As big tech companies face threats of antitrust regulations, Apple and Facebook are facing off, each company trying to position itself as “the good guy.” For Facebook, that means being a champion for the small business owner that’s already suffering during the pandemic, and for Apple that means fighting for user data privacy. As antitrust investigations continue to unfold, it’s clear that neither company is as clandestine as they’d like to appear. So how did we get here?
At an annual developer conference in June, Apple announced that its new iOS14 update to come this fall would require developers to ask users if they want to opt-in to sharing data with developers. Typically, developers, like Facebook, collect unique device identifying information, or IDFA, from iPhones in order to target ads to specific people. If users are given a warning and a chance to opt out of developers collecting their user data, they will likely jump at the chance. This presents a problem for Facebook who’s bread and butter is creepy, all-knowing targeted ads.
In response, Facebook announced on Wednesday that it would beat Apple to the punch. When Apple launches in the fall, the social network said it will no longer collect IDFA from iPhones. Is Facebook shooting itself in the foot?
Not really. Facebook has an advertising system called Audience Network, where third-party app developers turn to sell marketing spots and earn income, using Facebook’s trove of user information to target the ads. Audience Network gets a slice of whatever revenue developers get. So if Facebook stops getting user data, it won’t be able to target ads as well inside apps and may actually shut down Audience Network for Apple users when the new software is launched.
In 2016, Audience Network sales were projected to make $1billion for the company, but without IDFA, that number could drop by 50%. However, Audience Network is only a small part of the company’s earnings, which reached $70 billion in 2019. And Facebook doesn’t really need IDFA. After all, the company already has all of our data just from what we’ve provided on Facebook, Instagram and WhatsApp. The real loser will be businesses that rely on Facebook to intelligently fill ad space. And Facebook is blaming Apple for the potential drop in revenue that businesses will face.
This is not the first time in recent months that Facebook has criticized Apple for hurting small businesses, as Apple is dealing with the consequences of the fees it charges in its App Store. But perhaps instead of pointing the finger of blame, Facebook might be so kind as to provide the data it collects on its users to advertisers anyway, rather than contributing to the disadvantage of small businesses without the capacity to collect and analyze user data?