Source: Facebook for Business microsite
Facebook and Apple battle over the internet’s future
Facebook last week posted a new web page and took two full-page ads in major newspapers charging that Apple’s iOS 14 privacy changes will harm not only small businesses, but the internet experience as a whole.
Apple’s changes, set for early 2021, will require developers to ask for permission to gather data and track users across mobile apps and websites on an iPhone or iPad. Digital advertising firms expect most users will decline to grant that permission.
In its second ad, Facebook said the updates “will change the internet as we know it — for the worse.”
Facebook contends “your favorite cooking sites or sports blogs” are free because they are supported by personalized ads and the changes would force websites and blogs to start charging subscription fees or adding more in-app purchases.
But Facebook’s major focus last week was the potential impact on small businesses. The ad also cited Facebook internal data to contend that, without personal ads, the average small business advertiser stands to see a reduction of over 60 percent in their sales for every dollar they spend.
In a blog post, Dan Levy, Facebook’s VP ads and business products, argued that the internet has made marketing reach “accessible and affordable” for entrepreneurs and other smaller businesses. He wrote, “If these changes go through, established businesses with large marketing budgets will have the advantage — once again — taking us back to the age of TV advertising. But the big business that benefits the most is Apple.”
Apple’s motivation, he argued, are the subscription or in-app payments from a paid model.
Apple the prior week threatened to remove apps from its App Store if they don’t comply with the privacy feature. Apple has reiterated that its push for greater transparency only puts Apple product users first.
CEO Tim Cook wrote in a Thursday evening tweet, “We believe users should have the choice over the data that is being collected about them and how it’s used. Facebook can continue to track users across apps and websites as before, App Tracking Transparency in iOS 14 will just require that they ask for your permission first.”
The skirmish comes as Facebook, Apple, Google and Amazon are facing increased scrutiny over market power.
- Small businesses deserve to be heard. – Facebook
- Speaking Up for Small Businesses – Facebook
- Facebook Wades Into ‘Fortnite’ Maker’s Dispute With Apple – Wall Street Journal
- Facebook Takes the Gloves Off in Feud With Apple – New York Times
- Free Facebook hits back at Apple with second critical newspaper ad – Verge
- Facebook Says Apple’s New iPhone Update Will Disrupt Online Advertising – Wall Street Journal
Discussion Questions
DISCUSSION QUESTIONS: Should retailers be more supportive of Apple or Facebook in the companies’ battle over the transparency of targeted ads? What likely changes should retail prepare for?
Poll
BrainTrust
Paula Rosenblum
Co-founder, RSR Research
Ken Lonyai
Consultant, Strategist, Tech Innovator, UX Evangelist
Web browsers and mobile operating systems have begun restricting the use of third-party cookies and mobile identifiers, which have been used for years by retailers to deliver relevant ads and enable critical measurement. While Google and Apple claim this is about honoring consumer privacy, it’s not the only motivation. These moves personally benefit them, because their direct customer relationships will keep them relatively unaffected while many other identity solutions are weakened. The clearest, closest path for retailer digital success and growth is to dive deeper into first-party data strategies.
This is one of the most important discussions I have seen in a LONG time! Google and Facebook reap billions of dollars of profits by selling access to “everybody” to “whoever” is willing to pay! It’s not a nefarious game, just one largely played out of sight from most of the world. Obviously, many of my fellow commentators here are more aware of the “behind the scene games” than I am. I actually believe Glenn Terbeek, with his “Agentry Agenda: Selling Food in a Frictionless Marketplace“(1999) was well ahead of his time.
Clearly data is the product for Facebook and it is not for Apple. Each is looking out for their own audience and profitability. Google is also moving away from third-party cookies. Facebook is an ecosystem in itself, but clearly stricter privacy regulations will hurt Google and Facebook more than they hurt Apple.
First-party data and organic list building is the key for any business. I don’t believe stricter privacy measures will necessarily favor big businesses.
Facebook charging anybody with bad internet behavior is absolutely hysterical.
Seth Godin authored Permission Marketing more than 20 years ago; it is even more important today. The tsunami of personal data currently captured by the mega players of the Internet age is astounding. Consumers want personalization and privacy. By giving them the power to determine access to their data in this commercial context, in which others monetize your actions, we begin to recognize a fundamental consumer right in the digital age.
I am with Apple on this one. The classic line, which I have come to agree with 95 percent is “On Facebook, you are not the user. You are the product.” And that product is sold to advertisers.
And having been victimized by Facebook’s very ham-handed “AI algorithms” around what it perceives as hate speech, I really don’t want to see that company gain more power.
What changes should retailers prepare for? The same ones I’ve been anticipating for years. A backlash around consumer privacy. Privacy is not dead, and it’s about to re-emerge as an issue. Big time.
I’m not a fan of either approach. While I agree with Apple’s desire for greater transparency in how our personal data is used, I’m not in favor of the way it runs the app store or who gets to be part of that. Either way, small business or large, we are at the mercy of a handful of suppliers that do not have our best interests at heart.
Facebook has been fighting an uphill battle against privacy schemes for more than a few years now. They’ve been public in their alarm about ad blocking technology, to the point of issuing earnings warnings in the past. They have been vocal about their opposition to restrictions on location tracking, they’ve been actively working against data privacy laws, and they’ve been trying to convince their users to give up more data with app features like mobile tracking and “find people near me.” All of this to not much success. Ad blocking continues to grow, at last check more than a quarter of the browsers in the U.S. are running some sort of blocking software. VPN adoption by average consumers is growing, something Google has also noticed and responded too.
