leveled a further round of criticism against changes to
latest mobile operating system Thursday that will make it harder to target advertisements at users, cutting into revenue for businesses that rely on such ads.
Shares of Apple (ticker: AAPL) rose less than 1% to $128.91, as Facebook (FB) advanced 0.7% to $277.52 in afternoon trading Thursday.
In its second consecutive full-page ad in major national newspapers on the topic, Facebook argues that the changes to how apps can target ads will force people that make apps, or content from them, to come up with other ways to make money. That means consumers may have to pay for previously free services.
“To make ends meet, many will have to start charging you subscription fees or adding more in-app purchases, making the internet much more expensive and reducing high-quality free content,” reads Facebook’s ad, headed “Apple vs. the free internet.”
The ad further claims that the changes could hurt small businesses because many have begun to use ads on social media. The company says, based on its own data, that the changes Apple has planned will cut the additional revenue small businesses get from each dollar of ad spending by 60%.
Facebook as been at odds with Apple for months over the changes, which are expected to be rolled out early next year.
Apple said in a statement that through the changes, the company is standing up for its customers, who should be aware of when and what data is collected and shared. “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,” the emailed statement reads.
The changes Apple has announced have already hurt other developers’ stocks, such as mobile-videogame publisher
(ZNGA). The majority of the company’s revenue is from other sources, but investors have been concerned over the impact on its sales. Barron’s wrote positively about the stock in October, and the company has said it has a plan to mitigate any potential damage to its ad sales.
Thursday’s newspaper ads are part of a monthslong fight over changes to a so-called advertising identifier that is built into Apple’s mobile operating systems. Advertisers use the identifier, called IDFA, to help track what people do online, including what they buy and what sites they visit. The IDFA is currently enabled by default, but the change to iOS will require users to opt in to allowing such tracking. That is likely to reduce its use.
The Thursday print advertisement ran in The Wall Street Journal, the
New York Times
, and the Washington Post, Facebook said. The Wall Street Journal is owned by Dow Jones, Barron’s publisher.
It isn’t clear exactly what the change would mean for Facebook’s sales, but it will likely affect the Facebook Audience Network within its advertising segment. The network allows advertisers to buy ads in third-party apps that deploy Facebook’s tech.
In an October conference call, Facebook CFO David Wehner said the biggest effect will be on app installations, which would hurt the audience network and be a significant challenge for developers. “We’re looking at various options but our best view is that there are going to be significant headwinds next year as a result of these changes specifically on iOS 14,” he said.
The company also addressed concerns over IDFA in a conference call held after it released its second-quarter results.
On Wednesday, Facebook published another ad and a blog post that argued Apple’s changes are related to profit, not protecting its customers’ privacy, as the company has said. Facebook said that the decision amounts to a tax on developers because they would be subject to Apple’s app-store fees of 15% to 30% if they used non-advertising methods of revenue generation in their apps. Facebook also claims that the changes are designed to push developers to use Apple’s own ad platform.
Apple stock has returned 79% this year, compared with 37% for Facebook. The S&P 500 index returned 15% for investors in 2020.
Write to Max A. Cherney at [email protected]