Facebook’s business has boomed during the coronavirus pandemic, but 2021 might prove more difficult. The company cautioned in its latest earnings report that new privacy features in Apple’s iOS 14 update could contribute to a slowdown in advertising revenue.
The social network has been a vocal critic of Apple’s upcoming changes, which requires app makers to gain users’ explicit consent before turning on ad-tracking features, and has warned of the impact the changes could have in the past. But with those changes now imminent, the threat to Facebook’s bottom line will no longer be theoretical.
In a statement, Facebook CFO Dave Wehner said the company’s advertising business could start to take a hit “beginning late in the first quarter.”
“We continue to face significant uncertainty as we manage through a number of cross currents in 2021,” Wehner said. “We also expect to face more significant ad targeting headwinds in 2021. This includes the impact of platform changes, notably iOS 14, as well as the evolving regulatory landscape.” Additionally, he said that ad revenue could slow down if the pandemic trends that have so far been beneficial for the company — namely the massive increase in online shopping — begin to subside.
The warnings clouded what were otherwise strong results for Facebook. The company reported $28 billion in revenue for the quarter, and grew its user base to 1.84 billion daily active users and 2.8 billion monthly active users. Additionally, the company reported 3.3 billion “family monthly active people,” which refers to people who use at least one of the company’s “family” of apps.
During a call with analysts, Mark Zuckerberg criticized Apple for using its “dominant position” to interfere with competing apps like WhatsApp, which he said was “clearly superior.”
“We have a lot of competitors who make claims about privacy that are often misleading,” Zuckerberg said. “Apple recently released so-called nutrition labels which focus largely on metadata apps collect rather than the privacy and security of people’s actual messages. But iMessage stores non-end-to-end encrypted backups of your messages by default unless you disable iCloud, so Apple and governments have the ability to access most people’s messages. So when it comes to what matters most — protecting people’s messages, I think that WhatsApp is clearly superior.”
Zuckerberg also repeated Facebook’s previous argument that Apple’s iOS 14 changes will hurt developers and small businesses. “Apple has every incentive to use their dominant platform position to interfere with how our apps and other apps work, which they regularly do to preference their own,” he said. “This impacts the growth of millions of businesses around the world, including with the upcoming iOS14 changes, many small businesses will no longer be able to reach their customers with targeted ads. Apple may say that they’re doing this to help people, but the moves clearly track their competitive interests.”
Updated with additional quotes.
Author: Karissa Bell, @karissabe
4h ago
Source: Engadget
