While the PR and media layer of Apple’s dispute with Facebook over user tracking by apps may still be going, at a strategic level the drama’s pretty much over, and it’s looking like Apple won.
In a nutshell, Apple will soon require apps that want to track user’s movements within other companies’ apps or websites to get explicit permission to do so from the user. Facebook’s apps have long done this without such explicit permission.
When the new feature, which Apple calls App Tracking Transparency, was announced earlier this year, Facebook complained loudly that the loss of tracking data will hurt Facebook—and will hurt small businesses more by reducing Facebook’s ability to carefully target ads for them. Apple said it has a responsibility to its users to give them transparency and choice over the way their personal data is used. Neither of those statements is inaccurate, but they leave little room for compromise.
This isn’t the first privacy row between the two companies, but this time it was more heated. Apple CEO Tim Cook condemned Facebook’s business model and implied that it’s designed to profit from misinformation. Facebook CEO Mark Zuckerberg (reportedly) said Facebook must “inflict pain” on Apple. But the fact remains that Apple plans to release iOS 14.5, which contains a feature requiring iOS developers, including Facebook, to get permission from users if they want to track said user’s movements across third-party websites and apps.
The Apple-Facebook dispute is important for two reasons. While this current skirmish is ending—with Apple the apparent winner—it’s just the latest in a string of decisions by Apple to reduce user tracking within the iOS universe. In iOS 13, for example, the company began requiring iOS apps to give users a choice to have location tracking on whenever they use the app, just during the current session, or never. App Tracking Transparency, which Apple announced last June, is the next step, and more changes are sure to follow.
While the addition to iOS of a little opt-in message may not seem like a big deal, with App Tracking Transparency we’re actually seeing two of the most powerful companies in tech engaged in a cold war over how internet content will be paid for in the future. The sprawling ad-tech system that now underpins the internet allows for valuable content and services to be offered for free, but it also vacuums up our personal information and uses it in ways we could never understand or control.
The current flare-up
The main part of the Facebook-Apple dispute is over the IDFA, or “identifier for advertisers,” which is a piece of unique code that Apple assigns to each user’s device. The IDFA is normally passed from the iPhone to app developers (including Facebook) that want to track users’ moves not only within their own app but also in those of other developers and websites. It lets them connect that tracking data back to data about the same user in the Facebook graph.
Apple already gives iPhone users a choice in Settings>Privacy>Tracking to stop their phones from providing the IDFA to any app that wants to collect it. App Tracking Transparency will prompt the user to make that decision for each and every app that requests the IDFA, and the prompt will pop up automatically, instead of being buried two levels deep in Settings. Mind, Apple won’t show the opt-in message within apps that want only to collect data on users’ movements within its own apps, for the purposes of personalizing the content in the app for the user.
There are legitimate reasons for an app user to say yes to tracking.
“The issue that I have with it is that it’s a small tiny box asking you do you want to tracked or not, and in general the consumer market, including my 78-year-old grandmother, is not going to answer yes to that,” says Diana Lee, CEO and cofounder of Constellation Agency, which mass-produces ad media for social networks. “To them it’s ‘Here’s this stranger asking me if they can track me,’ and they’re going to say ‘I don’t want to be tracked, hell no.'”
There are legitimate reasons for an app user to say yes to tracking. For one thing, some users might want Facebook to be able to show ads that reflect their interests and purchases. A 29-year-old male might want to see ads related to his love of motorcycles, not random ads about perfume or lawn mowers.
Here’s what the opt-in message will look like, as tweeted by Tim Cook:
We believe users should have the choice over the data that is being collected about them and how it’s used. Facebook can continue to track users across apps and websites as before, App Tracking Transparency in iOS 14 will just require that they ask for your permission first. pic.twitter.com/UnnAONZ61I
— Tim Cook (@tim_cook) December 17, 2020
That mockup uses what some in the ad industry have called “loaded” language (“track your activity across other companies’ apps and websites”). It also leaves it all up to the app owner to explain why tracking might be a good thing—not an easy task in the three-line space provided. But, as Cook mentions, app developers can explain at greater length through screens in an app, as they often do in other instances such as when iOS requires the user to grant access to location or photos. Facebook has said it will indeed take that opportunity in all its iOS apps.
