When companies as diverse as Twitter Inc. and Unity Software Inc. reported earnings this month, they had one thing in common: Fear and uncertainty about what Apple Inc.’s iOS update will have on the bottom line.
and Zynga ZNGA,
to track users across their apps.
“Assuming that the global pandemic continues to improve and that we see a modest impact from the development of changes related to iOS 1
“IDFA [is] will require our customers to calibrate much of what they do in connection with procurement or revenue generation and their marketing strategies, “said Unity Chief Financial Officer Kim Jabal to analysts at the company’s interview, noting that the company’s platform specialist expects IDFA changes to reduce the annual turnover of around $ 30 million in 2021.
Their frontier to Apple AAPL,
not only raises the heat at the Silicon Valley power station, but can also flow into the Department of Justice’s ongoing investigation, as well as impacting thousands of small businesses and start-ups nationwide.
Finger pointing and naming counteract long-standing competition between four companies – Apple, the Google parenting alphabet GOOGL,
Amazon.com Inc. AMZN,
and Facebook Inc. FB,
– which are under the control of a phalanx of investigative bodies over their business practices and enormous influence in several markets. Antitrust experts jokingly refer to those investigated as GAFA.
What is at stake extends far beyond the main antagonists Facebook and Apple, and to thousands of small businesses that rely heavily on Facebook and Instagram to target customers, Athan Slotkin, a business consultant and strategist, told MarketWatch.
“For small businesses, start-ups and entrepreneurs, the first thing they think of is getting advertising to go to Facebook and Instagram to reach a larger audience and target their message,” Slotkin said. “It [iOS 14] will force advertisers to diversify their advertising channels ”and consider alternatives such as Google, TikTok, Clubhouse and Triller, he added.
Facebook is set to be the biggest loser – missing out on up to $ 5 billion a year in advertising, Mike Woosley, CEO of Lotame, a data-enrichment company, told MarketWatch. In addition, advertising partners in Facebook’s trajectory can lose hundreds of millions of dollars annually, he said.
With so much at stake, this earnings season has been framed as much by the daunting spectrum of iOS 14 as by a booming advertising sales. Facebook Inc. FB,
Snap Inc. SNAP,
Pinterest Inc. PINS,
and Unity Software U,
everyone warned about the harmful effects of the updated operating system’s new privacy features.
Facebook CEO Mark Zuckerberg, whose company is taking legal action against Apple, said the privacy updates “clearly track their competitive interests.”
“This dynamic is important for people to understand, because we and others will oppose it in the foreseeable future,” Zuckerberg said during Facebook’s fourth-quarter results on January 27, thanks to the concerns of Facebook CFO David Wehner.
For about a week, Facebook began displaying a prompt in the mobile app designed to convince users to allow ad tracking in preparation for the upcoming privacy change. This early data will show how Apple’s privacy change could affect the social network’s operations before the planned update in early spring.
Last week, the aquarium was rendered by Snap, Pinterest and Unity.
“Option figures from users will affect the extent of headwinds we see in the industry. And we are keeping an eye on that, “said CFO Todd Morgenfeld, Pinterest.
It can get worse for CFOs and the companies they work for. Growing evidence is that Apple is not alone in its new approach to modernizing the privacy settings of the updated operating system, says at least one Wall Street analyst.
Read more: Big Tech strikes at each other among antitrust probes and lawsuits
Robert Baird analyst Colin Sebastian warned in a recent note that Google could follow Apple’s limitations for Android.
The concerns of CFOs despite the fact that it is well within Apple’s rights to impose a privacy-heavy framework that plays into the business model while protecting the personal information of customers, say legal experts.
“It’s Apple’s operating system. These are Apple’s intellectual property rights. They can define what they want, and let the consumer ultimately decide. So Facebook’s complaints are out of place, ”Anthony Sabino, a law professor at St. John’s University, told MarketWatch. “Apple claims that they are making these changes to improve – and not reduce – consumer privacy. Given that this is such a hot-button issue, Facebook can be seen as swimming against the tide and favoring more, not less, privacy for consumers. ”
To be sure, it should come as no surprise that Facebook is leading the criticism of Apple. Maybe no other company has as much to lose financially and brand as Facebook has – the latest consequence of a controversial, long-running series with Apple due to contrasting business strategies.
Apple has become the largest public company in the world by charging many consumers too much money. Conversely, Facebook is actually an advertising company that does not sell to consumers, but shares its data with advertisers.
In thinly veiled comments directed at Facebook to name the company, Apple CEO Tim Cook told a privacy conference last month: “If a business is built on misleading users, on data exploitation, on choices that are not choices at all, so it does not deserve our praise. It deserves reform. For many, the question still remains: ‘How much can we get away with?’ when they need to ask, ‘What are the consequences?’ “
Read more: Why Facebook is considering a lawsuit against Apple
Facebook’s argument is as motivated by politics and PR as it is by the bottom line, according to Vasant Dhar, a professor at the Stern School of Business and the Center for Data Science at New York University.
“It is in their interest to keep users in the dark, that is, unaware of how they are being tracked,” Dhar told MarketWatch. “Most people are not aware of it. Apple is taking a step in this space by consolidating its position as a privacy advocate, where their products speak for themselves and their data does not monetize advertising. “
In fact, not all advertising-dependent companies opposed iOS 14 during the earnings season. Some, like Yelp Inc. YELP,
have models in play that cut the problem.
“It simply came to our notice then [to us] because we have direct traffic that we show ads, says Yelps CFO David Schwarzbach to MarketWatch.