Required ’opt-ins’ will squeeze Facebook’s ad business as Apple’s upcoming iOS 14 update asks consumers for permission to be tracked, the social media giant’s CFO reiterated Tuesday, noting other headwinds like a post-Covid spending shift from products to services, and lowering expectations for FB’s Ray-Ban smart glasses.
Apple’s AppTracking Transparency policy has put a prompt in iOS 14 requiring users to allow tracking across other apps and sites, or not. It’s ignited a simmering Cold War between the two companies (both of which are under fire for various alleged abuses of market power).
“We do expect this to be an impact to the business and impact our growth rates” chief financial officer David Wehner said at Morgan Stanley’s virtual media/tech conference. “We’ll be looking at opt-in rates.” He called it a problem for the entire “ecosystem.”
“We think advertisers may have a hard time to get ROI [return on investment] so it will reduce spend by anyone advertising on iOS.”
Tracking and data collection enables the personalized ads that are effective but have also been known to freak people out.
COO Sheryl Sandberg, who also spoke, said one of Facebook’s biggest challenges is convincing people that personalized ads are privacy protected. “If you get an add that is very targeted to you it is a better experience as long as you know that it protects your privacy.”
She said Facebook has been pushing, including in an ongoing ad campaign, for federal regulation on “harmful content” – “These are hard decisions for us to make on our own” – and is in favor of a federal consumer privacy framework so individual states led by California don’t continue to roll out their own rules. But, she said, regulation must not come at the expense of emerging companies.
“It will be a drag on our business and we will have to comply, but they would have no ability to comply with this as a tiny startup. It has to protect startups … the next Mark Zuckerberg, the next Larry and Sergei. We care about that a lot,” she said (referring to Facebook’s founder and CEO and to the co-founders of Google.)
Facebook has been accused of being too big — 2.6 billion users — and quashing competition by snapping up smaller rivals like Instagram and WhatsApp amid calls to reform antitrust laws, including a bill introduced last month by Sen. Amy Klobuchar.
Most recently the company has been accused of strong arming publishers after it banned all news content from and in Australia for five days ahead of a new law requiring it to negotiate pricing. The law was tweaked and news reinstated. However, big German publisher Axel Springer said it won’t join Facebook’s news product when it launches in the country this spring due to “inappropriately low remuneration.”
The execs weren’t asked and didn’t comment on news.
But Sandberg stressed Facebook’s value, highlighting in particular its work with small businesses that found a lifeline on the platform during Covid and currently number 200 million. For many it’s too costly to set up a website and mobile app but on Facebook “they can advertise effectively for relatively small amounts of money.” She said targeted advertising is especially for key small business to reach the right customers.
On the new smart glasses, coming out later this year in partnership with Luxxotica, Wehner said: “The first product we’ll have in that space, it’s — I’ll set expectations — its not going to be anywhere near where we want to eventually go.” The company, a leader in VR with Oculus, is investing heavily in augmented reality.