Privacy wars heat up on Apple and Facebook earnings calls

Facebook says the update will start impacting its business in Q2.

(Photo credit: Getty Images).
(Photo credit: Getty Images).

Apple's iOS 14.5 software update, which went into effect this week, was a big topic of discussion on Big Tech earnings calls. 

The update, which allows users to opt-in to being tracked by apps on iPhone and other Apple devices, is being championed by Apple as a push for greater consumer privacy. 

Facebook, on the other hand, which stands to lose an estimated 7% of its revenue, or $5 billion, from the change, has been pushing back on it hard for months, citing the impact it could have on small businesses that use its platform for targeted ads. While it's too early to gauge the impacts of Apple’s update yet, Facebook was vocal about how the new App Tracking Transparency framework will affect its business in Q2. 

“There are challenges coming to personalized advertising and we’ve been pretty open about that,” Facebook COO Sheryl Sandberg said on the earnings call on Wednesday. 

She said the platform is “doing a huge amount of work to prepare” for the changes to tracking, including working with advertisers to implement Apple’s measurement API as well as its own Aggregated Events Measurement API “to mitigate the impact of the iOS 14.5 changes.”

“We’re rebuilding meaningful elements of our ad tech so that our system continues to perform when we have access to less data in the future,” she said. “And we’re part of long-term collaborations with industry bodies like the W3C on initiatives like privacy enhancing technologies that provide personalized experiences while limiting access to people’s information.”

So far, the update hasn’t impacted Facebook, which posted a whopping 46% revenue increase in Q1, with CPMs up 30% year over year on strong advertiser demand. But even though Facebook is reluctantly complying with Apple’s new rules -- it doesn’t really have a choice -- it’s not going to stop beating the drum on personalized advertising. 

“It’s also on us to keep making the case that personalized advertising is good for people and businesses, and to better explain how it works so that people realize that personalized ads are privacy-protective,” Sandberg said. 

“Small businesses don’t have to understand the alphabet soup of acronyms they’ll need to comply with, but they do need to have confidence that they can still use our tools to reach the people who want to buy what they’re selling in a privacy-safe way," she added. 

To drive the point home, Sandberg told the story about a yoga studio in Detroit that used Facebook’s targeted advertising tools to reach people who practice in the area. 

“[They] can't afford to advertise to everyone in Detroit, much less everyone in Michigan, much less everyone in the U.S. And so, advertising using who lives there and who's likely to be interested in yoga and meditation is really important,” Sandberg said.

“Like everyone else, the business owners I talk to want to know what will happen next," she added. "Many are all-in online, so even when things reopen fully, they want to be able to do more online than they did before.”

Facebook CFO Dave Wehner added that the update is more concerning for small businesses on Facebook’s platform than for Facebook’s business itself.

“The impact on our own business, we think, will be manageable,” he said.

While Facebook devoted significant time talking about iOS 14.5, Apple CEO Tim Cook didn’t have much to add beyond reiterating the company’s stance on privacy. When asked about opt-in rates for tracking on iOS 14.5, Cook said “I don't even know the answer to that.”

“It's not something that we would have predicted beforehand,” he said. “And frankly, even if it's a very low [number] of people that don't want to be tracked, it's worth doing because...those people should...make their own mind up.”

Still, it’s clear that Apple’s tracking update is advantageous to its own advertising business, as the company will offer more data, more quickly about its own ad units than those sold by third-parties. Apple also seems to be doubling down on its own ad business while it restricts others, launching a new ad unit in its app store. 

“Apple has a number of private APIs on hardware and software that advantage their own products and services in ways that are challenging, and we face that issue with, in places like our messaging products and even with the hardware products we're launching,” he said.

In that context, advertising seems to be boosting business for Apple.   

“Consumer sentiment has improved and advertising is coming back,” said Apple CFO Luca Maestri on the earnings call. “And so the combination of these factors really delivered this very, very strong performance during the March quarter." 

This story first appeared on campaignlive.com. 

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in