Facebook claims privacy changes in the next version of Apple’s mobile operating system will cripple app makers’ ability to make money from targeted advertising.
iOS 14, which will be released in the autumn, will require apps to ask users for permission to collect and share data using Apple’s device identifier.
Facebook and other ad networks rely on this device identifier to track where users go online, what they do and what they buy, to deliver targeted ads.
The social media giant fears that, given the choice, many iOS users will reject tracking, affecting not only its own ad business but also any app makers and publishers that use its Audience Network.
The Audience Network allows Facebook and Instagram advertisers to place their ads elsewhere on the internet.
Facebook claims that the change in iOS 14 could see how much publishers make from targeted advertising in iOS cut in half, and may force the company to pull its Audience Network altogether.
Apple said the aim is to give people more choice over how they want to be tracked by companies on the internet – and the ability to say no if they don’t want tracking.
Apple’s upcoming iOS 14 is set to include privacy features that prevent companies from tracking users across different apps – and Facebook is not taking move lightly. The social media is criticizing the changes, claiming its ability to target ads to iPhone users ‘will be limited’ and significantly impact its revenue
In future users will have to give explicit permission for advertisers to be allowed to track them
Insiders in the advertising industry say that the move by Apple is significant as many users are likely to refuse permission, effectively blocking ad tracking.
In a blog post, Facebook said it was making a change to its own apps – which in addition to its flagship app also include WhatsApp and Instagram – that would likely spare them from having to ask iPhone users for data-tracking permissions.
The firm said it would also be making changes ahead of the iOS 14 release that could hurt smaller developers that use Audience Network on iOS.
Facebook collects data about users from the apps where it serves those ads, which it uses to inform highly tailored targeting throughout its business.
In iOS14 – due to be released this autumn – users will be asked by every app hoping to track them whether they accept this or not – without permission the app and in turn the advertiser won’t be able to follow their activities.
It won’t just hit Facebook, it will also cause problems for other advertising networks including Google AdMod and will harm the revenue streams of game-makers, news-publishers and app developers who all use tracking to make money from ads.
Apple says it will now require app developers to ask for permission before they track users to improve privacy and put users in control of their own data
‘Apple’s updates may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14,’ the company said.
‘This is not a change we want to make, but unfortunately Apple’s updates to iOS 14 have forced this decision,’ a Facebook spokesperson added.
Facebook’s Audience Network business is an in-app advertising network that connects users’ Facebook identities with their activities on third-party apps – allowing companies to serve targeted ads.
The Audience Network business, while an important source of revenue and traffic to small developers such as gaming companies, is far from Facebook’s biggest business, said Brian Wieser, global president of business intelligence at GroupM.
‘It would surprise me if it was greater than $1 billion on a net basis,’ he said.
Apple previously provided a tool called the identifier for advertisers, or IDFA, that allowed Facebook and others to engage in such tracking of users across apps.
But in June, the iPhone maker said such activity will require a pop-up notification saying the app ‘would like permission to track you across apps and websites owned by other companies.’
‘Apple is saying, we had an ‘opt out’ system before, and we’re going to switch to an ‘opt in’ system,’ said Craig Danuloff, chief executive of The Privacy Co, which makes an app to help users assess how private their data is.
‘What do advertisers say? They immediately assume it’s Armageddon. They just know nobody really wants this.’
As an alternative to the tracking tools it previously provided advertisers, Apple created a new advertising network technology that was better for privacy protection.
Facebook’s argument is a result of iOS 14 including blockers that prohibits sites from monitoring smartphone owners using their unique identifier (IDFA) without their permission
The company makes most of its money by showing advertisements in its main app and image sharing network Instagram.
Facebook is not just going into battle for itself, but also standing strong for other companies who rely on its Audience Network to generate their own revenue.
‘We understand that iOS 14 will hurt many of our developers and publishers at an already difficult time for businesses,’ the firm shared in the blog.
‘We work with more than 19,000 developers and publishers from around the globe and in 2019 we paid out billions of dollars.’
‘Many of these are small businesses that depend on ads to support their livelihood.’
Facebook notes that it would lose over 50 per cent in its Audience Network publisher revenue if personalisation is to be removed from mobile install campaigns.
‘While the iOS 14 release schedule has not been announced, we plan to release the Audience Network SDK beforehand and will provide an update as soon as these dates are confirmed,’ Facebook wrote.
Apple is set to release its new operating sometime this Autumn along with new phones but the firm has yet to announce the specific date.
The changes Facebook announced Wednesday will fall hardest on ads that prompt users to install new mobile apps, a format that is heavily used in the mobile games.
‘Apple’s iOS 14 changes will certainly negatively affect the way that game studios and publishers currently raise revenue and gain users through sales targeted advertisements,’ Renee Gittins, executive director of the International Game Developers Association, said in a statement.
John Nardone, chief executive of ad serving software company Flashtalking, said Apple’s move to restrict its ad business could be viewed as anti-competitive by raising prices for consumers used to free, ad-supported apps.
‘There’s self-interest in Apple doing this because as the advertising revenue stream becomes more difficult, then apps have to charge users and Apple, as you know from the Epic Games case, takes 30 per cent of that,’ Nardone said.
‘Apple doesn’t have a stake in ads but they have a stake in paid apps.’
The Cupertino company has seen its fair share of entanglements in the past few months – many of which have been over the 30 per cent charge to developers.
This month, Apple had pulled Epic Games popular Fornite from its App Store due to the game maker violating in app payment guidelines.
has seen its fair share of entanglements in the past few months. This month, Apple had pulled Epic Games popular Fornite from its App Store due to the game maker violating in app payment guidelines
And in the same day, Epic served Apple a lawsuit calling for it to be returned.
The recent update of the fiasco comes from a US federal judge who has has granted Epic Games a temporary restraining order against Apple which will prevent the iPhone maker from cutting off Epic’s computer graphics software Unreal Engine.
The Unreal Engine and its license is relied upon by hundreds of app developers, not just Epic, and would cause enormous disruption in the gaming industry.
The judge ruled that, as the dispute is between Fortnite, Epic’s marquee game, and Apple, there is no basis to remove access to other branches of its business, which are used by numerous parties who are not involved in the litigation.
For publishers the burden of changes by Apple in terms of privacy may be less, said David Chavern, president of the News Media Alliance.
Many rely on what is known as first-party data, such as which stories a user reads, to determine which ads to show, an activity which is not subject to Apple’s new rules.
‘News publishers aren’t huge beneficiaries of cross-app tracking and, more broadly, we all see the ecosystem moving against highly targeted programmatic ads,’ he said.
‘There may end up being benefits to publishers from that, such as a some move back to contextual advertising.’