On the other side of the discussion, a very vocal segment of consumers has been just as voracious in their opposition to tracking and targeting technology. They’ve managed to persuade governmental agencies in the EU and California to pass sweeping data privacy legislation. Five more states have started investigating their own versions of the law. It’s coming. My sense is that Apple and privacy are going to win the day in this discussion and Facebook will find themselves having to find new ways to bring audiences to their advertisers. The agenda of this discussion is being set by the privacy advocates. Facebook and Google, so far, have failed to make an argument in favor of personalization that resonates with the public.
I do believe retailers need to take notice of this discussion. Consumers do care about privacy and the message is this: they need to be good stewards of their customers data. That does not mean they cannot be relevant with engagement strategies. Opt-in is the magic word these days. Creating apps and digital experiences that engage, adding value for customers while not but creeping them out or being intrusive is the key. Starbucks is a great example with their app and online ordering experiences – it adds value, provides a direct-to-consumer channel for promotion and loyalty experiences, and is executed in a way that doesn’t appear to impact strategy or privacy.
So that’s what Facebook sour grapes smell like. Maybe if Facebook didn’t abuse its data gathering/usage for all these years, things wouldn’t be going in this direction.
There’s a little merit to their claims about ads supporting free sites, but not much. The ad revenue for the majority of mommy-blogger, cooking, and small business web sites don’t account for a sizeable, reliable income, just a small revenue stream. So if that is what’s holding the Internet together, a change is in the cards. Don’t worry though, it’s not. And — every paradigm change creates new opportunities.
It’s fascinating to read this, especially where Facebook’s entire business model is built around end-user engagement and leveraging those insights into more targeted advertisements and content. Regardless, the consumer should choose to share their data in return for the commitment that their data is safe, secure, and used for value-added experiences.
Data and insights are the new oil, yet with great power comes great responsibility to ensure that consumers’ data is truly safe. Apple, Google, Facebook, Amazon, Instagram, Twitter, TikTok, and other internet-based businesses are racing to provide the most engaging experience for consumers but, more importantly, the right strategies to maximize revenues for their companies.
Consumers will gladly share their data if they have some element of control over who receives it and what they plan on doing with it.
I agree with Facebook. Apple is going to send an unnecessary shock wave throughout the digital advertising/ad tech world. Furthermore, happily for Apple, there is the universal Apple ID — didn’t that work out nicely for them? Hmmm. I would make the same comment about Google moving ad tech and identifiers inside their Chrome browser — sweet deal for them to protect privacy that way, right? I need to make a comment here that might be silly, OR it might be really truthful. Cookies and identifiers are being killed by a desire for insulating these companies against punitive damages from GDPR and the California data protection act (and more are coming). The irony is that the most anonymous thing in the world is a cookie! No one knows anyone’s ID from a cookie. So as cookies die what will replace them? FIRST-PARTY PII IDENTIFIERS! What could be less privacy protected than your hashed e-mail being thrown around the web?
I don’t think it’s even possible for a consumer to give “informed consent” over the use of their personal data. I likely don’t even want to know what information is available or inferable about me based on my internet and smart device usage. I think Apple is doing the right thing for its customers, and that Facebook needs to be more forthcoming about (and then clean up) their access to and use of consumer data that has gone far beyond the “intent” of a Facebook user.
Facebook as the paragon of privacy advocacy is just bad comedy, and quite laughable. Let’s be clear, Facebook isn’t the guardian of small businesses everywhere. They’re the guardian of tremendous amounts of user tracking data across the Internet that most users have no idea has been collected. Apple is forcing businesses like Facebook, whose primary revenue source is user data, to make their data practices uncomfortably public and require users to opt in to tracking. That’s not going to hurt small businesses as much as it’s going to hurt Facebook’s bottom line. Just take a look at the Facebook app’s privacy policies in Apple’s App Store for an example – but make sure you’re comfortable because it’s going to be quite a lengthy read!
The net effect of all this, and Google’s plan to drop support for third-party cookies, is that collecting first-party data is becoming an absolute necessity for retailers. Consumers have woken up to privacy concerns and they’re not going to backtrack or back down. The Facebooks of the world are going to have to fight a very uphill battle against these new practices with little hope of holding them back. They’ll be in need of a new business model soon enough.
Excellent points Ricardo. I would add that Facebook has made no friends among consumers with repeated examples of “bad behavior.” Now we have the USDOJ plus almost every state coming at them with anti-trust concerns.
Not sure I trust either of these companies in thinking about the individual user, but Apple is more adept at putting concepts in the user’s corner as well as ensuring data stays inside a closed system. For the retailer it’s a different story. The asking of permission can solidify relationships, especially for retailers, as compared to social media. The small retailers that are engaged in the opt-less marketing model will be stuck only to the extent their business originates from advertising. Yes, this may mean online magazines can be affected, but this won’t eliminate the best toy makers, artists, or even general merchandisers. These retailers selling merchandise might even see greater loyalty, stronger relationships, and most of all be more dependent on their relationship with the customer rather than a 3rd party handoff. Larger retailers with strong brand awareness and/or physical presence will be even less impacted.