Apple, Facebook Trade Barbs Over Privacy-Focused Business Models – The Wall Street Journal

0
32

The clash between Apple Inc. AAPL -3.50% and Facebook Inc. FB -2.62% intensified as the chief executives of the two tech giants squared off in public remarks over privacy, the impact of algorithms and competition and offered dueling visions of the future of the internet.

Without naming Facebook directly, Apple CEO Tim Cook leveled a blistering condemnation of “conspiracy theories juiced by algorithms” in a speech Thursday as he discussed a new privacy tool the iPhone maker plans to roll out in the next several months. Mr. Cook also tied recent social unrest to a broader argument that app-tracking tools are turning consumers into advertising products.

Facebook CEO Mark Zuckerberg singled out Apple Wednesday as one of its most formidable competitors and accused the company of using its platform to interfere with how Facebook apps work. Mr. Zuckerberg has previously cast the fight as one between ad-supported players like his company who offer free apps with targeted advertising and privacy-conscious, fee-based services like those Apple is backing for consumers.

The dueling salvos in consecutive days escalate a battle between two of the world’s largest and most influential companies over central elements of how the tech industry operates. The fight is taking place against the backdrop of heightened regulatory scrutiny of giant tech companies. Facebook has been sued by the Federal Trade Commission and 46 states over anticompetitive claims. Apple, too, has faced claims from tech rivals that its practices limit competition. Both tech giants have denied wrongdoing.

In remarks to the Consumer Privacy and Data Protection Conference Thursday, Mr. Cook decried what he called “a theory of technology” that prizes engagement and algorithms that help spread disinformation and conspiracy theories in order to collect user data for advertising.

“If a business is built on misleading users, on data exploitation, on choices that are no choices at all, then it does not deserve our praise—it deserves reform,” Mr. Cook said. He added, “It is long past time to stop pretending that this approach doesn’t come with a cost of polarization, of lost trust, and yes, of violence. A social dilemma cannot be allowed to become a social catastrophe.”

The coming change is part of a continuum of features Apple has added over the years aimed at improving and protecting user privacy.

Photo: Daniel Acker/Bloomberg News

Mr. Cook’s speech came after Apple hours earlier reiterated its intent to give users the option to limit how apps track their digital footprints. This spring, users will see the new feature, which will allow ad tracking only if consumers opt in once they receive a prompt on an iPhone or iPad. (A beta version will be coming sooner for test users.) The software update to its mobile operating system would make it so that Facebook or other companies would no longer be able to collect a person’s advertising identifier without permission.

In comments to investors Wednesday after Facebook posted record profits, Mr. Zuckerberg sought to cast Apple’s privacy moves as a means to use its platform to put Facebook at a disadvantage. He said Apple’s iMessage service is pre-installed on every phone and complained that Apple uses tools to put it at the center of the experience of its users.

“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. “This impacts the growth of millions of businesses around the world.” Apple didn’t respond to a request for comment on Mr. Zuckerberg’s statement.

At the core of their dispute are starkly different business models that are nonetheless intertwined. Apple gets most of its revenue from selling iPhones and other devices, though it has a growing services business built partly on enabling the distribution of apps like Facebook. The social-media giant gets the vast bulk of its revenue from digital advertising that relies on the ability to target users based on their interests and habits—but it relies on Apple’s hardware as the tools through which many Facebook users access its apps.

A user prompt to allow advertising tracking on Apple’s iOS 14 mobile operating system.

Photo: apple inc/Reuters

Parts of those businesses are increasingly colliding, as Apple in recent years has built out its messaging platform with features making it easier to send group chats and has a smaller ad business.

Facebook issued a warning Wednesday that specifically mentioned Apple’s mobile operating software, iOS 14, as a risk to its business this year, although the company also said revenue growth will remain stable in the first two quarters. Facebook has become the world’s largest social network, with roughly 1.85 billion users in the latest quarter, and its WhatsApp and Messenger communication tools are among those services that compete directly with Apple.

Late Wednesday, Apple’s spring timeline for implementing the new privacy features was included in a new company report online that aimed to detail how personal data is harvested and commercialized by third parties.

The coming change is part of a continuum of features Apple has added over the years aimed at improving and protecting user privacy while also making such efforts part of its marketing. For example, the iPhone asks a user to give permission to apps wanting to use the device’s microphone, such as when Skype is used.

Apple and Google have one of Silicon Valley’s most famous rivalries, but behind the scenes they maintain a deal worth $8 billion to $12 billion a year according to a U.S. Department of Justice lawsuit. Here’s how they came to depend on each other. Photo illustration: Jaden Urbi

Apple’s ad identifier is a string of numbers widely used by digital ad and data brokers that can be used to reveal where users go online, insight that is useful for targeting ads.

Some in the app industry are worried that the opt-in requirement will lead many users to reject the request, resulting in the collapse of ad prices and creating new challenges for small businesses trying to reach a targeted audience effectively.

A Tap Research Inc. survey found 85% of respondents said they wouldn’t allow an app to track them if given the choice.

Amid pushback, Apple in September announced it was delaying the privacy change until early this year from last fall to allow developers time to make necessary changes. The feature was announced last June.

On Thursday, Mr. Cook made clear that Apple is moving ahead with its plans, saying the company’s moves are essential to protect user privacy and asserting that the disinformation perpetuated by social companies using algorithms is damaging society.

“Too many are still asking the question: how much can we get away with? When they need to be asking: What are the consequences?” Mr. Cook said. “What are the consequences of prioritizing conspiracy theories and violent incitement simply because of the high rates of engagement? What are the consequences of not just tolerating but rewarding content that undermines public trust in lifesaving vaccinations? What are the consequences of seeing thousands of users joining extremist groups, and then perpetuating an algorithm that recommends even more?”

More on Apple and Facebook

Write to Tim Higgins at Tim.Higgins@WSJ.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

LEAVE A REPLY

Please enter your comment!
Please enter your name here