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Why Is Facebook Launching An All-Out War On Apple's Upcoming iPhone Update?

Two titans of Silicon Valley, Facebook and Apple, are in a bitter fight that centers on the iPhone data of millions of people and whether companies should be able to track that data as easily as they do now.

Facebook believes the answer is yes. On Wednesday, it even unveiled a video voiced by Grace Jones aimed at currying the public's favor.

Apple says not so fast. CEO Tim Cook tweeted last month about the need for greater control over data privacy "from safeguarding your health & financial data to guarding against algorithms that perpetuate rampant misinformation. We need transparency and reform."

What will happen?

In the coming weeks, Apple will update its iOS software for iPhones to require apps to get explicit consent to track what people are doing on their phones for the purposes of sharing it with third parties.

This type of tracking which includes which apps are being used and for how long, which websites are visited, and data about a user's location is tapped by advertisers to create hypertargeted, personalized advertisements.

According to Apple, the average app has at least six trackers that are discreetly harvesting user data.

Some apps, like Facebook, allow for some data tracking to be manually disabled. But by default, it is turned on. That gives the company reams of personal data on who we are and what we are doing, which it then vacuums up, packages and uses to sell ads.

Starting sometime early this spring, Apple will require apps to send a push alert where people can either choose to "ask app not to track" or "allow."

Why does Facebook oppose Apple's update?

While Apple CEO Tim Cook has said the move is about giving people more control over data collection practices he sees as intrusive, Facebook officials argue Apple is acting out of self-interest.

Facebook says Apple is attempting to push free apps, which often sweep data up and feed it to advertisers, to move to subscription models. Apple, through its App Store, collects a 30% cut of in-app purchases, which critics dub "the Apple tax."

In an interview with NPR, Facebook's director of privacy and public policy Steve Satterfield said Apple's forthcoming alert is an attempt to undercut the business model used by Facebook and other ad-supported free apps.

"This discouragement, this is going to have a real impact on the Internet as we know it, which is increasingly going to move to a paid experience, which again, benefits Apple's bottom line," Satterfield said.

Facebook has also launched a website and taken outfull-page advertisements in newspapers, in additionto a recent TV and radio ad push, to put a spotlight on how many small business owners depend on targeted ads.

The tech giant points to people like Monique Wilsondebriano. She launched the Charleston Gourmet Burger company in South Carolina. When she first started, she could not afford TV or radio ads. But she was able to drum up interest on Facebook.

"Ninety percent of our customers are finding us because of Facebook, because of those personalized ads, so if something was to disrupt that, it's going to be a problem," she told NPR.

This perspective was so important to Facebook that officials invited Wilsondebriano and other small business owners to speak at a recent company press briefing.

Yet privacy advocates and other prominent Facebook critics have raised doubts about whether the change will indeed significantly impact small business as much as profits at Facebook, which generates some 98% of its revenue from advertising.

A recent study from the group TapResearch found that 55% of people surveyed said they would not let Facebook track them across apps if they were prompted.

Some analysts predict Apple's update could result in a 7% hit to Facebook's revenue.

It is personal between Cook and Zuckerberg

In remarks delivered in late January at a technology and privacy conference in Brussels, Cook underscored Apple's emphasis on data privacy.

"It seems no piece of information is too private or personal to be surveilled, monetized and aggregated into a 360-degree view of your life," Cook said.

Cook never mentioned Facebook by name, but in discussing a tech company's business model run amok, his target was clear.

"At a moment of rampant disinformation, and conspiracy theories juiced by algorithms, we can no longer turn a blind eye to a theory of technology that says all engagement is good engagement," said Cook, speaking just weeks after the Jan. 6 siege on the Capitol.

Back in 2018, Zuckerberg condemned Cook's comments criticizing Facebook turning users into the product as "extremely glib" and "not at all aligned with the truth."

According to The Wall Street Journal, Zuckerberg at the time said this privately to his team about Cook's jabs against Facebook: "We need to inflict pain."

Facebook and Apple: Opposite ways of making money

Both Silicon Valley giants, the companies' ways of making money and views of Internet are directly in conflict.

Zuckerberg has long said the only way to build a social network that connects billions of people is for the platform to be free to use and supported by advertising. It is often said that when a tech service is "free," users pay mightily with their data. And that is the case with Facebook, which compiles its own portrait of its users through granular behavior tracking and also has a lucrative business of selling data to third-parties, like data brokers and advertisers.

Cook, meanwhile, is mostly in the hardware business. Apple makes most of its cash by selling iPhones, iPads and laptops. While Apple has apps that do a fair share of data mining, Apple claims it does not share that data with third parties. No doubt Apple's upcoming software update helps its image as a privacy protector.

It is not lost on Cook that the message has proven especially resonant at a time when lawmakers and prosecutors seem ready to rein in the power of Big Tech, while other critics of Silicon Valley gain bipartisan support for rallying against the excesses of the industry.

"We have an application like Facebook that's really driven by collecting data, and harnessing the value of that data," said Jordan Fischer, a law professor at Drexel University who follows privacy issues. "And then we have Apple which is almost becoming this gatekeeper function for applications and saying we're going to mandate a certain minimum level of privacy, and they're clashing because they don't necessary work in the same world."

Analyst Dan Ives said this Facebook-Apple row is setting the stage for a larger fight over how technology companies will balance privacy with data collection in the digital economy.

"I think Facebook is worrying about, 'This is just a first step for Apple. What could be in the next one to two years if they further put the clamps down around data privacy as well as advertising?' " he said. "Apple knows in this regulatory environment, not being flexible on privacy is ultimately going to be come down on their side."

Editor's note: Apple and Facebook are among NPR's financial supporters.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

Bobby Allyn is a business reporter at NPR based in San Francisco. He covers technology and how Silicon Valley's largest companies are transforming how we live and reshaping society.