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Thursday, September 24, 2020

Explained: Why does Facebook think Apple’s iOS14 feature will impact its business model?

The latest version of Apple’s iPhone operating system has one feature that could potentially damage Facebook's business model, at least among those using iOS devices.

Written by Nandagopal Rajan , Edited by Explained Desk | New Delhi | Updated: September 3, 2020 9:35:50 am
Facebook, Apple, Apple iOS 14 software update, Facebook business model, Facebook on iOS devices, Indian ExpressThe Facebook app icon on an iPhone. (AP Photo: Karly Domb Sadof, File)

Facebook is miffed with Apple. To be precise, Facebook is miffed with Apple’s iOS 14 software update that will start rolling out to users across the world in a couple of months. The latest version of Apple’s iPhone operating system has one feature that could potentially damage the social network’s business model, at least among those using iOS devices. Once on the latest version of the software, Apple will give users the choice to decide whether they can be tracked across apps using an unique identifier.

At WWDC, Apple’s annual developer conference, the company announced that with iOS 14, users will get a pop up asking them if they want to be tracked by a specific app. Since this will also give users the freedom to say no, it will cut the amount of data an app like Facebook is able to collect about a specific user with the help of unique identifiers. While this will help preserve consumer privacy, for apps like Facebook it will reduce the effectiveness of ad campaigns via its Audience Network as it will reduce attribution that helps identify if an ad was successful in triggering an app install or payment.

What is IDFA?

IDFA or Identifier for Advertisers is the random device identifier Apple assigns to an iPhone across apps. Advertisers like Facebook use this to deliver and track customised advertising. For instance, if someone is shown an ad to download a game on Facebook, this number helps authenticate if the same device finally ended up downloading the app. However, Apple does this without identifying the user itself. This is also used to track effectiveness of mobile advertising campaigns as well.

Google uses a similar tech called Google Play Services ID for Android (GPS ADID) and even gives users the ability to reset this from their settings and even offers an opt out. However, the options are not upfronted to the user like Apple wants to. The fear is that if given a choice, most users will say no to tracking.

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What is Facebook’s grouse?

In a blogpost, Facebook said it was “addressing” the changes triggered by the iOS 14 feature. “For developers and publishers using Audience Network, our ability to deliver targeted ads on iOS 14 will be limited,” it said, adding that this will mean some iOS users won’t see any ads from Audience Network while others will see less relevant ones. It warned that this will being down revenues for app developers and publishers across ad networks on iOS devices.

Facebook claimed a revenue drop of 50 per cent “when personalization was removed from mobile app ad install campaigns” in testing and warned of an even severe impact in real life scenarios.

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Why is Apple’s move significant?

While iOS is just about 25 per cent of the global mobile market while Android lords over almost the entire remaining pie, it is a more monetisable operating system as iPhone users are generally of a better economic strata. So any change in ads policy or monetisation on iOS has a disproportionate impact on ad and developer businesses across the world. For instance, an app install campaign on Android might drive much more users than iOS, but the campaign on the latter will give more actual potential paying users.

What does this mean for users?

A lot of experts have been lauding the move by Apple as one that gives users the choice and control. More relevant ads is not as much as a user requirement as it is an advertiser requirement. And a lot of users do find some of the ads as intrusive as they have suggest the advertiser knows what the user has been up to till the point the ‘relevant ad’ is served.

However, while there will be impact on the relevancy of ads for sometime, new technologies could help players like Facebook track and target users effectively. There are startups which claim to have had some success in the space of universal user identification which will work across operating systems and devices.

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