Facebook Says Apple's New iPhone Update Will Disrupt Online Advertising

By Jeff Horwitz 

Facebook Inc. says privacy changes that Apple Inc. has made to its newest operating system will cripple the social-media giant's ability to serve targeted ads to iPhone users while they use outside apps.

The announcement, which Facebook made Wednesday in a note to app developers, will affect its Audience Network business, which connects users' Facebook identities with their off-platform activities.That enables the company to serve them ads on apps outside of Facebook's.

The changes go into effect with Apple's new operating system for iPhone, called iOS14, which was released in beta form to developers this week.

The announcement is another shot in the increasingly contentious relationship between the two tech giants, whose different business models have led to public sparring. Apple, which produces devices sold world-wide, has criticized the data-collection operation that underlies Facebook's massive advertising business.

While Facebook doesn't disclose the size of the Audience Network business, it is believed by analysts to be in the billions. Facebook previously announced it had paid out $1.5 billion to developers and publishers for the right to show ads on their properties in 2018.

"Our ability to deliver targeted ads on iOS14 will be limited. As a result, some iOS 14 users may not see any ads from Audience Network, while others may still see ads from us, but they'll be less relevant," the company wrote. Despite the company's efforts to adapt, Facebook wrote, the changes "may render Audience Network so ineffective on iOS14 that it may not make sense to offer it on iOS14 in the future."

Facebook said the changes would likely result in reduced earnings for developers "at an already difficult time for businesses," adding that it considers the situation to still be murky because of an absence of guidance from Apple.

Facebook said the iPhone changes are expected to "have a far-reaching impact on the developer ecosystem."

Write to Jeff Horwitz at [e-mail]

(END) Dow Jones Newswires

August 26, 2020 12:33 ET (16:33 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.