The dispute centers over Facebook’s once-secret effort to pay users -- some as young as 13 years old -- $20 each month to install a research app that could collect intimate information about their online behavior and communications, an effort to give the social-networking giant a new edge over its competitors. To get the app on consumers' devices, Facebook took advantage of an Apple program that allows companies to create apps for their own employees and offer them without first submitting them to the iPhone giant for review.
Apple’s developer program allows developers to test and use their software outside of its App Store, and these apps are not subject to the same privacy and data policies as those intended for public consumption. Apple said that Facebook’s practices amounted to a breach of the agreement. In response, Apple prohibited Facebook engineers from using this feature to test beta versions of their primary app and other offerings including Instagram, according to a source familiar with the matter but not authorized to speak on the record.
“We designed our Enterprise Developer Program solely for the internal distribution of apps within an organization, Apple said. “Facebook has been using their membership to distribute a data-collecting app to consumers, which is a clear breach of their agreement with Apple.”
Facebook said in a statement Wednesday that the nature of the data collecting app was not secret.
“It wasn’t 'spying’ as all of the people who signed up to participate went through a clear on-boarding process asking for their permission and were paid to participate,” the company said. Facebook added that less than 5 percent of the users who participated in the research were teens, who signed parental consent forms. But Facebook declined to how say how many young people actually signed up for the app.
The standoff between Apple and Facebook erupted hours before the social-networking giant reported record quarterly revenues from the fourth quarter of 2018 that beat analysts' expectations. Facebook posted revenue exceeding $16.9 billion, and the company said it had 1.2 billion daily active users. It estimated about 2.7 billion people use Facebook along with its other services, including the photo-sharing app Instagram and its messaging tools, Messenger and WhatsApp.
Facebook shares soared nearly nine percent in after-hours trading, after closing up 4 percent during the regular session.
“Our community and business continue to grow,” Facebook CEO Mark Zuckerberg said in a statement. “We’ve fundamentally changed how we run our company to focus on the biggest social issues, and we’re investing more to build new and inspiring ways for people to connect.”
Apple’s decision to punish Facebook reflects an intensifying war between the two companies over privacy. The iPhone giant’s chief executive, Tim Cook has faulted Facebook for its data-collection practices since the revelations in 2018 that it mishandled 87 million users' personal data in a scandal that since has become the subject of a federal investigation.
Last year, Cook broadly slammed social-networking companies in a speech for creating a "data industrial complex" that allows those firms to "know you better than you may know yourself." In the meantime, Cook has called on Congress to adopt sweeping new limits on how companies collect and monetize consumers' personal information.
Some lawmakers sharply rebuked Facebook on Wednesday in response to the reports about its data-tracking app. “Wiretapping teens is not research, and it should never be permissible," Democratic Sen. Richard Blumenthal said in a statement. "This is yet another astonishing example of Facebook’s complete disregard for data privacy and eagerness to engage in anti-competitive behavior."
Facebook said Wednesday it is shutting down the app to Apple customers. The app, first reported by TechCrunch, had targeted users between ages 13 and 35. In some advertisements for the app displayed on Instagram and Snapchat, teens were targeted to participate in a paid social media research study, and if they tried to sign up were asked to get their parent’s approval through a Web form.
Facebook did not respond to questions about if it is still operating the same app for Android users.
Last year, Facebook yanked a data-security app called Onavo from the app store after Apple ruled the app violated its data collection policies. Onavo, which was billed as a virtual private network designed to keep users safe from malicious websites, allowed Facebook to track and analyze users’ activity on their phones, the Wall Street Journal reported, giving the company insight into rival apps and new software offerings.
The latest privacy-related issue at Facebook comes on the same day the company will report its quarterly earnings. Last period, the company disclosed slowing user growth, as it loses users in Europe and invests more resources in combating misinformation on the network.