◼ TECHNOLOGY Bloomberg Businessweek February 8, 202118
PHOTOGRAPH BY DAVID JAEWON OH FOR BLOOMBERG BUSINESSWEEK. DATA: YOUGOVsuch as virtual- and augmented-reality headsets.
“We increasingly see Apple as one of our biggest
competitors,” Zuckerberg told analysts in January.
“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.”
The feud has escalated rapidly over Apple’s
forthcoming update to the software that powers
its iPhones, which includes a requirement that
developers get explicit permission to collect cer-
tain data and track users’ activity across apps and
websites. Such a move could undermine the effi-
cacy of Facebook’s targeted advertisements. In
December, Facebook took out full-page ads in a
trio of U.S. newspapers saying it was “standing
up to Apple for small businesses everywhere” by
opposing the changes, which it describes as an
abuse of market power. Facebook is considering
filing an antitrust lawsuit against Apple, according
to a person familiar with the company’s thinking.
Apple says the software update will give users
more clarity about who’s collecting their data
and why. It describes privacy as a “fundamental
human right”—and its record on the issue is a way
to differentiate itself from Alphabet Inc.’s Google,
which makes Android, the software powering most
non-Apple smartphones.
Cook seemed to take a shot at Facebook on
Jan. 28 at the online Computers, Privacy & Data
Protection Conference. “If a business is built on
misleading users, on data exploitation, on choices
that are not choices at all, then it doesn’t deserve
our praise, it deserves reform,” he said. Cook added
that some social networks facilitate the spread of
dangerous disinformation and conspiracy theories
for the sake of user engagement. “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,” he said.
Discussions between the two companies about
the software update have been unproductive, says
Graham Mudd, a vice president for Facebook’s
ads and business product marketing. He says
attempts by Facebook and others to discuss the
software update with Apple have “failed.” “Apple
did not respond, either at all or with any degree
of collaboration.”
The recent flareup now centers on the wording
of the pop-up prompting iPhone users to decide
whether to allow tracking. Executives at Facebook
worry that Apple will frame the choice in an alarm-
ist way, effectively pushing users to reject track-
ing. Facebook Chief Financial Officer Dave Wehner
told analysts that he expects “high opt-out rates”for Apple’s prompt, and Facebook has said these
changes will impact its business moving forward.
It plans to front-run Apple’s prompt with messag-
ing of its own, framing advertising as a way to have
a better experience on Facebook and support busi-
nesses that rely on targeted ads for sales.
Whatever the outcome, the dispute points to
further tension ahead. Elizabeth Renieris, a data
protection and privacy lawyer who runs the Notre
Dame-IBM Technology Ethics Lab, says the clash
over tracking has exposed how much both com-
panies dominate their respective markets, which
could be problematic since both are under anti-
trust scrutiny. Facebook’s argument that small
businesses won’t be able to reach customers
after these changes demonstrates how critical it
is intheworldofsmall-businessadvertising,she
says.Apple’sclaimthatit mustcreateandenforce
industry-standard rules on user privacy illustrates
its outsize influence on the smartphone market.
“They’re presuming their ongoing dominance
for the next decade or more. They’re already
talking about their next feud,” she says, referring to
Facebook. “It’s quite insane to me that they would
publicly air all of this.”
Zuckerberg warned analysts last month about
“very significant competitive overlap” in the years
to come. Facebook owns three messaging products
with more than a billion users each—WhatsApp,
Messenger, and Instagram—that compete with
Apple’s iMessage. Zuckerberg accused Apple in
late January of giving its own app unfair advan-
tages over competitors, though he also has pointed
to iMessage’s success as a way to prove Facebook
doesn’t have a monopoly over private messaging.
The two companies will compete in hardware
when Apple releases a virtual-reality device to
rival Facebook’s Oculus Quest headset as early
as next year. Both companies are also develop-
ing their own augmented-reality glasses, though
those are further off.
Given its bruised reputation, Facebook is at a
serious disadvantage in a fight over privacy, and
Zuckerberg has tried to stress what he sees as
the nonbenevolent motives behind the phone-
maker’s business decisions. “Apple may say that
they’re doing this to help people, but the moves
clearly track their competitive interests,” he said
on Jan. 27. “I think this dynamic is important for
people to understand, because we and others
are going to be up against this for the foreseeable
future.”�KurtWagnerandMarkGurman▼U.S.opinion, 2020
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FacebookApple47%63%THE BOTTOM LINE Apple and Facebook have generally steered
clear of direct competition, but their spat over data collection is a
sign that this is changing.