Could Apple seriously harm Facebook's business model with this single update? And what will happen to the developers?
Earlier this week, in an article I wrote about Epic's lawsuit against Apple, I briefly mentioned the little argument between Apple and Facebook. You can read it here,
but the TLDR is, Facebook released an update that told users that Apple would take a 30% commission on transactions made on Facebook's IOS application.
Facebook currently supports a recent feature that allows you to organize paid online events (think the birthday party is reserved for small businesses).
Due to the recent pandemic, Facebook has stated that it will support small businesses and events by not charging fees for at least the next year, meaning that small businesses will be able to keep 100% of their earnings.
The problem is on iOS: Apple takes 30% in almost all circumstances of any in-app purchase. Including those on Facebook.
Facebook tried to ask Apple to make an exception given the current pandemic, but Apple refused and blocked the update informing users of Apple's 30% commission.
Now, this is clearly a bad image for Apple, but the giants ended up neck and neck once again, and maybe in favor of Apple this time.
Privacy in question !!!
It's all about iOS 14 and something called IDFA.
What is the Identifier for Advertisers (IDFA)?
The Identifier for Advertisers (IDFA) is a random device identifier assigned by Apple to a user's device. Advertisers use it to track data so that they can serve personalized ads. The AID is used to track and identify a user (without revealing personal information).
The data can then be used to discover information such as in-app events that a user triggers. IDFA can also identify when users interact with a mobile advertising campaign, provided the channel offers IDFA tracking and the advertiser tracks users with whom the interaction is as successful. If this happens, IDFA can determine whether specific users click on an ad for payment and attribution purposes.
Why is the Advertiser ID (IDFA) important?
IDFAs are important because they provide an accurate way to track iOS users. By assigning a device to a single IDFA, advertisers who are able to track the IDFA as part of a campaign have greater certainty as to the determining qualities of that user and whether or not they have moved because of an ad campaign. The GIFI also provides a welcome level of privacy for users. This can have additional effects for advertisers, while the depersonalization of user data by the IDFA ensures that it is on the right side of data protection efforts.
The Android equivalent of the Advertiser ID is called GPS ADID (or Google Play Services ID for Android). The user has access to their GPS ADID in the settings menu under "Google - Ads". He can also reset the ID and refuse the personalization of the ads.
This is really important to understand because this is the main way companies like Facebook follow you outside of their own application on iOS. And it's what drives the majority of targeted ads on the platform, which is Facebook's core business.
But the biggest change in iOS 14 is that Apple is going to let users choose to join the service. Previously, they could opt out, but that wasn't really a feature that was advertised so much, which means that Facebook already has all these users on board.
With the current public debate about data privacy and the fact that more and more people want to have control over their data, one would think that few people would agree to participate in the service.
It is important to know that IDFA does not collect information that personally identifies you as your name. This makes it partially anonymous while still allowing advertisers to track you.
Facebook uses what is known as its audience network. The Audience Network is essentially a plugin for developers, developed by Facebook, to use when they want to add ads to their applications.
Today, the Audience Network relies on IDFA to collect data and provide results on the best ads to run on certain devices.
It's easy to imagine that this change will only affect Facebook and that Apple will help make data privacy even more important in the next version of the IDFA.
But ads are a major reason why many applications can be free and continue to help developers and publishers through non-direct payments. With this change, according to Facebook,
We know that this could have a serious impact on the ability of publishers to monetize via Audience Network on iOS 14, and, despite our best efforts, could make Audience Network so inefficient on iOS 14 that it may not make sense to offer it on iOS 14 in the future.-Facebook
This basically means that developers will have to watch other advertising programs from Google or maybe in the future from Apple themselves to generate profits.
Facebook has said that it expects "less impact" on its own advertising activities, as it does not need information at the device level, but the loss of an audience network across an entire platform will be a huge loss for them and a considerable source of revenue that will disappear.
The other side of all this is the users themselves.
Data privacy is important and these new changes are, in my opinion, welcome in an environment where it is currently difficult to tell how my own data is collected by all these large companies. It finally gives users direct control over which applications I trust to follow me (the answer is none, I really don't mind irrelevant ads).
More than that for Apple, it can serve to make a huge difference between iOS and Android. If you want to protect your privacy and your data, iOS (and especially Apple) is the ideal solution.
I'd like to know what you think.
Do you want more privacy and control? Do you think Facebook will be hit hard or do they already have a solid model in place? And what about the publishers and developers who seem to be really in the ascendancy?
I'll leave you with this last quote
"We believe that Facebook and targeted advertising is a lifeline for small businesses, particularly in the Covid era, and we are concerned that aggressive platform policies will reduce this lifeline at a time when it is so critical to the growth and recovery of small businesses."- Wehner