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iOS 14 now requires app developers to provide information for a privacy “nutrition label” shown next to the download button in the app store, and sometime in early 2021 it will force apps to warn users. on the follow-up for personalized advertising. In the eyes of some of the other tech titans, most notably Facebook, this amounts to anti-competitive behavior.
However, criticism of Facebook is not rooted in damage to its own platform; points to the expectation of disproportionate harm to small businesses that rely on personalized ads and tracking technologies to compete with business-scale advertising budgets.
Apple accused of anti-competitive behavior
In response to the changes in iOS 14, Facebook has said that it expects its own services and those of its subsidiaries (such as Instagram and WhatsApp) to be fine, given that its own internal ad delivery systems will only be minimally affected. Instead, the world’s largest social media company singles out small businesses as victims of Apple’s alleged anti-competitive behavior. Targeted ads have been a boon for businesses that don’t have the budget for traditional saturation-based approaches, allowing them to spend only on individual ads that measurably reach their desired target demographics. In a blog post, Facebook raised the possibility of completely removing the off-the-shelf component of its ad network from Apple devices in case the proposed changes for iOS 14 stick.
Apple says the changes are in the name of user privacy, which it believes should be considered a fundamental human right. Facebook takes a more cynical view, believing that Apple is implementing these changes to push both its own targeted advertising service (Apple Search Ads) and to help its brand image as a provider of premium hardware.
Allegations of anti-competitive behavior have escalated beyond cross-market shootings for Apple, as antitrust investigations have been launched in both the US and the EU. However, Facebook has its own problems of this nature. Now he faces lawsuits, brought by the Federal Trade Commission and the vast majority of states, that threaten to undo the company’s major mergers of the last decade.
A major component of the anti-competitive behavior allegations is that Apple does not hold itself to the same standards. While the company will provide privacy labels for its own application downloads and on the associated application website, devices come preloaded with all types of applications that will not be subject to this requirement. Apple also does not plan to implement opt-out warnings for its own apps, exempting Apple Search Ads from disclosure requirements.
Is Facebook going to fight for small businesses?
To date, Facebook has run two full-page ads in major newspapers criticizing Apple for its anti-competitive behavior. The most recent of these frames the problem as “Apple vs free internet,” stating that free sites and blogs will need to start charging subscription fees and that free apps will need to drive more optional in-app purchases to survive if they can’t draw. revenue from targeted advertising. The announcement cites statistics from a recent Deloitte study showing that 44% of small and medium-sized businesses increase the use of personalized ads on social media during the Covid-19 pandemic, and that the average small business advertiser can expect. A 60% reduction in your return on ad spend if you can’t use personalized ads.
However, Facebook did not suddenly jump into the fray when small business revenues were threatened. The company has been grappling with Apple for proxy over its alleged anti-competitive behavior for some time. When Epic Games (publisher of Fortnite) took on Apple for its mandatory 30% cut of all app store transactions and refusal to allow sales outside of its ecosystem, Facebook pledged to provide supporting materials and documents for a legal challenge.
Facebook-owned WhatsApp also directly criticized Apple for its anti-competitive behavior in early December over new mandatory privacy labels, the content of which is not controlled by the app’s publishers. Although Apple has voluntarily adopted these labels for its internal apps, WhatsApp notes that the terms used in them are very broad and can confuse users as to the extent of the apps’ ability to collect data from people. WhatsApp also pointed out that its direct competitor, iMessage, comes pre-installed on almost all Apple devices and therefore end users would not see its privacy label unless they visited the app’s website to specifically search for it.
Facebook suggests that the average small business advertiser can expect a 60% reduction in their return on #adspending if they can’t use personalized ads. #privacy #respectdata
Deutsche Bank has estimated that around 70% of Facebook’s ad revenue comes from small businesses, often spending as little as $ 100 or $ 200 for a successful targeted ad campaign when more general TV or radio ads would cost thousands of dollars. Dollars. Apple’s new search ad program earns much less, but the company has made a recent effort to attract small businesses to its ecosystem by lowering the app store transaction fee to 15% for organizations making less. of $ 1 million in revenue per year.
