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Facebook Versus Apple, On Astroturf

Apple makes the majority of its money by selling us gizmos, and it makes most of the rest by dispensing content for which customers are willing to pay. There is nothing wrong with that.

Facebook makes most of its money by learning everything it can possibly learn about us and using that information to target commercial advertising to audiences most likely to be receptive. There is nothing intrinsically wrong with that, either.

Facebook is very, very angry at Apple right now.

The latest version of the iPhone operating system forces Facebook and other app developers to tell their customers, explicitly and upfront, what sort of data they collect and how they use it. Most annoyingly, at least to Facebook, it requires user consent before companies can use that data on behalf of third parties. Picture the maker of baby products whose ads start appearing on your favorite news website seemingly within minutes after you join a Facebook group for new parents. Apple has said developers who try to work around the new rules risk having their apps removed from the company’s App Store.

Facebook launched an aggressive advertising fusillade against Apple this month, just as Apple activated the new limitations in iOS 14.3. But Facebook claims this is not about protecting its own business, worth about $775 billion at this week’s stock prices. It is about protecting the 10 million “small businesses” that, it says, use its tools to “find new customers, hire employees and engage with their communities.” Citing its own internal data, Facebook says such a business “stands to see a cut of over 60% in their sales for every dollar they spend.” Or least every dollar they spend on Facebook.

“Small businesses deserve to be heard,” Facebook declared. “We hear your concerns, and we stand with you.”

Uh-huh. If the Associated Press Stylebook we follow in this blog allowed for an eye roll emoji, you would be looking at one right now.

Personally, I think a lot of internet privacy concerns are overblown. It doesn’t bother me if Facebook’s Instagram platform offers me content from National Geographic or Smithsonian Magazine just because I happen to post a lot of wildlife pictures. And it doesn’t bother Apple, either, as long as it doesn’t bother me. All Apple is doing is forcing Facebook to check with me first.

Facebook, on the other hand, is being cloyingly duplicitous. If Mark Zuckerberg and his minions really want to do something helpful for small business, they can stop choking the life out of “organic” distribution of Facebook content to force businesses to buy ads. The average organic reach of a page’s post (as opposed to an individual’s) hovers just above 5%. An indie musician might have 20,000 Facebook likes on her professional page, but unless she pays up, she will be lucky if 1,000 of these followers get to see her latest music video in their news feeds.

Google has a dog in this fight, too. Or a whole kennel. Its search advertising and ad placement businesses depend on intimately detailed user data, just as Facebook’s business does. But Google also sells devices, and an Android operating system, that compete directly with Apple’s products. It isn’t eager to alienate those customers. So Google is taking a lower profile in this tussle over control over the data that is generated by their use. But that doesn't mean it isn’t fighting; it just chooses less-conspicuous ways to do it.

If Google’s weapon of choice is a silencer-equipped Magnum, Facebook’s is a howitzer. Ads targeting policymakers who read The New York Times and similar outlets, and pseudo-grassroots organizing on behalf of small business (known as Astroturf inside the Beltway) are only part of the initiative. Facebook is trying to gin up an antitrust angle against Apple, too. Facebook claims Apple is using monopoly power to force app developers into paying the “tax” of up to a 30% share of in-app purchases in exchange for placement in the App Store. Epic Games, which makes the popular game Fortnite, is already embroiled in a legal battle with Apple on this count. Facebook has now said it will play a supporting role in the suit.

And in an echo of my long-vanished youth, Facebook has dredged up the claim that Apple’s screen power will kill “free,” advertising-supported content in favor of paid-subscription models. You know who made that argument decades ago? Broadcasters, against cable TV operators. And you know what happens now? Cable operators and other distributors pay broadcasters for the privilege of carrying signals that most viewers could opt to receive for free, over the airwaves. Except for occasional blackouts when they are feuding over contract terms, cable operators and broadcasters coexist pretty well.

Facebook also argues that Apple takes advantage of its own information-gathering position to benefit its in-house products and advertising sales. That bag of gas likewise has about as much staying power as the atmosphere that once may have made rivers run on Mars.

It’s true that Apple’s music and video services use customer histories to offer suggestions for additional streaming, just like Netflix and every other streaming service. And Apple’s TV app, to cite an example, can use customer interests to help target ads on Apple News and other products. But Apple discloses this in clear language as soon as you fire up the software, and tells users where and how they can opt out. In other words, it does pretty much what it is now demanding of Facebook and everyone else. Facebook would argue that opt-outs are much less disruptive to its business … er, to small business … than the new App Store rules, which iPhone’s built-in apps avoid. Point taken. As soon as Facebook starts building hardware and an app store that people want to use, the way Google did, the playing field will be leveled.

Even with Apple’s new rules, you can still have your free, customized weather app. You can still let the software know your location (a pretty important feature for a weather app). And you can still let it sell that data to advertisers to keep the product free. But Apple says the developer needs to ask, clearly and nicely, for your consent first.

As Apple put it in a statement responding to the Facebook ads, “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.”

There’s nothing intrinsically wrong with making app developers ask for permission before collecting and selling user data. Except, maybe, that it makes Facebook see nothing but angry-face emoji. You would be looking at one right now, but there’s that danged AP Stylebook again.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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