Your iPhone will soon be a battlefield in the clash between Apple and Facebook.
When Apple updates iOS14, its iPhone and iPad operating system, in the next few weeks, you and up to about 1 billion or so of its users will face a decision: Do you want apps like Facebook to keep collecting data to offer personalized ads across other sites and apps?
iPhone users currently can go into settings to prevent cross-site tracking. But Apple is adding this "App Tracking Transparency" feature to give consumers more control over how their data is handled.
So while tech titans Facebook and Apple are facing off over privacy and the collection of user data, the real conflict runs deeper, hitting at how they operate and make money.
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Apple CEO Tim Cook has said he thinks too much data is being collected needlessly and that it can be exploited. "Technology does not need vast troves of personal data, stitched together across dozens of websites and apps, in order to succeed," he said at the International Conference on Computers, Privacy & Data Protection, a virtual gathering on Jan. 28. "Advertising existed and thrived for decades without it."
The biggest target of this change is Facebook, which has built its $40 billion U.S. digital advertising business — second only to that of Google's $50 billion, eMarketer estimates — on being able to help marketers deliver more relevant ads to consumers based on what they like and other sites they visit.
Facebook has said it plans to issue its own prompt to iPhone and iPad users asking app users whether they will allow the social network to track their activity as a means of delivering more personalized ads. "Personalized ads are an important way people discover small businesses on Facebook and Instagram, and how these ads help small businesses grow from an idea into a livelihood," Facebook said in a post in late February. .
Those ads also allow Facebook and Instagram to be free services, the company says.
Apple's strategy, it counters, "is about profit, not privacy," said Dan Levy, Facebook's vice president of ads and business products, in a December 2020 online post. "It will force businesses to turn to subscriptions and other in-app payments for revenue, meaning Apple will profit and many free services will have to start charging or exit the market."
A suit filed by Epic Games, the publisher of popular online video game "Fortnite," echoes the criticism that Apple is attempting to use its position to boost app revenue. Apple gets a 30% cut of spending in many apps on iOS devices — just as Google does on Android devices.
What will the Apple iOS14 update do?
Sometime after your software updates, Facebook will have to issue the prompt. If you opt in, your activity on Facebook and other apps will remain as it is. But what happens if you decide to not let Facebook track you?
Your activity on Facebook will likely lead to more notices — similar to warnings you see on sites that must adhere to the General Data Protection Regulation (GDPR) passed in 2018 by the European Union to give consumers more control over their personal data, said Michael Pachter, managing director, equity research for Wedbush Securities.
"This prompt and message will appear automatically and that’s why it’s just a battleground for Facebook versus Apple," said his Wedbush Securities colleague Daniel Ives.
Does Apple or Facebook have higher ground?
Apple has less at stake in this showdown because "consumers don’t really care about the machinations of not being tracked more closely," said Patrick Moorhead, founder and president of Moor Insights & Strategy. However, if consumers opt-out of tracking, ads that consumers see likely won’t be as relevant, "which will be annoying," he said.
Facebook could face as much as a $3 billion U.S. advertising revenue decline if iPhone users don't opt in. "Long-term, this could negatively impact revenue of any website that relies on advertising, like news outlets," he said.
Does data privacy really matter to consumers?
Some say the data collection debate is long overdue.
"I have said for a long time that once you have consumers aware of how much of their information is simply being taken and used that it would be a significant blow to Facebook and others’ business models," said Columbia Business School professor and corporate strategy expert Rita McGrath.
Facebook users don't realize that when they post a baby picture, for instance, that "the minute you post that thing, they own it and they own it forever" and other data, such as where and when you took the photo can be connected by data brokers to create personal profiles, she said. "If you had that little warning before you interacted with Facebook, people would abandon it in droves," said McGrath, who is also the author of "Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen."
Still, despite some very public misuses of Facebook data, "consumers keep coming back," Moorhead said.
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Privacy, along with antitrust, is among the topics involving Big tech the Biden administration and Congress are expected to tackle in the near future.
The threat of regulation to Big tech is palpable. Recently, Google said it would get rid of third-party cookies in its Chrome browser. That data, used in Google's digital advertising, tracked your online activity and could be used to deliver targeted ads. That’s the technology behind those creepy ads that follow you wherever you travel on the Internet, McGrath notes.
"Apple does have something of a higher ground position" on privacy, she said. But its app store model could be a regulatory target. "They are basically saying Apple gets 30% of everything I do, which is an unbelievable margin," she said.
Like past monopolies such as Standard Oil and Microsoft, today's massive tech companies need some regulation because, "there is no boundary to what’s OK at the moment," McGrath said.
Contributing: The Associated Press
Follow Mike Snider on Twitter: @MikeSnider.
This article originally appeared on USA TODAY: Why Facebook, Apple want to control what your iPhone shares