Facebook's business model is under threat
Google could be forced to follow Apple’s lead on anti-tracking features, putting a sizeable hole in Facebook’s business model, according to a leading mobile analyst.
The new app-tracking controls that are due to be implemented in iOS 14 will “severely disrupt ad-funded businesses in 2021” according to CCS Insight - and the situation will be made even worse if Google feels it has no choice but to follow suit.
Apple was due to implement strict anti-tracking controls with the release of iOS 14 last month. The feature was postponed after strong protests from Facebook and other advertisers who are heavily reliant of tracking users’ behavior on their phones and across apps. Facebook warned its third-party Audience Network might not be able to function at all with the new controls, although claimed they would have “less impact” on its own advertising business. The feature is now set to be implemented in 2021.
Ben Wood, chief of research at U.K.-based mobile analysts CCS Insight, claims the arrival of the new features could have a “huge impact” on companies such as Facebook.
“The majority of consumers are completely unaware of the amount of information that apps capture about them,” he said. “I think it’s going to be a revelation - an unwelcome shock.”
“When you start finding out that your favorite social media app is looking at your browser history, looking at your call records, looking at your photos and all these sorts of things - I think people, when they have the opportunity to press the ‘allow’ button will say ‘no’.”
Wood says it was no surprise that “companies like Facebook immediately raised their arms in terror, saying ‘you can’t do this because it’s going to cause problems’,” but the threat to their business model hasn’t gone away. And it could get worse if Google feels compelled to match Apple’s privacy stance in Android.
Android on alert
Wood says Apple’s made a company-wide decision to set itself apart from rival firms by focusing on customers’ privacy. “I do genuinely believe that Apple has decided that it wants to differentiate the entire Apple platform - Mac through Safari, iPhone through app management - as being the platform that looks after consumers’ rights and privacy.”
“It’s a bit over the top, but they do talk about privacy being a fundamental human right.”
That puts enormous pressure on rivals such as Google to implement similar controls, so that it doesn’t appear to be comparatively negligent. “I think where Apple have gone others will follow,” he said. “I think you will see other platforms take a similar approach. It’s trend that’s here to stay and it will certainly impact some of the business models.”
The big question then becomes: how does Facebook and the other app developers relying on ad trackers continue to keep the money rolling in? “I don’t deny the reason why Facebook and other companies who have an ad-funded model have been alarmed by this is because it could detrimentally impact their revenues,” said Wood.
“They’re just going to have to look at different ways to monetize their businesses.”
