In 2021, Apple shook the mobile app market by changing the logic behind Identifier for Advertisers (IDFA), the unique, random device identifier assigned to iOS devices, allowing advertisers to track user data and measure ad campaign performance without revealing personal information. Publicly, Apple cited concerns about user privacy, but the real reason was competition with Meta, which was using IDFA for targeted ads. Apple resented that another major player was making $40-50 billion annually through its platform.

At first, it looked like Meta would struggle to recover. The company lowered its growth forecasts, while Apple doubled down on developing its own ads platform.

Now, three years later, it’s clear that the IDFA changes have backfired on Apple. In fact, the blow may have hit Apple harder than Meta.

Here’s a quick recap of what happened since the IDFA changes:

— The mobile app marketing ecosystem broke down. Some companies cut their budgets, while others stopped campaigns altogether. Ad spending shifted to Android, driving up auction prices.

— Ads platforms could no longer match user clicks with in-app actions, stalling ad targeting improvements.

— Mobile developers began searching for a solution, and many shifted to web funnels.

— Instead of driving users directly to the app, developers sent them to web pages where they signed up, completed onboarding, purchased subscriptions, and then downloaded the app.

Before 2021, few developers used web funnels. Now, many have adopted them, particularly in categories like Health & Fitness and Education. Other sectors are still experimenting.

The rise of web funnels has led to several unintended consequences, most of which are bad for Apple.

Apple loses a chunk of App Store revenue

Many users now buy subscriptions directly from developers using web funnels, bypassing Apple’s 30% cut. That money is funneled into scaling ad buys, further driving up auction prices.

Apple loses revenue, while Meta profits.

Apple users’ experience deteriorates

Apple’s App Store review process was designed to give users confidence in the quality of digital products. But competition and the lack of control on the web have led to the rise of questionable products and dark patterns that are prohibited on the App Store.

Many users can’t tell the difference between purchasing subscriptions through the App Store and a website. As web funnels become more popular, users have to deal with misleading paywalls, complex subscription cancellations, and low-value products.

Even honest developers are forced to adopt these tactics to stay competitive, further degrading the user experience and driving up ad costs.

Once again, Apple loses, while Meta gains.

Product quality now matters less than the acquisition funnel

Product quality used to be key to success on the App Store, with all developers following the same rules. But with web funnels, those rules are irrelevant. Now, the focus is on optimizing acquisition funnels and paywalls, with less emphasis on user experience.

— Companies spend more on creating ads, optimizing funnels, and refining paywalls. 

— Consequently, they spend less on improving product quality.

In the long run, this hurts everyone—except Meta, which continues to profit.

These are just some of the most obvious issues. As with any large ecosystem, negative second-order effects will accumulate over time.

Apple is already searching for solutions. The company has reportedly started cracking down on apps that rely on web funnels. Some apps have been banned after multiple user complaints about difficult subscription cancellation processes (even though the subscription occurred on the web, not in the app).

However, removing these apps from the App Store won’t fix the underlying problem. Key parts of the user acquisition funnel have moved to the web, beyond Apple’s control.

These issues stem from Apple’s desire to cut into Meta’s revenue while maintaining its 30% fee on all in-app purchases. Unfortunately, the fallout has been worse than Apple anticipated.

To learn more about web funnels, check out our interview with Andrey Shakhtin from FunnelFox.