Late last week, Facebook bought full-page ads in the leading national dailies contending that Apple’s new policy, which will require apps running on iOS to allow users to opt out of tracking beginning early next year, will hurt small businesses. The ads—taken out in The New York Times, The Washington Post, and The Wall Street Journal on December 16—claim that Facebook is “standing up to Apple for small businesses,” for whom Apple’s changes will be “devastating.” With its not-so-subtle implication that Apple doesn’t care about lifting up the little guys, the campaign amounts to a mammoth bat-swing at the company, especially in this moment of antitrust inquiry and anti-monopoly reckoning. But while the social media giant is leading us in a seemingly virtuous direction, the reality is quite different. Facebook’s contentions that this is bad for small business are most likely self-interested. But they are also plain wrong.
The nuts and bolts of Apple’s new policy, which will apply to iOS 14, are pretty clear: Data tracking is not allowed if the user chooses to disable the option. And that choice must be presented to the user through Apple’s AppTrackingTransparency framework, which, in the user interface, appears as a typical iPhone pop-up query. Apple has further indicated that the kinds of practices that will qualify as tracking include in-app ad display targeted at users with the aid of third-party data, sharing of location data with brokers, sharing of personally identifiable information like email addresses with third-party ad networks for ad-retargeting or lookalike targeting, and use of third-party SDKs that use in-app data for commercial ad-targeting services.
This definition of tracking can be considered appropriately broad. It could be broader—Apple offers some examples of practices that will still be allowed under the new policy. But as with every decision, there are natural trade-offs, and Apple has faced tremendous pushback from app developers and major tech firms in response to the announcement. The new policy doesn’t come out of the blue, though. Some have suggested that Apple, along with other major tech firms, including Facebook, are instituting (or already have established) such policies in light of the growing regulatory stick in the air on all matters related to user privacy; the European Commission and the state of California, for instance, have each recently pushed new standards that favor their constituents’ privacy rights. And we could soon see similar moves at the federal level in the United States, resulting either from the recently-pushed antitrust suits or the possibility of a reformative baseline privacy law.
Facebook’s ads claim that small businesses will be impacted—that its many app developers and small business advertisers around the world will suffer in the long run as a result of Apple’s privacy-minded changes. Notably, the newspaper ads mention that 44 percent of “small to medium businesses started or increased their usage of personalized ads on social media during the pandemic” and that the “average small business advertiser stands to see a cut of over 60 percent in their sales for every dollar they spend.”
But when one examines the technical changes that Facebook announced to its developer community in order to comply with Apple’s update, the idea that small businesses advertising on its platform stand to lose a lot of revenue begins to look quite shaky. According to the post, Facebook will tweak engagement measurements so that advertisers cannot track more than eight types of “conversion events,” or in-app user actions that it measures to assess the effectiveness of ad-targeting algorithms. There will also be some minor technical changes to the implementations of Value Optimization, Facebook’s algorithmic tool that maximizes revenues generated from ad targeting by predicting how much a given user will spend in an app, as well as dynamic ads, measurement of performance of ad campaigns, and a subset of Facebook’s developer APIs.
These are manageable changes—minor coding fixes—for small businesses who depend on Facebook to reach their customers and know their buying habits. But more to the point, they are changes that hurt Facebook and its affiliated data brokers and ad networks—not the main-street small businesses evoked by Facebook’s newspaper ads.