Apple is after Meta’s wallet…and yours! (Part 1/2) #37
There is a saying in the tech market that goes “If a product is free to use, then you are the product.” It means that all these technologies that we enjoy for free are not really for free, otherwise the companies producing them will go bankrupt. The revenue model they use is that we use their products for free but in exchange for information about us they use to show us personalized ads paid by their ‘’true’’ clients.
Ninety-seven percent of the revenue of Meta (formerly Facebook) comes from ads shown to us on Instagram and Facebook. Don’t be quick to think that Meta doesn’t make any money from WhatsApp, since we are not shown ads. WhatsApp is one of the most used Apps in the world and we share valuable information about us there, just by interacting with it. Have you ever seen Facebook suggesting you become friends with someone you just started chatting with on WhatsApp? Thanks to our mobile numbers, Meta uses WhatsApp to tell Facebook ‘’these two chat here (on WhatsApp) so, suggest them to become friends on your side too.’’ The goal is to make us spend more time on Facebook so that we may see the ads. They do the same with Instagram, when they suggest us to follow people we are friends with on Facebook or chat with on WhatsApp. Meta also wanted to buy Snapchat to increase its dominance on the social media market, but they refused to sell.
Apart from showing us ads when we use their products, Meta also tracks our moves in mobile Apps that work in collaboration with them. That’s why you can be playing a free game on a mobile App but you see an ad (in the App) on something you liked on Instagram. Meta then shares the ads revenue with the video game App.
The past few years, there has been a battle between Meta and Apple. This might amaze you since they are not in the same market: one is on social media and the other on physical devices. But when you look at it more closely, you will understand why Mark Zuckerberg himself calls Apple one of their biggest competitors.
In the beginning of this year, WhatsApp updated its privacy policy informing us that they will start sharing our WhatsApp info with the rest of their platforms, what I just explained in the second paragraph. Many people complained and started moving to other Apps like Telegram. Elon Musk even tweeted to ask people to use Signal.
Meta communicated a message saying they are postponing the implementation of what the updated privacy policy was talking about, but personally I think they have been using that strategy, they just wanted to be more transparent about it. The problem is that today, people are more and more aware of the use of their personal data by big tech companies to generate profit and they feel like these companies are making money on them without their permission. Well, without reading, we accept the terms and conditions to use their products so…
Apple saw an opportunity in this privacy concern among people and wants to benefit from it. Tim Cook (Apple’s CEO) announced that from iOS 14, iPhone users will be asked to allow Meta to track or not their data on each App they download from the App Store. We can already disable the tracking today, but it’s a long and tedious process. What Apple is planning to do is to put it in front of their clients’ eyes, the moment they download an App. This will obviously dramatically increase the number of people who will refuse to be tracked. This is a problem because without Meta tracking what we do on other Apps, it will not be able to show us personalized ads on those App but also on Facebook and Instagram. It does happen that you download an App on Fitness and if the App works in collaboration with Meta, you see ads of fitness coaches on Facebook and Instagram. The ads shown on Meta platforms that are based on the information we provide directly to their platforms are not at risk. The problem here is their collaboration with other Apps because that’s what Apple is planning to break.
Over the years, Apple has changed its business model going from being an Innovative Tech company (focusing on innovation with products like the iPad), to a Design company (investing a lot in the design of their products), to a Fashion company (with nice wearable products like the Apple watch). To benefit from this privacy trend, Apple wants to become a Privacy company.
After the announcement on the upcoming privacy changes in the future iPhones, Meta bought entire pages on journals like The Washington Post, The Wall Street Journal and The New York Times to explain how that will hurt small businesses — both the Apps tracked by them and the companies that cannot afford tv ads and other expensive ads — that rely on this kind of advertisement to respectively make money and get client. Apple has since delayed the launch of the change; we can’t say with certainty if it’s because they saw that Meta had a point or they are just not done working on the change.
Since there is a huge number of those apps that rely on Meta to make money (which contributes to about 7% of Meta’s revenue, which is certainly billions for a company of this size), if Apple goes forward with their idea, it might force the Apps to charge us for the use of their services, to make up for the loses of not being able to show efficient targeted ads anymore. They will still be able to show ads, but the decrease of their efficiency will diminish the number of people who want to use these kinds of ads to promote their businesses.
That means we will have to pay for basically everything we use on the internet, since the product will not be us anymore but the actual apps. They will ask us to pay to download the Apps or to pay a monthly subscription fee to keep using the App or to buy thing in the App, etc. Some Apps and journals already do it to not depend entirely on ads to make money, but they will be forced to increase the amount we spend, to keep the companies alive.
In response, Meta even threatened to prevent iPhones from having access to their products as they did by removing WhatsApp from Windows Phones in 2019. Myself I have been a big user of Windows Phones, until that change. With Apple it is a bit different since millions of people use iPhones around the world. Apple will certainly lose clients since people will think twice before buying a phone that won’t allow them to use Instagram, Messenger, WhatsApp and Facebook, but the different here is that, if Meta cuts iPhones, they will also lose all those millions of iPhone users. It’s going to be a lose-lose situation.
To be continued…
