iOS 14 Ad Tracking Controls Threaten Facebook Profitability

image credit: Facebook (public domain)

By Chand Bellur

August 12, 2020 at 3:50 p.m. PT

  • Facebook uses ad tracking to earn revenues by providing more salient advertisements to potential customers.
  • Apple’s upcoming mobile operating system, iOS 14, allows users to opt out of ad tracking.
  • Third-party developers may benefit from the change, as iOS 14 will enable them to pop up information about why the end-user should opt in to ad tracking.

How Ad Tracking Works

Modern-day consumers are wary of privacy issues, for good reason. Surveillance capitalism is a reality. We’re all being analyzed, our data stored in the cloud, so that corporations can reap profits.

There’s another side to the story. Ad tracking presents the end-user with relevant ads. There’s no sense in trying to sell a vegan a hamburger, after all. In fact, the individual would likely be offended by the experience. Ad tracking can arguably provide a better user experience.

Ad tracking in iOS works by implementing an IDFA, which is a unique ID for advertisers. This information represents you and your interests; however, it does not divulge your real identity. Data such as your name and address are unavailable to advertisers.

Although ad tracking is relatively innocuous, some people don’t want any surveillance at all. While this is impossible, Apple is aware of this consumer need and designs products with privacy in mind. After all, advertising is not Apple’s forte.

Corporations like Google, Facebook, and even this website rely on advertising for revenues. Recent laws have forced websites, like mine, to implement methods for opting out of ad tracking. It’s not the end of the world, and it hasn’t affected my ad revenues. Facebook, however, is much more sophisticated. Their business model is to profit off of detailed knowledge about their end-users.

iOS 14 Permits Users to Opt Out of Ad Tracking

Apple’s commitment to privacy continues with iOS 14. The upcoming operating system allows users to turn off ad tracking. By doing so, apps and social media platforms like Facebook won’t know who you are or what referred you to an app or social media platform. You’re just a unique transaction.

Facebook and others reliant on advertising should be able to cope with the change. After all, when you listen to an ad on the radio or see one at a bus stop, your information is not recorded. Advertisers, communication platforms, and consumers have fared well for a long time without surveillance capitalism.

Facebook, however, is already bristling at the change. The company forecasts that privacy changes to iOS 14 will undermine profitability. Facebook Chief Financial Officer David Wehner told CNBC that the change will be detrimental to society:

“Our view is that Facebook and targeted ads are a lifeline for small businesses, especially in the time of Covid, and we are concerned that aggressive platform policies will cut at that lifeline at a time when it is so essential to small business growth and recovery.”

Most analysts and even small businesses don’t agree with Facebook. They contend that changes to iOS 14 may benefit small developers. Matt Littin, CEO of game rewards company Lootcakes, claims that the change could benefit developers:

“Advertisers and app developers who offer clear and compelling value to users for sharing their IDFA may end up with far superior opt-in rates.”

Given input from concerned parties, it appears as though Facebook’s magnanimous reaction is deceptive. Their profitability will be affected; however, developers may stand to benefit from changes in iOS 14. Without a doubt, giving consumers the ability to opt in or out of ad tracking is best for the end-user.

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