Facebook Just Confirmed its iPhone Privacy Nightmare will Hurt

Since late last year, Facebook has been criticizing Apple’s latest privacy security for iOS 14. Following Apple’s introduction of app privacy labels, which warn iPhone and iPad users about how much data an app can gather, Facebook launched an ad campaign alleging that Apple will damage the open internet and small businesses. The privacy labels revealed the frightening amount of data that Facebook’s apps collect from devices.

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Facebook has intensified its campaign in the months that followed, moving from print ads to TV commercials that were practically begging users not to stop Facebook from tracking them across apps and services on iPhone and iPad. Apple tested the new App Tracking Transparency (ATT) feature that forces developers to ask for consent before their apps can track users.

Apple released iOS 14.5 on Monday with ATT enabled, and apps will soon start asking for permission to track users, Facebook’s apps included. Facebook might have toned down its aggression towards Apple in the past few months, but the company is already bracing for the iPhone nightmare to drop, expecting ATT to hurt its ad business in the coming months.

Facebook sent out a memo to advertisers on Wednesday that Insider obtained (via 9to5Mac), highlighting how ATT will affect advertising on Facebook and Instagram.

ATT can hurt so much because it impacts various aspects of the ad business. Companies like Facebook collect user data from its apps and other third-party apps and services and build profiles. Advertisers can then sell personalized ads targeted to audiences likely to buy or consume their products. By tracking user behavior, Facebook doesn’t just group users into audiences. Tracking also lets Facebook provide detailed statistics to advertisers, so they can see what works best and optimize their campaigns. All these features are going away if people do not allow Facebook to track them.

Facebook said in the memo that ad campaign results would “fluctuate” gradually as users update iPhones and iPads to iOS 14.5. Advertisers will then lose access to some key stats as people opt out of tracking:

1-day click-through opt-out data will be modeled for advertisers.
7-day click-through and 1-day view-through attribution settings will no longer include iOS 14.5 opted-out events.
28-day click-through, 7-day view-through, 28-day view-through attribution tools will no longer be available to advertisers.
Facebook also warns that customers who opt out of tracking will be excluded from specific targetable audiences, which will result in a decrease in audience sizes.

Facebook can continue tracking users inside its own apps. That’s why the company changed tune slightly a few weeks ago, saying that iOS 14.5’s privacy features might be beneficial. Facebook hopes more companies will choose to do e-commerce directly in its apps, where Facebook can still collect data about user behavior without worrying about ATT.

Facebook CEO Mark Zuckerberg also said on Wednesday during the company’s quarterly earnings conference that ATT fallout will be noticeable in the second half of 2021. Facebook CFO David Wehner noted that advertising revenue growth is expected to “significantly decelerate” in the second half of the year. In addition to “platform changes,” he also mentioned “regulatory” changes. ATT could impact Facebook’s bottom line as soon as the second quarter.

Separately, Apple CEO Tim Cook said on Wednesday that the response to ATT has been “tremendous:”

ATT’s focus is really on the user and giving the user the ability to make a decision about whether they want to be tracked or not. And so it’s putting the user in the control, not Apple, not another company, but the user, where it should be. And so that’s really the focus of it and the feedback that we’ve gotten from users both before it went live, when it was in the planning stages and so forth, and after has been tremendous. And so we’re really standing up on behalf of the consumer here.

Cook did not have actual numbers to back up his claims. iOS 14.5 rolled out just a few days before Apple’s quarterly earnings report. He said that even “if it’s very low of people that don’t want to be tracked, it’s worth doing because those people should make their own mind up, whether they would like to be tracked or not.”

iOS 14.5 is available to download on a variety of iPhone and iPad models right now.

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