Is Apple Really Killing Small Businesses?
Apple VS Facebook. Does Facebook make a compelling enough argument?
So, what’s going on and why is Apple killing small businesses.
Before we talk about why Apple is under attack from Facebook we should talk a little about data privacy and how these platforms operate.
Companies, like Facebook, Google, or even Apple collect large amounts of data on you as a user when you use their services. Companies track everything you do on their platforms like what posts you like, what buttons you click, who you spend the time texting, everything. They use this data to build a sophisticated profile on you and their algorithms learn to categorize you. This information keeps you using their services and they can push ads that they think you’ll probably like.
I think at this point we all kind of already understand and accept this. We give away our data and they give us services like Google Maps for free.
But that isn’t where it ends. Companies don't just track you within their own apps. They track you everywhere, across all the websites and apps you use.
The way they do this is through something called IDFA on IOS. An IDFA for simplicity is just a unique name used to identify a user’s specific device.
This way companies like Facebook can track users “Anonymously”. Those quotation marks are pretty big btw because it wouldn’t be hard to tie an IDFA to an actual identity. But this is how companies can track you on almost any app you use without you knowing and it’s a little creepy and sometimes a little funny.
I remember once posting an ad on Kijiji (it's like Canada’s Craigslist) and then seeing ads for the post I just made on Instagram. I thought it was a little funny when I saw it but it’s a good example of how these ads work.
The way Kijiji, eBay, Amazon, and other e-commerce businesses set up their ads with Facebook is by having Facebook target the individual product I was searching for and showing results for that on their e-commerce business.
But now that you have an idea of how things work let’s move back to Apple.
So let’s get back to why “Apple is killing small businesses”.
With the introduction of iOS 14, Apple will require users to opt-in to being tracked across apps and websites. This will show up as a popup notification like in the image below.
Additionally, Apple will begin rolling out ‘nutrition labels’ for apps. This will serve as a way for you to see exactly what information apps on the app store will have access to. You can read more about it from my article below.
Apple Will Be Adding “Nutrition Labels” To Protect You From Data Theft
But what are these nutrition labels exactly and will they help protect your data?
This way users have the option to disable tracking outside the app and they can make smarter more informed decisions on what apps they decide to download.
In my humble opinion, these changes are more than welcome. In fact, I’d say that they should have always been like this from the very start. I can understand being tracked on a companies own platform… But outside the platform, on any app or website!?! That's ridiculous.
This is basically the problem Facebook has with Apple though and why Facebook is trying to push back.
Facebooks Stand Against Apple
According to Facebook, many of the free websites we use all like to use are based heavily on advertisements to keep those services free.
Targeted ads, like the one Facebook sells, allow businesses to reach much higher conversion rates, target key demographics, and at the end of the day, profit enough to keep their services running at no direct monetary cost to the customer.
Because a large majority of individuals will opt-out of tracking, Facebook argues that this will kill the internet as we know it.
More and more businesses will move either towards subscription-based models or go entirely out of business. According to Facebook, “44 percent of small to medium businesses started or increased their usage of personalized ads on social media during the pandemic”.
They also estimate that if Apple goes through with its new changes “the average small business advertiser stands to see a cut of over 60 percent in their sales for every dollar they spend”.
Why Facebook is wrong and why it obviously only cares about its bottom line
Facebook is right on one thing. Ads drive the majority of free content online and personalized ads generate much more money. That’s all true.
What's not true is that Facebook cares at all about small businesses.
First of all, it’s important to make one thing clear.
Regardless of how many businesses are affected, users have the right to know if their data is being collected and what that data is exactly. It is not okay for any business to monitor and track millions of people without their consent or prior knowledge so that they can sell that data to the highest bidder.
But anyway let’s get back to small businesses.
They mention that 44% of businesses began using targeted ads during the pandemic. Again I ask, so what? Of course, they decided to start advertising online. People are making more purchases online now than they were pre-Covid-19. That doesn’t necessarily mean that small businesses will continue to spend large amounts of money on ads once the pandemic has ended. And even if they did continue, they have multiple options including Facebook themselves. Furthermore, they can diversify to other ad sources like traditional TV and radio spots.
My point is that targeted ads online have only existed for a very brief period and businesses can adapt. If anything large monopolistic corporations like Facebook, Amazon, and yes even Apple are far greater threats to small businesses than ads.
And when it comes to small businesses “seeing a 60% cut in sales for every dollar they spend”, that assumes that these small businesses don’t pursue other advertising streams, which they of course will. At the end of the day, people want to purchase from local businesses, and even though it's harder now during the pandemic that doesn't mean that these businesses won't adapt.
Even if it were the case that small businesses relyed heavily on specifically Facebook for their business to be viable (which they don’t). That doesn’t give any of them the right to track and collect data without your consent, period.
Facebook is in this for their own bottom-line and it’s so blatantly obvious.
Would you like to take a guess at how much of Facebook’s revenue comes from digital ads? According to Wired, 98% of Facebook’s global revenue (about 70 billion) comes from advertising. Even the smallest shift in that percentage could mean Facebook losing billions of dollars.
Facebook is nearly a monopoly in the social media sector owning its own Facebook, Facebook Messenger, WhatsApp, and Instagram, and having thousands of businesses rely on its own advertisement services (along with Google and Amazon).
And look I’m not an Apple fan. But I’ll give them props when they deserved credit and they deserve credit here. These improvements to data privacy are a good first step to educating users on what data is being collected on them and it gives them more options to how they manage their own data and I hope other companies follow their lead.