The Issue
In early 2021, Apple announced upcoming changes to its privacy policies that would impact how apps on iOS devices could collect user data. Specifically, Apple would require apps to ask for user permission before tracking their data across other companies’ apps and websites.
This change posed a major challenge for Facebook, whose business model relies heavily on being able to track user behavior and target ads based on that data. Facebook pushed back hard against Apple’s changes, arguing that the new policies would severely hurt its ad targeting abilities and revenue.
The dispute between the two tech giants escalated into a major public battle over the next several months. At stake was not just revenues for Facebook, but also differing philosophies around user privacy and the power of Big Tech.
Apple’s Privacy Changes
At Apple’s annual developer conference (WWDC) in June 2020, the company announced it would be making major changes to user privacy protections in the next version of iOS, iOS 14.
The key change was a new requirement called App Tracking Transparency (ATT). ATT required that apps ask for and receive a user’s permission before tracking their data across other companies’ apps and websites.
Previously, apps could engage in this cross-app and cross-site tracking without explicitly notifying users or getting their consent. But with ATT, users would have to actively opt-in to being tracked.
Apple framed these changes as giving users more transparency and control over their data. The company emphasized that it was not requiring apps to stop collecting user data altogether, just to be more upfront with users about what was being collected and tracked.
iOS 14 launched to the public in Fall 2020. But Apple delayed enforcement of the ATT requirements until early 2021, to give developers more time to make changes.
Facebook’s Concerns
For Facebook, Apple’s new policies represented a major threat to its advertising business.
Facebook relies heavily on being able to track users’ behavior across the web and apps to target ads. The more data Facebook can collect on users, the more valuable its ad targeting abilities are to advertisers.
If many users opted out of cross-app tracking on iOS devices, it would severely limit the data Facebook could collect and leverage for ad targeting for those users.
Facebook estimated that Apple’s changes could cut its revenue by billions of dollars per year. Beyond the revenue impact, Facebook framed Apple’s moves as detrimental to small businesses who rely on Facebook ads to find customers.
Public Battle Between the Companies
In late 2020, Facebook launched a public campaign criticizing Apple’s upcoming changes. This included:
– Blog posts arguing Apple’s policies would hurt small businesses
– Full-page newspaper ads promoting Facebook’s stance
– A dedicated website (https://www.facebook.com/speakupforsmb) urging people to speak out against Apple’s changes
Facebook COO Sheryl Sandberg argued that although framed as a privacy move, Apple’s changes were really just self-serving to improve its own ad business. Many saw Facebook’s campaign as misleading, since users would still have the choice whether or not to opt into tracking.
Apple steadfastly defended its changes as user-first. CEO Tim Cook stated in a speech, “If a business is built on misleading users, on data exploitation, on choices that are not choices at all, then it does not deserve our praise. It deserves reform.”
The back-and-forth attacks escalated leading up to Apple’s enforcement of ATT in early 2021. Mark Zuckerberg and Tim Cook traded barbs, with Zuckerberg saying Apple’s moves would hurt small businesses and Cook saying Facebook’s stance was rooted in self-interest over user privacy.
Impact on Facebook
In Spring 2021, Apple began enforcing its App Tracking Transparency rules. This required apps like Facebook to prompt iOS users to opt into cross-app tracking.
Facebook continued urging users to enable tracking, arguing it would help keep Facebook free of charge. But many privacy-minded users opted out.
Financial Impact
In its Q2 2021 earnings, Facebook reported that Apple’s changes had indeed begun to negatively impact its business.
Later earnings reports quantified the revenue impact from Apple’s policies at around $10 billion in 2022. Here are some key stats on how Apple’s changes affected Facebook’s ad business:
| Metric | Impact of Apple’s Policies |
| Ad revenue growth rate in Q3 2021 | Slowed to +3% year-over-year, a steep drop from +56% in Q2 2021 prior to iOS changes |
| Ad revenue growth rate in Q4 2021 | Declined year-over-year for the first time ever |
| CFO Comments in Q4 2021 earnings call | “Apple’s iOS changes will have a greater impact in the first half of 2022 compared to the second half” |
| Revenue impact predicted for 2022 | $10 billion |
Product Changes
The decreased ability to target and measure ads also led Facebook to rollout more changes to its products. Some examples:
– Removing the ability to target ads based on users’ interactions with other apps and websites
– Restricting advertisers’ ability to target ads using categories like race, health, political affiliation, etc.
– Investing more in AI recommendations to improve ad relevance since less user data is available
– Focusing more on broader brand awareness campaigns vs highly targeted performance marketing
Despite these changes, Facebook reiterated that personalized, relevant ads remained core to its model. It would continue investing in privacy-safe ways to target users.
Broader Impacts
The very public battle between Apple and Facebook highlighted a larger debate about Big Tech and privacy. Some key issues it raised:
User Privacy vs. Tech Business Models
Facebook argued Apple’s moves were not truly about protecting users, but really about harming Facebook’s business. Apple and privacy advocates contended that users do benefit from these changes and deserve more transparency and control.
Ultimately, the dispute centers on differing philosophies – should user privacy take precedence over an ad-supported business model?
Walled Gardens
Critics of Apple point out that its own ad business stands to benefit from Facebook losing targeting abilities. This highlights accusations of “walled gardens” – companies making rules that hurt rivals but favor their own businesses.
Apple counters it still allows ad tracking if users consciously choose to opt in, maintaining an even playing field. But the dynamics between platforms and apps remains a hot issue.
Industry Self-Regulation vs. Government Intervention
Some argue Facebook’s pushback shows that voluntary self-regulation by tech companies is not sufficient to address privacy concerns. They contend government oversight and privacy laws are needed instead.
Others believe government intervention is too heavy-handed. They argue companies like Apple show the industry can self-regulate by giving users more control over their own data.
Competitive Impacts
Reduced ad targeting abilities on iOS devices could make running ads on Facebook less attractive compared to platforms like Android. This levels the playing field somewhat between social media rivals.
But platforms like Facebook also argue that overly stringent privacy rules risk entrenching the dominance of Apple and Google by hampering competitors’ ability to monetize through effective personalized ads.
Societal Impacts
Broader societal questions also emerge. Do users really benefit from less targeted ads, or do they appreciate personalized recommendations? Do people understand and consciously make privacy choices, or mindlessly click “Accept”?
Are trade-offs between privacy and user experience inevitable as tech evolves? The Apple-Facebook dispute touches on many profound tech ethics questions with no easy answers.
Conclusion
The battle between Apple and Facebook over iOS privacy changes brought pivotal tech issues to the forefront. For Facebook specifically, Apple’s ATT policies have clearly had major financial and product impacts that are still unfolding.
But the biggest legacy may be highlighting deeper debates about platform power, competition, user preferences, and the role of targeted ads in the tech industry. With technology constantly advancing, striking the right balance between privacy and innovation remains an ongoing challenge.