Facebook has lashed out at Apple’s attempt to limit advertisers’ ability to target iPhone owners, warning it could halve some app makers’ ad revenues, in the latest row between the two Silicon Valley rivals.
The social network warned that Apple’s update puts at risk hundreds of millions of dollars in revenues for Facebook and thousands of smaller companies that use its ad network.
The next update to the iPhone’s operating system, iOS 14, will require apps to obtain users’ permission, via a pop-up window, before gathering data that allows tracking and ad targeting.
iPhone owners are already able to opt out of such tracking but digital marketers have warned that the new requirement to opt in could cause a much sharper drop in their addressable audience.
Facebook said on Wednesday that the changes would hit publishers and developers that use its advertising system within their own apps, dubbed its Audience Network, particularly hard.
“Ultimately, despite our best efforts, Apple’s updates may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14,” Facebook said in a blog post.
Facebook’s Audience Network is a popular way for app makers to market themselves within other apps and generate new downloads. These so-called “app install ads” have been among Facebook’s more successful mobile advertising formats.
Facebook said its own testing pointed to a revenue drop of more than 50 per cent for app makers using Audience Network, which it said was a multibillion-dollar business last year.
Wednesday’s comments are Facebook’s most forthright yet on the iOS changes and add fuel to a long-simmering row between Apple and the social network over privacy.
Facebook executives warned investors about a potential “headwind” from iOS 14 when the company reported its latest quarterly earnings last month.
Dave Wehner, Facebook’s chief financial officer, said iOS 14 was “an area of concern” and “definitely something to watch” in the fourth quarter of the year, when most iPhone owners will have installed the update just as advertisers ramp up spending for the holidays.
Facebook has warned about the potential hit to revenues from Apple’s privacy changes in the past, but emerged largely unscathed. This time seems different, Mr Wehner said.
“I think it is something that people need to take very seriously and make sure that they understand,” Mr Wehner said during a conference call with analysts. “It’s clearly going to make it harder for app developers and others to grow using ads on Facebook and outside of Apple, to some extent.”
Facebook does not break out precise revenues or fees from its Audience Network but in its last quarterly filing to the SEC, it warned about the growing restrictions to data gathering and ad tracking, including Europe’s GDPR privacy regulations and changes to iOS, would “materially and adversely” affect its targeting capabilities, “which would in turn significantly impact our future advertising revenue growth”.
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Content source: https://www.ft.com/content/1a72d3d7-f2ec-4bb1-9f61-d65afba41821
Prepared by: Celine C.