Facebook has a point when it says the opt-in message will hurt app developers and small businesses. The power of Facebook ads happens when the iPhone’s IDFA (and all the behavioral data connected to it) is linked up with the iPhone owner’s data within the Facebook graph. This creates a collection of thousands of data points on that person, all weighed against the likelihood that a specific user will click on this ad or that. It could be an ad on Facebook for a game on Apple’s App Store, or an ad for a local pancake house that has uploaded its customer list in hopes of advertising to a similar set of people who are likely to come in for a delicious stack.
Since Apple’s opt-in requirement will almost certainly reduce the flow of targeting data from millions of iPhones, Facebook will have less ability to put ads for game developers or pancake houses in front of people with a high likelihood of clicking through. The pancake house might see its return on ad investment go down, which leads to fewer new customers, which leads to less money to buy ads. The game developer, Facebook emphasizes, might be forced to start charging money for its game. The same could be said for free news apps that rely on selling ad space to keep the lights on.
Eric Seufert, the creator of the mobile advertising blog Mobile Dev Memo, created an alternative design for Apple’s opt-in message:
In an alternate universe…(1/X) pic.twitter.com/S9jbDOKFY7
— Eric Seufert (@eric_seufert) February 2, 2021
How the web is paid for
The two ways of framing the question represent fundamentally different visions for the future of the web.
“We have two companies who own major plumbing from a digital consumer experience perspective,” says John Donahue, CEO of digital services consultancy WLXJS. “One, Apple, is attempting to create greater privacy for users, and the other trying to defend its ads business that requires IDFA to function.”
Facebook may be forced to invent new ways of deriving user intent from its existing data.
Facebook’s vision—which has prevailed through a big chunk of the web’s history—is one with less privacy, more advertising, and more free stuff.
If Apple continues pushing in the direction of less user tracking, and federal regulators buy into that vision in new privacy regulation, it could mean big changes ahead for big ad platforms such as Facebook’s. It might also push ad platforms to invent new ways to target ads, without relying so much on clandestine harvesting of personal information. Facebook may be forced to invent new ways of deriving user intent from its existing data. Or it might begin to buy more supplemental targeting data from third parties to make up for the data it’ll no longer get from iOS users.
As for the current debate, Facebook doesn’t have many arrows left in its quiver. Mark Zuckerberg has already taken out full-page ads in The New York Times, The Wall Street Journal, and The Washington Post making his case against Apple.
The Information‘s Alex Heath and Joshua Sisco reported that Facebook executives talked internally about filing an antitrust lawsuit against Apple, which would allege that it’s leveraging its dominant App Store platform in an anticompetitive way. Facebook also reportedly considered recruiting other advertising-based companies to sign on to the suit. But antitrust cases are tough to win in U.S. courts, and Facebook’s well-known reputation for privacy abuses would surely precede it in the courtroom, not to mention the fact that it is itself the target of a Department of Justice antitrust suit.
For Facebook, the ultimate act of inflicting pain on Apple might be to pull its apps out of the App Store or take steps that would prompt Apple to remove them. Fortnite developer Epic Games did something comparable in its dispute with Apple over the fees Apple imposes on developers. Now Fortnite is gone from the App Store.
In the end, though, there are limits to how far Facebook and Apple can go in their ongoing dispute. Facebook needs access to the 1 billion iPhones now active in the world. And with Facebook, Messenger, Instagram, and WhatsApp among the most popular apps in the world, Apple has a powerful disincentive from taking steps that might lead to their disappearance from its platforms.
Once the current war of the words is over, the two tech giants have far more to gain by playing nice, and a lot to lose by quarreling.