Some Facebook and Instagram users who open up the social media apps on their iPhones will get a new message on Monday about targeted advertising: Namely, targeting advertising is not as bad as Apple makes it out to be.
The messages, which look rather innocuous, are actually the latest salvo in a battle playing out between the two Silicon Valley Goliaths.
In one pop-up message that Facebook is testing, a drawing of a smiling woman on her cellphone, flanked by a cup of tea and a vase of flowers, precedes a plea to get users to allow their “app and website activity” to be used to “support businesses” and “get ads that are more personalized.”
However, after the user responds to the first pop-up, another pop-up appears from Apple: “Facebook would like permission to track you across apps and websites owned by other companies,” it reads, followed by two options: “Ask App Not to Track” and “Allow Tracking.”
As both companies face pressure from lawmakers in the United States and Europe over their market dominance and alleged abuse of power, the Facebook-Apple feud is the latest example of how private companies are taking matters into their own hands and attempting to settle scores before regulators even have a chance. Apple, in addition to scrutiny in the European Union and Congress, faces a lawsuit from Epic Games accusing it of using an alleged monopoly over the App Store to crush rivals. Microsoft, another behemoth, expressed support in October for a coalition of app developers taking on Apple.
The fracas between Apple and Facebook, which owns Instagram, revolves around advertising data and how it is used on Apple devices. Facebook lashed out at Apple in August over the iPhone maker’s plan to force app developers to ask users for permission to track them across the Web. Currently, that type of tracking is on by default and is facilitated by tracking software created by Apple and known as an “ID For Advertisers,” or an IDFA. But Apple says it plans to change that.
Since 2012, each customer who uses an Apple mobile device, like an iPhone or an iPad, has been assigned a unique IDFA to facilitate targeted advertising. The IDFA helped Facebook and other developers learn what apps users downloaded, how frequently they used those apps, their in-app purchases, and the websites they visit on desktop and mobile devices and Apple TV.
Apple customers can turn IDFA tracking off by going into their device’s settings. But few people ever do, and privacy advocates have long urged Apple to turn off IDFA tracking by default.
In June, when Apple unveiled its latest mobile operating system, iOS 14, it made a bombshell announcement that the privacy community applauded. Apple wasn’t quite turning off the IDFA, but it planned to force its customers to make a conscious choice, by clicking either “allow tracking” or “ask app not to track” in a pop-up menu if an app attempted to access a user’s IDFA.
The advertising industry, which relies heavily on the IDFA to track people while they’re using their iPhones, shuddered. If Apple users opted out of IDFA tracking en masse, it would mean advertisers would be flying blind on iOS, where many of the most wealthy, and coveted, eyeballs in the United States spend a large amount of time. Advertisers aren’t willing to pay as much for ads that aren’t targeted, because it’s generally believed they’re less effective.
In August, Facebook said Apple’s changes would have little impact on Facebook but would instead harm small businesses and other advertisers who would have a more difficult time finding their customers with targeted advertising.
But on an earnings call with analysts last week, Facebook CEO Mark Zuckerberg acknowledged Apple’s new policy would materially affect the company’s bottom line: “We do expect there to be high opt-out rates related to that, and that’s factored into our outlook,” he said, answering an analyst’s question about Apple’s IDFA pop-up windows. “We do expect that will have increasing impact through the year as more users adopt iOS 14 and go through those permissions.”
Google, which also uses IDFA tracking for targeted advertising on iOS, announced in a blog post last week that it would stop using IDFA tags because of Apple’s new policy. But Google has not taken aim at Apple over the changes.
Google’s bottom line is less dependent on behavioral targeting than Facebook’s. Google search engine ads, a far bigger part of its revenue, are based largely on search terms. Another reason Google and Apple are less likely to start throwing punches is that they inked a massive search engine partnership years ago. Google pays Apple billions of dollars so Google remains the default search engine on iOS devices.
In June, Facebook suggested in a blog post that, like Google, it might just give up on using the IDFA altogether, rather than rely on its users to click the “allow tracking” button, an action that seemed unlikely for most people.
But Facebook’s tactics have changed. Rather than give up on the IDFA, it’s going to make a pitch to its customers that tracking is actually a good thing. Apple’s pop-up notification stating “Facebook would like permission to track you across apps and websites owned by other companies” is suggestive and unfair, according to Facebook.
Facebook is still testing the notifications, and the company hasn’t decided which version it will ultimately use. One version shared with The Washington Post tells customers that by opting in for tracking, users can “get ads that are more personalized” and “support businesses that rely on ads to reach customers.” The pop-up goes on to say Facebook needs to be able to use data it receives from other websites to “provide a better ads experience.”
Apple has not said when it will begin rolling out the pop-up messages requesting users to make a decision on IDFA tracking.
In its effort to curb Apple’s policy changes, Facebook has sought to paint Apple as a monopolist that is abusing its power over the App Store that it controls.
Facebook is facing its own lawsuit, filed by the U.S. Department of Justice, calling for Facebook’s alleged monopoly to be broken up into pieces.
On the earnings call last week, Zuckerberg added more specifics to Facebook’s argument against Apple, pointing out how Apple’s own apps are held to a different standard than those of its competitors. For instance, iMessage, Apple’s built-in mobile messaging service, is the most used in the world, he said, because it comes preinstalled on iPhones and has software capabilities that other apps aren’t allowed to implement, according to App Store policies.
Zuckerberg’s argument echoes one made to the European Union by music streaming service Spotify, which has complained that Apple Music has leveraged its advantages on the App Store to take market share away from Spotify.
Zuckerberg said Apple’s increasing focus on growing its own apps and earning more revenue from subscriptions gives it an incentive to harm Facebook with its policy changes. “Apple may say that they’re doing this to help people, but the moves clearly track their competitive interests,” he said.