Facebook's feud with Apple escalates | TheHill - The Hill

Facebook’s feud with Apple is coming to a head over a dispute about Apple’s new privacy feature that would limit the reach of targeted ads, highlighting the contrasting but symbiotic nature of the two tech giants’ business models.

Apple is planning to release a feature early next year requiring apps sold in its store to ask users for permission to track their data, expanding on amped up privacy features already launched. The update has been championed by tech advocacy groups, such as Ranking Digital Rights, who cite it as a vital step toward data protection and transparency.

But Facebook, which thrives off selling targeted ads, is criticizing the update with an ad campaign branding Apple’s move as focused on profit, not privacy.

“It will force businesses to turn to subscriptions and other in-app payments for revenue, meaning Apple will profit and many free services will have to start charging or exit the market,” Facebook’s vice president of ads and business products Dan Levy said in a blog post Wednesday.

Apple has pushed back on Facebook’s claims, doubling down that the move is aimed at improving privacy, while also jabbing Facebook’s collection of user data.

“We believe that this is a simple matter of standing up for our users. Users should know when their data is being collected and shared across other apps and websites — and they should have the choice to allow that or not,” Apple said in a statement. “App Tracking Transparency in iOS 14 does not require Facebook to change its approach to tracking users and creating targeted advertising, it simply requires they give users a choice.”

Facebook ramped up its fight against Apple this week, coming out swinging Wednesday with a new website and newspaper ads claiming Apple’s update will hurt small businesses. Separate ads launched Thursday argue the move will also hurt consumers, causing businesses to start charging fees for previously free services to make up lost ad revenue.

“Facebook, obviously, is doing this in its own interest,” Elizabeth Renieris, senior policy analyst at Ranking Digital Rights, told The Hill, noting that the platforms’ customer isn’t individuals but rather advertisers.

“They're using the hashtag ‘Stand up for Small,’ or something like that, but you don’t see the Small Business Administration, or NFIB [National Federation of Independent Business] or Chamber of Commerce pushing back against these changes. That feels disingenuous,” she added.

The Small Business Administration, NFIB and the U.S. Chamber of Commerce did not respond for comment.

Levy acknowledged the update will hurt Facebook's own diversified ads business, but he wrote in the blog post the effect on Facebook will be “much less than what will befall small businesses.”

On a call with reporters, Levy also accused Apple of behaving anti-competitively with the update in an effort to benefit from Apple’s app store.

The accusation comes as both Facebook and Apple, along with Google and Amazon, have faced increased scrutiny regarding market power.

Earlier this month, 48 attorneys general filed a lawsuit accusing Facebook of anti-competitive acquisitions. Facebook defended itself, noting that the acquisitions in question, of WhatsApp and Instagram, were approved by regulators at the time.

Although Facebook and Apple are two of the largest tech companies, they have contrasting business models which lay at the heart of their mushrooming feud.

Facebook is built off of providing free online services to users, making money instead through ads placed on its platforms. Apple is grounded in charging consumers, and is less reliant on ad revenue.

Despite their conflicting models, both companies rely on each other to reach consumers.

“The problem there for Facebook, it [has] kind of this weird symbiotic relationship [with Apple],” Ryan O’Leary, senior research analyst at the International Data Corporation (IDC), told The Hill.

Facebook needs Apple’s iOS platforms to reach users, he said. Similarly, Apple risks losing users if it doesn’t have Facebook-owned apps available for customers.

The update, announced as part of a new set of privacy features unveiled in June, was set to be launched as part of the iOS14 update in September. But Apple later delayed the update saying it would give developers time to update their systems and data practices.

The battle over the anti-tracking feature adds to a years-long dispute between the top tech companies.

In 2018, Apple CEO Tim Cook slammed Facebook over its data privacy practices amid reports that Cambridge Analytica harvested data from 50 million Facebook users without their permission.

Asked at the time what he would do if he were Facebook CEO Mark ZuckerbergMark Elliot Zuckerberg Hillicon Valley: Lawmakers call for action after 'devastating' cyberattack on federal government | US cyber agency issues emergency directive following hacks | FTC opens privacy study into major internet platforms Facebook faces most serious breakup threat yet from lawsuits 46 states and FTC file antitrust lawsuits against Facebook MORE, Cook replied, “I wouldn’t be in this situation.”

“We could make a ton of money if we monetized our customers. If our customers were our product,” Cook said in the same interview with Recode and MSNBC.

“We care about the user experience. And we’re not going to traffic in your personal life. I think it’s an invasion of privacy,” he added.

Zuckerberg fired back in an interview shortly after Cook’s, defending Facebook’s model as creating a more accessible internet service.

“You know, I find that argument, that if you’re not paying that somehow we can’t care about you, to be extremely glib. And not at all aligned with the truth,” Zuckerberg told Vox.

“The reality here is that if you want to build a service that helps connect everyone in the world, then there are a lot of people who can’t afford to pay. And therefore, as with a lot of media, having an advertising-supported model is the only rational model that can support building this service to reach people,” he added.

The fight has gone beyond the top executives trading barbs.

Apple rejected at least five versions of a Facebook Gaming app between February and June, The New York Times reported. Apple reportedly cited its rule that prohibits apps with the “main purpose” of distributing casual games.

Now, Facebook said it’s also prepared to lend a hand to another company taking on Apple: Epic Games. The company behind the widely popular video game Fortnite filed a lawsuit against Apple this summer accusing Apple of violating antitrust laws by requiring developers to use Apple’s payment system

Facebook's director of privacy and public policy Steve Satterfield said Wednesday the social media giant is prepared to support Epic Games's suit against Apple and provide any relevant information in the litigation.

Facebook and Apple’s contentious relationship will likely be further highlighted in coming months, as lawmakers in the U.S. and Europe crack down on tech companies. The regulation in many ways has been a long time coming, O’Leary said.

“Consumers didn't understand they were the products until way too far into the situation. The cat was kind of out of the bag and hard to claw back,” he said.

The European Commission on Tuesday unveiled sweeping new content and competition regulations. The proposed Digital Markets Act focusses on so-called “gatekeepers,” and companies that don’t comply with the new rules could face hefty fines or be forced to sell off portions of their businesses.

In leveling attacks at each other, though, Facebook and Apple are showing their market powers as gatekeepers, Renieris said.

“They're having this very public fight and basically holding themselves out in this way [that] subjects them to pretty serious regulation,” she said.

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