- Facebook said privacy protections in Apple's next mobile operating system, such as requiring every app to ask users to opt-in to tracking, may cause a 50% drop in revenue for its Audience Network that lets developers use Facebook's data for in-app ad targeting. The company shared the estimate in a blog post that cited a prior study.
- Facebook won't collect identifier for advertisers (IDFA) information from Apple devices that run iOS 14, which the iPhone maker is expected to offer next month after releasing its sixth test version this week, Forbes reported. Facebook plans to release an update to the software development kit (SDK) for iOS 14, including support for Apple's SKAdNetwork API that limits the sharing of data for advertising.
- "Despite our best efforts, Apple's updates may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14," Facebook said in a separate blog post. "We expect less impact to our own advertising business, and we're committed to supporting advertisers and publishers through these updates."
Facebook's warning about Apple's privacy protections in iOS 14 reflects the concern of advertisers and app developers about how iPhone users will respond to the upcoming changes in IDFA sharing. An IDFA is a randomly generated code that Apple assigns to devices, letting apps track user activities and show targeted ads from services like Facebook Audience Network. Apple will require apps to seek opt-in consent from iOS 14 users to access a device's IDFA or use it for tracking, the company announced at its yearly WWDC event for software developers. It's almost certain that many iPhone users won't allow app tracking, making the targeting of mobile ads more difficult for marketers. The change may drain billions of dollars out of the in-app ad market, which had been forecast to grow from $90 billion this year to $226 billion by 2025, per an estimate by Grand View Research published before the coronavirus pandemic dampened demand for advertising.
Facebook's warning comes more than two months since Apple announced changes to IDFA, and may be another sign of growing tensions with Apple over the company's policies on privacy and app approval. Facebook this month introduced a service to let businesses, creators, educators and publishers make money by hosting online events, and criticized Apple for not waiving the App Store's 30% commission on in-app payments. Before that, Facebook was forced to change the iOS version of its new Facebook Gaming app, which originally had planned to offer in-app games. Because Apple wouldn't allow gameplay functionality in the app, Facebook Gaming only shows livestreams of gaming sessions, similar to Twitch. Facebook is among the companies, including Epic Games and Spotify, that have criticized Apple's fee structure for the App Store.
While app publishers may see significant declines in ad revenue from Facebook Audience Network, the company doesn't expect its own business will be affected. Even after it stops collecting IDFA information, Facebook can still sell highly targeted in-app ads to marketers seeking to reach users of its main social network and ad-supported apps like Instagram. Facebook's revenue climbed 11% to $18.7 billion in Q2 from a year earlier as the social media giant saw increased engagement from homebound consumers during the pandemic's early days.
The Audience Network likely generates a small fraction of Facebook's total mobile ad revenue, Digiday reported in February, when Facebook announced it would shut down its mobile web arm. Facebook's announcement came a few weeks after Google said it would phase out support for third-party cookies, a popular web tracking technology, in its popular Chrome web browser in the next few years. Facebook had started Audience Network in 2014 to give advertisers a way to target audiences on mobile apps that carry advertising. The launch of Audience Network followed its acquisition in 2013 of the Atlas Advertiser Suite from Microsoft for as much as $100 million, CNBC reported.