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28 April 2021 0 Comments
Posted in Opinion, Technology & media

Facebook v Apple: tech giants square up over ad tracking and privacy

Author headshot image Posted by , Associate
Contributing authors: Matthew Pyke

A forthcoming update to Apple’s iOS that has the potential to take a substantial bite out of Facebook’s ad-generated revenue has sparked a war of words between the two California-based tech giants.

What is Apple planning to do?

When Apple rolls out the latest version of its mobile device operating system (iOS 14.5) this week, the update will introduce something called App Tracking Transparency. This feature will be turned on by default and will force all app developers to actively seek user permission to use their data for the purposes of targeted advertising.

The particular data in question is known as the IDFA (Identifier for Advertisers) which uniquely identifies the device and can be used in concert with other information, such as tracking cookies, to create what Facebook and other firms might reasonably argue, are ever more relevant advertisements for their users.

Apple have always promoted themselves as a firm for whom user privacy is of paramount importance and assert that this move is simply aimed at giving users more control over their personal information and transparency in relation to how it is stored and processed.

Why is Facebook concerned?

Data protection is a constant and growing concern for individuals and businesses alike given the impact a data breach can have to both an individual’s privacy and a company’s reputation and financial integrity. Internet users are issued with multiple daily reminders of this courtesy of the ubiquitous cookie acceptance banners and pop-ups which companies are obliged to place on their websites to ensure compliance with the Privacy and Electronic Communications Regulations and the GDPR.

Facebook generates around 98% of its global revenue from advertising. Given that recent surveys have indicated that around 80% of users are likely to refuse consent to allow their IDFA to be used for advertising purposes, it is perhaps not surprising that Facebook anticipate that the introduction of Apple’s new feature will have a significant impact on their business model and revenue streams.

Facebook have responded by highlighting what they say is the particular importance of targeted advertisements to the success and survival of small and medium size businesses during what continues to be a turbulent and unpredictable time for the economy.

What happens next?

As successful global corporations, Facebook and Apple have to meet and reconcile multiple, and sometimes conflicting, obligations to their customers, their shareholders and the legal frameworks under which they operate.

Some may argue that Facebook is more concerned about its bottom line as opposed to the data privacy of its users or the financial health of the small businesses who rely on its services. It might equally be argued that Apple, which generates most of its revenue from non-advertising sources, is simply seeking to maximise profits by forcing businesses who may currently rely on advertising to change to other methods more favourable to Apple’s business model, such as monthly subscriptions.

However, despite these economic drivers, for both firms it will primarily be the reaction of their users and customers that determines who blinks first.

Given the prevailing sense of distrust in regard to large companies’ use of personal data and an ever-increasing focus on data privacy, it is unlikely to be Apple that backs down. As frustrating as cookie consent messages and other user opt-ins/opt-outs can be, they play a crucial role in protecting the user’s personal information in an online environment where such data can be extremely valuable to genuine businesses and criminals alike whilst also serving as a constant reminder to all internet users about the importance of safeguarding this information.

It therefore seems unlikely that increasingly privacy-savvy users will actively seek to turn off an additional privacy feature just to protect the interests of the businesses whose services they use or products they buy.

Nonetheless, the outcome is far from certain and things could get even more heated if and when other hardware manufacturers such as Samsung or Huawei weigh into the debate, especially considering the fact they are reliant on Google for their Android operating systems.

If firms like Facebook and Google do start to see the predicted drops in revenues for themselves and their users, it will also be interesting to see what alternative revenue streams they begin to explore or what technological solutions they look to develop in order to continue to exploit user data for advertising purposes.

If you have any questions about how this update could affect you or your company or need further advice in relation to data protection or data breaches please do not hesitate to contact our data protection lawyers on:

0800 923 2073     Email usenquiries@roydswithyking.com

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