Facebook and Apple Are Beefing Over the Future of the Internet

Last July, Facebook CEO Mark Zuckerberg, along with the heads of Google, Amazon, and Apple, spent a long day fielding heated questions from members of the House antitrust subcommittee. Did he realize at the time that the most immediate threat to his company’s business model would come not from Congress, but from one of the other executives at the hearing?

If he didn’t then, he does now. On Thursday morning, Apple CEO Tim Cook gave a speech explaining his company’s upcoming privacy changes, which will ban apps from sharing iPhone user behavior with third parties unless users give explicit consent. And he made plain that these new policies were designed at least in part with Facebook in mind. Speaking as part of a conference convened for International Data Privacy Day, Cook excoriated the social media business model, which is based on monitoring people’s behavior in order to target ads to them.

“The fact is that an interconnected ecosystem of companies and data brokers, of purveyors of fake news and peddlers of division, of trackers and hucksters just looking to make a quick buck, is more present in our lives than it has ever been,” he said. “Technology does not need vast troves of personal data, stitched together across dozens of websites and apps, in order to succeed.” Cook didn’t mention Facebook by name, but he didn’t need to. It was perfectly clear who he had in mind when he posed rhetorical questions like, “What are the consequences of seeing thousands of users join extremist groups, and then perpetuating an algorithm that recommends even more?” It sounded like something out of the documentary The Social Dilemma—in fact, Cook used that exact phrase at one point.

The two companies have traded barbs over privacy for years, with Cook remarking in 2018, “If our customer was our product, we could make a ton of money. We’ve elected not to do that.” But Thursday’s speech was more than mere corporate trash talk. Apple’s new App Tracking Transparency framework, which was first announced last summer, takes direct aim at any company that makes money by following users across the internet. Beginning sometime this spring, every iOS app that wants to “track” a user—that is, share their behavior and data with other apps, websites, or data brokers—has to first get their express permission. (There are small exceptions, like sharing data for fraud-prevention and security purposes.) Just about everyone expects the vast majority of users to opt out.

That would be bad news for Facebook. The company makes a lot of its money by providing what it calls “lookalike audiences.” Advertisers upload lists of their existing customers, and then Facebook generates a matching list of users who resemble those customers, based on demographic and behavioral data, and so are likely to respond to an ad. To do that effectively, it has to be able to tie a given user’s identity to everything they do across the web, using things like device identifiers and email addresses. It won’t be able to do that for iPhone users who opt out of tracking. As a result, advertisers will probably be less willing to pay. Some analysts have predicted that the immediate impact of the shift could reduce Facebook’s revenue by more than 10 percent.

The company has accordingly launched a public relations offensive against Apple’s changes. In December, it took out full-page ads in major newspapers declaring that it was “standing up to Apple for small businesses,” arguing that merchants will have a harder time reaching the right customers if they can’t target them based on their behavioral data. Another ad warned that apps would have to start charging fees, which would “change the internet as we know it—for the worse.” In an earnings call on Wednesday, Zuckerberg dialed up the attack on Apple even further, devoting far more attention to it than he did to any of the lawsuits his company is facing from state and federal agencies. “Apple has every incentive to use their dominant platform position to interfere with how our apps and other apps work, which they regularly do to preference their own,” he said. “Apple may say that they’re doing this to help people, but the moves clearly track their competitive interests.” It was a thinly veiled accusation that Apple has violated antitrust laws. (Indeed, after the earnings call, the Information reported that Facebook is considering filing a civil antitrust suit.)

Zuckerberg is certainly right about one thing: Apple is using its dominant position in the mobile phone market to unilaterally impose a major change to how user data is tracked and shared online. Establishing an “opt in” regime, in which privacy is the default and users have to give affirmative consent to share their data, has long been a dream of privacy activists. Few people are willing to take the trouble of opting out of every individual site or app they use, let alone the ones they don’t know are tracking them. Opt-in is considered so politically and even legally difficult to achieve, however, that even California’s newly enacted privacy law, the most ambitious in the nation, doesn’t go that far. And yet Apple, a private company, can flip a switch and achieve what no US government regulator has—at least when it comes to the roughly half of the US mobile market that it controls. (Internationally, Google’s Android operating system is much more prevalent.)