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Facebook says Apple is hurting small businesses

New rules in Apple’s mobile operating system will limit personalized ads, which small businesses rely on


Facebook took aim at Apple on Wednesday, criticizing the iPhone maker’s new policies limiting personalized ads on Apple products.

Facebook said changes Apple has made to how easily advertisers can track iPhone users will disproportionately harm small businesses that rely on personalized advertisements to reach customers and find new ones. Facebook said its internal research has found that small businesses earned 60 percent less in sales when they were not able to use the kind of targeted advertising Apple aims to limit.

Dan Levy, Facebook‘s vice president for ads and business products, blasted Apple, questioning the company’s motives for a move he said benefits Apple’s bottom line. “We believe Apple is behaving anti-competitively by using their control of the App Store to benefit their bottom line at the expense of app developers and small businesses,” he said during a call Wednesday. Facebook launched a website and took out full-page ads in newspapers to drum up support.

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“We believe that this is a simple matter of standing up for our users,” Apple spokesman Fred Sainz said in a statement. He said the new changes in iOS 14 don’t actually prohibit Facebook from continuing to offer the same tracking. Rather, “it simply requires they give users a choice,” he said. Apple has denied it is making the changes for business reasons. Instead, Apple says, the changes, which require customers to specifically opt into personalized ad tracking, are meant to enhance its customers’ privacy, which the company has called a fundamental human right.

In a letter to human rights groups last month, Jane Horvath, Apple’s senior director of global privacy, dismissed the allegations that the changes would hurt small businesses. “In fact, the current data arms race primarily benefits big businesses with big data sets,” she said. “Privacy-focused ad networks were the universal standard in advertising before the practice of unfettered data collection began over the last decade or so.”

The battle between Facebook and Apple is playing out as both companies come under fire for alleged anti-competitive practices. A lawsuit the Federal Trade Commission brought against Facebook last week seeks to break up the company. Apple has been sued by several developers over the grip it wields on its App Store.

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In Apple’s latest operating system, iOS 14, iPhone and iPad owners receive messages asking them whether they would like to give specific apps permission to track them across the Web via a personalized “identifier for advertisers.” The IDFA has been used by Apple since 2012 to help app developers earn money on iOS. The unique number, assigned to iPhone customers, allows advertisers to track their movements around websites and apps by following that unique identifier.

Until the latest changes in iOS 14, mobile-app developers were allowed to use the IDFA to track Apple customers by default. To stop the tracking, Apple customers had to toggle off the feature in the device’s settings. With the new pop-up messages, customers are confronted with a choice.

Facebook criticized Apple in August for making the change, which had not yet been implemented in iOS 14. Following Facebook’s criticism, Apple delayed the move in an effort to give businesses more time to adjust. At the time, Facebook said in a blog post the move would render its off-platform ad network so ineffective that it may not make sense to offer it to developers at all. “This is not a change we want to make, but unfortunately Apple’s updates to iOS14 have forced this decision,” the company said in a blog post in August.

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Facebook’s criticism of Apple on Wednesday echoes similar criticisms from iOS developers that say the company charges exorbitant fees. Apple collects a 30 percent cut of most revenue app developers earn on the App Store. Apple recently reduced that fee to 15 percent for app developers with less than $1 million in revenue. The fee goes up to 30 percent when they begin earning more revenue.

The Coalition for App Fairness, a group of developers that have banded together to criticize Apple, said it now has 50 members, including the music streaming service Spotify, Fortnite maker Epic Games and online-dating conglomerate Match Group. On Wednesday, the group announced a new member: Digital Content Next, an industry group for online publishers that includes The Washington Post.

On Tuesday, the European Commission unveiled new draft legislation that would rein in large tech companies, including Facebook and Apple, in an attempt to curb alleged anti-competitive behavior.