Apple’s software update blocks data tracking. Could that hurt Facebook's revenue?

Written by Danielle Chiriguayo, produced by Bennett Purser

Starting this week, a new update on Apple devices will let users decide whether apps like Facebook can track their data. Photo by Alexander Kirch/Shutterstock.

Apple and Facebook — two of the world’s biggest tech companies — are embroiled in a fight over user data. That’s because this week, Apple released a software update that lets device users decide whether to share their data and activities with apps and websites. The update could have big implications for Facebook’s business model, which relies on ad revenue. 

As users update their phones, they can expect an array of pop-up windows that will ask whether they want a particular platform to track them across other platforms, says Jack Nicas, a reporter at the New York Times. 

“One of the dirty secrets of digital advertising is that a lot of these companies, and especially the big digital advertising companies like Google and Facebook, track us across the internet and across our phones.”

He says through embedded technology on websites and apps, companies are able to build consumer profiles that can then be sold to interested parties. 

At the center of the Apple-Facebook conflict are clashing ideas of what the internet should represent, Nicas says. Facebook promotes an open internet, which provides free services such as email and social media. That’s possible through the selling of user data. Apple, on the other hand, promotes a private and safe experience — with a premium price tag. 

“These companies are so big now that there are so many ways that they compete, but also so many ways that they depend upon another. And that's why this fight has really happened — because Facebook relies upon Apple to reach consumers,” he says.

Nicas says that’s because Facebook sees the iPhone as the most important gateway to users, due to their use of apps like Instagram and Whatsapp (which Facebook both owns). 

“That also means Apple has an enormous amount of leverage over Facebook's business. And it allows Apple to make these sorts of changes, like stopping Facebook from tracking users. That hurts Facebook's bottom line.”

It’s still unclear how the software update might play out. But Nicas references a 2018 move by Apple to block companies like Facebook from tracking users on their browser Safari. 

“Facebook at that time said this would be terrible for our business. It ended up not being that big of a deal. But the other thing is Facebook actually also kind of reversed its position. Recently, Mark Zuckerberg said publicly that … it might actually be good for us, but it's going to be bad for the smaller advertisers. So it's all sort of confusing, and we'll see how it all plays out.”