Facebook is speaking up for small businesses. According to social media platform giant, Facebook, Apple’s new iOS 14 policy will have a harmful impact on many small businesses that are struggling to stay afloat and on the free internet that we all rely on more than ever. This will largely impact small businesses with the AppTrackingTransparency feature. This will reportedly force businesses to turn to subscription and other app payment systems for revenue.
iOS 14 now requires app developers to provide information for a privacy “nutrition label” that is displayed next to the download button in the app store, and sometime early this year will force apps to warn users about tracking done for personalized advertising. In the eyes of some of the other titans of tech, most notably Facebook, this amounts to anticompetitive behavior.
Facebook’s criticism is not rooted in harm to its own platform, however; it points to an expectation of disproportionate damage done to small businesses that rely on personalized ads and tracking technologies to compete with enterprise-scale advertising budgets.
Here is an overview of what Apple is doing and where Facebook stands:
- They’re creating a policy — enforced via iOS 14’s AppTrackingTransparency — that’s about profit, not privacy. 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.
- They’re hurting small businesses and publishers who are already struggling in a pandemic. These changes will directly affect their ability to use their advertising budgets efficiently and effectively. Our studies show, without personalized ads powered by their own data, small businesses could see a cut of over 60% of website sales from ads. We don’t anticipate the proposed iOS 14 changes to cause a full loss of personalization but rather a move in that direction over the longer term.
- They’re not playing by their own rules. Apple’s own personalized ad platform isn’t subject to the new iOS 14 policy.
- We disagree with Apple’s approach, yet we have no choice but to show their prompt. If we don’t, we’ll face retaliation from Apple, which could only further harm the businesses we want to support. We can’t take that risk.
This means that Apple will profit and that various free services will have to start implementing charges to function in the market. In a domino effect, the new feature will affect small businesses advertising budgets.
In an official press statement, Dan Levy, VP Ads and Business Products for Facebook sheds light on the importance of personalised ads controlled by small business owners.
“Our studies show, without personalized ads powered by their own data, small businesses could see a cut of over 60% of website sales from ads. We don’t anticipate the proposed iOS 14 changes to cause a full loss of personalization but rather a move in that direction over the longer term.”
Facebook claims that Apple is not following the AppTrackingTransparency guidelines as its personalised ad platform is not subject to the new iOS 14 policy.
“We disagree with Apple’s approach, yet we have no choice but to show their prompt. If we don’t, we’ll face retaliation from Apple, which could only further harm the businesses we want to support. We can’t take that risk,” adds Levy.
AppTrackingTransparency implications
The internet has played a pivotal role in inspiring and generating the creation of new small businesses, allowing entrepreneurs to turn a single idea into a revenue-generating business. As a critical tool for businesses, the internet enables businesses to reach a wider customer base, market their products, or services at an affordable rate.
Facebook has enabled small business owners to run a campaign via their mobile devices, minimizing the costs and the need for a middle man.
Levy outlines that the new policy by Apple will only benefit big businesses.
“I mention all of that because what Apple is proposing with their iOS 14 AppTrackingTransparency policy puts this at risk — benefitting big businesses and hurting small businesses. We’ve heard from many of you, small businesses in particular, that you are concerned about how Apple’s changes will impact your ability to effectively reach customers and grow — let alone survive in a pandemic.”
Small businesses have a small budget available for advertisement and if they are unable to target their specific audience and maintain control of their ad reach, generating revenue and reaching customers will prove to be difficult.
“Case in point, our studies show that when running ads on the Facebook family of apps to drive sales on their websites, small business advertisers saw a cut of over 60% of their sales, on average, for every dollar they spent when they weren’t able to use their own data to find customers on Facebook,” explains Levy.
The internet allows SMMEs to reach more customers via their advertisements, generating overall revenue which helps the business stay afloat. Given the impact of Covid-19 on small businesses across the globe, a secondary blow could cause many of these businesses to face closure.
“We believe that personalized ads and user privacy can coexist, without the collateral damage iOS 14 will bring. We, and others in the industry, are investing deeply in solutions that increase privacy while still enabling businesses to thrive online. Unfortunately, Apple is making far-reaching changes without input from the industry and the businesses most impacted. Why? As far as we can see, Apple has another strong motive. If these changes go through, established businesses with large marketing budgets will have the advantage — once again — taking us back to the age of TV advertising. But the big business that benefits the most is Apple,” explains Levy.
Facebook has taken a stance against Apple and is reportedly committed to providing critical and relevant information to the existing case of Epic Games versus Apple. Epic Games is in a legal battle with Apple regarding its restrictions on apps from having other in-app purchasing methods aside from the one offered in the Apple App Store.
“Facebook agrees that it is critical for the Court to understand the broader implications of the unfair policies that Apple imposes on iOS developers, among many other businesses,” concludes Levy.
