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 slash the amount publishers make from targeted advertising 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.
In Facebook’s second-quarter earnings call last month, finance chief Dave Wehner said the company is ‘still trying to understand what these changes will look like and how they will impact us and the rest of the industry.
‘But the very least, it’s going to make it harder for app developers and others to grow using ads on Facebook and elsewhere.’In a blog post, Facebook said it was making changes to its own apps, to help its advertising partners prepare for the iOS 14 changes.
It will no longer collect the identifier for advertisers on its own apps for iOS 14 devices.
It is also asking businesses to create new ad accounts dedicated solely to running ads for apps for iOS 14 users, in order to comply with Apple’s new rules.
The firm said these changes were likely to ‘disproportionately affect’ its Audience Network, given its heavy dependence on app advertising.
‘Like all ad networks on iOS 14, advertiser ability to accurately target and measure their campaigns on Audience Network will be impacted, and as a result publishers should expect their ability to effectively monetize on Audience Network to decrease,’ the company said.
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, according to Brian Wieser, global president of business intelligence at GroupM.
The company makes most of its money by showing advertisements in its main app and image sharing network Instagram.
However, 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.
‘We understand that iOS 14 will hurt many of our developers and publishers at an already difficult time for businesses,’ Facebook 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.’
The changes in iOS 14 won’t just hit Facebook, but it will also harm the revenue streams of other advertising networks including Google AdMod, game-makers, news-publishers and app developers, all of whom use tracking to make money from ads.
‘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,’ said Renee Gittins, executive director of the International Game Developers Association.
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.’
For publishers the burden may be less, said David Chavern, president of the News Media Alliance, which represents several major US publishers.
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.’
However, Julia Beizer, who heads up digital for Bloomberg Media, expressed concern that Apple is attempting to change digital advertising on its own.
‘We all want to make a better, privacy-safe web. But rolling it out without consulting the industry means you’re asking publishers to bear the brunt of the sins of ad tech. Which isn’t fair,’ she told Recode.
Apple is set to release its new iOS 14 operating system sometime this Autumn along with new iPhones but the firm has yet to announce the specific date.
The Silicon Valley 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.
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