Apple and Facebook have been sparring over iOS 14’s privacy changes for months. But last week, when Facebook CEO Mark Zuckerberg accused Apple of using its dominance to prefer its own apps, it was a clear escalation. We take a look at what Apple is changing, how it will impact Facebook, and Apple CEO Tim Cook’s ideas around technology companies.
What changes has Apple introduced? Apple’s latest operating system update, iOS 14, will require apps to ask a user’s permission to track their activity and data across apps and websites operated by other companies. If users do opt-out of granting such access — which they will most likely do — it would imply that mobile apps will lose a major source of data, and thus, the ability to monetise it. Though announced in 2020, iOS 14 will be rolling out to users in spring 2021.
Zuckerberg accuses Apple of preferencing own apps
On January 27, on an earnings call, Facebook CEO Mark Zuckerberg said “we increasingly see Apple as one of our biggest competitors”, accusing Apple of using its “dominant platform position” to preference its own apps, while putting other apps at a disadvantage. “We’re also seeing Apple’s business depend more and more on gaining share in apps and services against us and other developers,” Zuckerberg added.
Apple may say that the updates are to help people, but their moves “clearly track their competitive interests”, Zuckerberg said.
How will this impact Facebook?
Of all companies, Facebook’s ecosystem would perhaps suffer most from any change that limits its view into what a user does. It has trackers embedded across apps and websites. The data is used to target ads on its multiple platforms as well as Audience Network, the company’s ad network for developers. While Apple devices may not be dominant in India, the company dominates American and other developed markets, geographies that pull in the much higher ARPUs for Facebook.
As Facebook’s executives said on the earnings call, iOS 14 will be a headwind factor for Facebook’s ads business in the coming quarters. The company expects high opt-out rates from iOS 14 as more and more Apple users update their devices.
‘Privacy’ changes will only benefit Apple bottomline: Facebook
In December, Facebook had warned that iOS 14’s App Tracking Transparency feature is about “profit, not privacy”. The feature will only benefit Apple’s bottom line.
Since it will force businesses to move from advertisements to subscriptions and other in-app payments to earn revenue, Apple would earn more revenue through its cut in the App Store. Further, Apple’s move would hurt pandemic-battered small businesses who rely on Facebook’s ad products to advertise and sell their products.
Most importantly, Facebook said Apple failed to play by its own rules, since the iOS policy won’t be applicable to Apple’s own personalised ad platform.
By default, Apple uses data it collects — including in-app purchase data that Apple collects from within apps owned by other companies — to improve the efficacy of Apple’s own ads products.
Facebook has now hit back with its own prompt, along with Apple’s, which will provide more information on how it uses personalised ads to “support small businesses” and “keep apps free”.
“If you accept the prompts for Facebook and Instagram, the ads you see on those apps won’t change. If you decline, you will still see ads, but they will be less relevant to you. Agreeing to these prompts doesn’t result in Facebook collecting new types of data. It just means that we can continue to give people better experiences. We feel that people deserve the additional context, and Apple has said that providing education is allowed.” — Facebook
The day after Zuckerberg’s comments on the call with investors, The Information reported that Facebook has been preparing an antitrust suit against Apple over its App Store rules. Facebook’s case will revolve around Apple App Store policies, which all developers except for Apple, have to abide by.
Tim Cook swings back: ‘Tech does not need troves of personal data’
The same day, Apple CEO Tim Cook delivered a keynote speech at the Computers, Privacy and Data Protection conference. Without naming Facebook, some of Cook’s remarks about data and advertising clearly point to Facebook. Some excerpts from the keynote:
The fact is that an interconnected ecosystem of companies and data brokers, of purveyors of fake news and peddlers of division, of trackers and hucksters just looking to make a quick buck, is more present in our lives than it has ever been
Technology does not need vast troves of personal data stitched together across dozens of websites and apps in order to succeed.
If a business is built on misleading users on data exploitation, on choices that are no choices at all, then it does not deserve our praise. It deserves reform.
We should not look away from the bigger picture. In a moment of rampant disinformation and conspiracy theories juiced by algorithms, we can no longer turn a blind eye to a theory of technology that says all engagement is good engagement, the longer the better, and all with the goal of collecting as much data as possible.
— Tim Cook, Apple CEO