fees, which could also mean cheaper app prices for users… A win-win situation? A dream come true? We reserve the right to remain sceptical.
What could be the catch
Speaking to The Verge, Meta spokesman Tom Channick sounded upbeat, describing the new opportunities a new app distribution platform will offer developers.
“We’ve always been interested in helping developers distribute their apps, and new options would add more competition in this space. Developers deserve more ways to easily get their apps to the people that want them.”
On the one hand, we’ve always been in favor of more competition as a driver of progress and innovation. So the fact that we’re going to have more of that in the app store market in the future, at least in the EU, is something we can only welcome. After all, it’s not just about Meta: Microsoft may also launch its own app store, and let’s not forget about smaller independent app stores like F-Droid, APKPure, and Aptoide that could all benefit from a more level playing field that the DMA will create.
On the other hand, Meta may be a new player in the app distribution market, but it’s a Big Tech giant with a dismal privacy record, so its foray into this new territory also raises privacy concerns. Meta may argue that its decision to enter the app store market is driven by a desire to help developers, but there may be more self-serving interests at play, and we’re not talking about revenue from commissions (of which there may even be none).
Meta arguably became the biggest loser from Apple’s crackdown on tracking which it launched in 2021 with the App Tracking Transparency (ATT) feature in iOS 14.5. This feature forced all the apps to ask users’ permission to track their activity across other companies’ apps and websites. This gave users an easy way to opt out of such tracking — and no more than a quarter of iOS users now let apps track them. Tracking is vital for Meta’s business model, as it fuels targeted advertising — its main cash cow. Less tracking means less personalized ads, which, in turn, means less effective ad campaigns and less money for Meta, which was expected to lose $12.8 billion in revenue from that. And while Meta tried to find loopholes to bypass these restrictions, perhaps it thought that launching its own app distribution platform would be its saving grace.
The exact contours of Meta’s own app distribution platform are still shrouded in mystery. It’s possible that Meta’s sweetheart deal for app developers is just a bait-and-switch, and that they’ll change the rules of the game once they are hooked. Or maybe Meta is willing to trade one thing for another, namely potential commissions for the freedom to track users without any limits. In any case, we at AdGuard will be following the situation with Meta’s equivalent of an app store closely and will update you when more details become available.