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Following months of complaints, attack ads, and handwringing over Apple’s new iOS 14 tracking privacy features, it looks like Facebook’s CEO is conceding that the new feature might actually be a good thing for his company.
Shortly before the release of iOS 14 last year, Facebook spoke out in protest of Apple’s new privacy feature, stating that it could potentially cut ad revenue in half by taking away Facebook’s golden goose: targeted advertising.
It was an understandable concern for Facebook, which makes almost all of its money from advertising. After all, Facebook may be free for end users, but somebody has to be paying for all the necessary infrastructure to make it work every day for a billion people. As with most “free” services, this money comes from advertising.
In essence, if you’re a Facebook user, the company is selling you to advertisers, and this is done by tracking your behaviour pretty much everywhere that Facebook can — both on and off the social media service.
The key point here is that most companies that are trying to advertise their products will pay considerably more for those ads if they’re guaranteed to reach a target audience that actually wants to buy their products. For example, Nike would pay far more for an ad that’s going to be shown primarily to sports and workout enthusiasts in the appropriate age group than one that’s going to be shown alongside retirement funds or children’s toys.
Moreover, advertisers also want to know as much as they can about their target audience, such as what other hobbies, products, and activities they’re involved in. Building these kinds of connections is actually Google’s main business, and it spends — and makes — billions of dollars on knowing everything it can about everybody who comes anywhere near a Google property online, from Google Search to Gmail.
And it’s a game that Facebook has been desperately trying to get in on for years.
Unfortunately for Facebook, it doesn’t have the sheer pervasiveness of Google, so it needs to resort to more subtle ways to track users. A big part of this comes from the Facebook SDK that thousands of developers bake into their mobile apps.
In fact, Facebook’s tracking is so insidious that many developers don’t even know how much of their users’ data their apps are giving away to Facebook and other advertising services. Developers plug these SDKs into their apps for various purposes, ranging from allowing their users to log in to services via Facebook to running Facebook supported ads. In the fine print, however, they’re also giving Facebook permission to collect a ton of data on anybody who users their apps.
Of course, if all of this data was truly anonymous, there’d be no need for concern. However, several years ago the online ad industry came up with its own special feature known as the IDFA, or “Identifier for Advertisers,” that could be used to track an individual’s activities across multiple apps and websites.
While the IDFA doesn’t track your actual identity, it’s still a code that’s associated with your device that allows Facebook, Google, and other advertising and tracking companies to build a profile of your online behaviour.
For example, if you live in Los Angeles, order pizza a couple of nights a week, visit the gym on Saturdays, and search for Persian cats and basketball scores, the IDFA will be able to put this all together. If enough people have habits that are similar to yours, then that’s going to be valuable to advertisers who are looking to sell products like, say, green tennis balls (or Persian cats).
At the end of the day, this is ultimately all that these companies care about. They don’t really need to know who you are to drive their marketing and advertising businesses — they just need to know what it is you’re doing on a regular basis. Although, perhaps ironically, the weirder and more offbeat your habits are, the less likely they’ll care about your profile.
The IDFA is also the same reason why you’ll often see ads on Facebook for products you’ve just searched for on Amazon. While this kind of ad targeting is also valuable for both businesses and (arguably) for end users, it’s actually more of a side benefit to the massive profile that they’re building on your interests and habits.
What Apple’s Doing About It
As part of a long list of privacy improvements that Apple added in iOS 14, Apple announced last year that it would be taking steps to limit ad tracking by effectively blocking the IDFA at the iOS level.
The new privacy feature didn’t actually make it into iOS 14, as Apple backed down after a backlash from developers who insisted they needed more time to get ready for it. However, Apple made it clear even back then that this would be a temporary reprieve, and now it looks like it will be throwing the switch when iOS 14.5 is released in the next few weeks.
What’s important to note, however, is that the new feature doesn’t actually disable tracking across the board. Instead, it gives users control over whether they want to be tracked or not. It’s a bold move on Apple’s part that puts privacy back in the hands of the end user, rather than the big tech companies.
In light of that, Facebook’s strenuous objections to the feature over the past few months have arguably shown exactly how insidious this kind of tracking is. The social media giant is very obviously afraid that if users are actually asked whether they want to be tracked, they’re going to say “no.”
Late last year, Facebook attacked Apple with a disinformation campaign, claiming that Apple was against the “free internet.” The implication here was that Apple’s iOS 14 changes could lead to Facebook and other online services to start charging their users to make up for the money they’d lose from advertising.
After that campaign clearly fell on deaf ears, failing to convince pretty much anybody that Facebook was the good guy, it changed its tactic. Its next move was to add a new popup in the Facebook app promising users a “better ads experience” if they would just tap that “Allow Tracking” button when prompted by iOS 14, instead of that nasty old “Ask App Not to Track” one.
Now it looks like Facebook is coming to the conclusion that this isn’t going to do it much good either, and appears to have surrendered to the inevitable. Now, it seems to be looking for ways to embrace Apple’s changes, rather than continuing to rail against them.
It’s probably not surprising after CNBC reported that 73 percent of users were on Apple’s side and would be likely to opt out of tracking when prompted by iOS 14.5.
So, in the face of that kind of opposition, Facebook CEO Mark Zuckerberg seems to have changed his tune. According to CNBC, Zuckerberg spoke out in a Clubhouse meeting yesterday stating that not only will the social media company “manage through” Apple’s new changes, but that it could actually put them in an even stronger position.
While the Facebook chief executive is being very optimistic, he’s clearly now seeing a silver lining in that Apple’s move could encourage more companies to do business directly with Facebook itself.
It’s possible that we may even be in a stronger position if Apple’s changes encourage more businesses to conduct more commerce on our platforms by making it harder for them to use their data in order to find the customers that would want to use their products outside of our platforms.
Facebook CEO Mark Zuckerberg
In other words, Zuckerberg hopes that by cutting off the ability for the IDFA to be used reliably in third-party apps, Apple will actually drive advertisers directly into Facebook’s waiting arms.
It’s actually a pretty massive about face for Facebook, which had predicted last summer that the changes in iOS 14 could lead to a drop of more than 50 percent in its Audience Network advertising business. Facebook’s executives also reiterated this position during its fourth-quarter earnings call in January, stating that it would begin impacting its bottom line in the very near future.
That said, Facebook has also been looking for ways around the new limitations by expanding its own advertising tentacles even further. As CNBC notes, both Facebook Shops and Instagram Shops provide a new way for brands to list their products within the Facebook ecosystem, and both already have over 250 million active users. Since Facebook owns these properties directly, that will give them more options for tracking users without the need to rely on the IDFA, since a common user account is required for these services.
This is also the likely reason why Google has been far less concerned about the loss of the IDFA, since it already has a much more extensive tracking network of which it owns all the pieces. This of course includes Google Search, but also extends into email, calendars, maps, photos, video streaming, news, and of course mobile devices and laptops.