Apple – Mark Zuckerberg’s losing fight with Apple shows where the power really lies in tech
Every app that wants to collect tracking data will have to ask permission, and they will be banned from incentivising users to opt in. The smart money is that a majority of users will opt out, a prospect that is sending shivers through the mobile advertising world.
Since Facebook runs advertising not only on its own apps but handles ads for hundreds of others, it stands to lose out, although not as much as the independent developers that rely on targeted advertising.
Facebook, which reported a 58pc increase in annual profits last week, says it expects revenues will be affected when the change comes in during the coming weeks.
It has accused Apple of deliberately harming apps such as games that rely on advertising to favour those that charge users, a practice that Apple takes a cut of up to 30pc from, or better yet, joining Apple’s £5 a month game subscription service.
There are grains of truth here. Apple is likely to benefit if apps switch to a funding model it can take a commission on. But the iPhone maker has a robust defence. It can merely claim to be giving users a choice. If users want to enjoy targeted advertising, they can opt in to tracking, although as Cook himself put it last week, many will not.
The rivalry, though, is bigger than a quarrel about advertising, which is not existentially important to either company. It is about who holds power.
Zuckerberg has long been paranoid about the fact that unlike Google or Apple, he does not own a smartphone operating system, effectively putting Facebook at the mercy of the two companies. An effort to create a Facebook-themed version of Android in 2013 flopped spectacularly.
So far, Zuckerberg’s worst fears have not materialised, and Facebook has become bigger and more profitable than ever. However, the tracking row with Apple demonstrates that for all Facebook’s power, it remains beholden to the platforms it runs on.
Apple and Facebook are likely to clash in more areas. Messaging is an area of increasing importance to Zuckerberg as he seeks to turn Facebook into a shopping and customer service destination, but Apple’s iMessage is pre-installed on iPhones.
Both companies have ambitions in virtual and augmented reality, seen as the next major computing leap after the smartphone, which is likely to pit them against each other more directly.
Last week, reports emerged that Facebook was considering suing Apple on monopoly grounds, seeking to force Apple’s own apps to compete with rivals on a level playing field. That would be an extreme step, but it is not an impossibility.
For all its might and riches, Facebook’s row with Apple has shown where the power between the two truly lies. Taking the iPhone maker to court is a risk, but Zuckerberg may still see it as his best hope.
