What is happening?
Facebook has been preparing an antitrust lawsuit against Apple for months. The main accusation is that the company founded by Steve Jobs forces developers to follow App Store rules that, conspicuously, its own apps do not have to comply with.
And there is a bigger issue involving chat services: if Facebook files the lawsuit, its complaint could also target Apple’s refusal to allow third-party apps to become the default messaging service on its devices, instead of iMessage, Apple’s chat.
Facebook explained that Apple’s upcoming changes to its system of “tracking” user information for advertising would give it an “unfair advantage” in displaying ads in the App Store and elsewhere.
The potential litigation would follow an antitrust lawsuit Epic Games filed against Apple last year that made a lot of noise in the developer scene. Facebook and several other companies joined Fortnite owner Epic in criticising Apple’s “unfair” policies. And, as Engadget reports, last month Facebook said it would provide internal documents to back up Epic’s case.
Facebook VS Apple
Facebook could seek changes to App Store rules, like Epic, and the company is looking at asking other companies to join the lawsuit.
Apple, of course, has its defence: it argues that it does not have the largest share of the smartphone market and that the App Store rules reduce the risk of malware (viruses) and scams.
The two companies have been at each other’s throats in public. WhatsApp recently accused Apple of double standards when it comes to data privacy labels on iOS. When Facebook reported its quarterly earnings on Wednesday, CFO Dave Wehner suggested that Apple’s plan to limit tracking between sites and apps for advertising purposes, due to go into effect early this year, could have an impact on ad revenue.
Even Facebook CEO Mark Zuckerberg criticised Apple at the company’s last balance sheet meeting. He put a condition on iMessage to store “non-end-to-end encrypted backups of your messages by default unless you turn off iCloud”. And it backed its messaging service: it said WhatsApp was “clearly superior” when it comes to protecting people’s messages.
2020, a year of extraordinary earnings for both companies
Apple on Wednesday announced strong quarterly earnings beat as well as a record three-month revenue for the first time topping $100 billion.
The iPhone maker posted net profits of $28.7bn in the first quarter of its 2020-2021 fiscal year – the Christmas sales quarter – up 29% compared to 2019.
Group revenue reached an astronomical $111.4bn. “We are gratified by our customers’ enthusiastic response to our unparalleled line-up of cutting-edge products we delivered in a historic holiday season,” CEO Tim Cook said.
Apple said iPhone sales accounted for nearly $66 billion, leading all other company products and growing 18 per cent.
But the tech giant also saw strong growth in wearable devices, including its Apple Watch, which generated $12.9bn in sales.
Services accounted for $15.7 billion as Apple increased sales of music, digital content, cloud archiving and subscriptions.
Facebook, meanwhile, had a turnover of more than $28bn, essentially from advertising, in the final quarter of 2020, and a net profit of $11.22bn, up 53 per cent from the same period last year, as social media usage exploded during the pandemic.
“We had a very strong year-end as the public and businesses continued to use our services in these challenging times,” said Facebook CEO and founder Mark Zuckerberg.
The number of users grew even more during the holidays. By 31 December, 3.3 billion people were frequenting one of the group’s four platforms and messengers (Facebook, Instagram, Messenger and WhatsApp) at least once a month, according to a statement released on Wednesday.
What can happen in the future?
The company expects “headwinds” this year from increased data privacy on Apple-branded devices, it said. That could affect the rollout of targeted ads for users. The dispute between the two tech giants centres on changes to the latest version of Apple’s iOS operating software, which includes a tracking transparency feature that Facebook says will cripple its ability to serve targeted ads.
“While the timing of the iOS 14 changes remains uncertain, we would expect to see an impact starting in late Q1,” Facebook said.
Last month, the social media giant opened fire on Apple, saying the iPhone maker’s new measures on data collection and targeted ads would affect small businesses.
In the meantime, both companies face antitrust scrutiny from regulators. The Federal Trade Commission and most state attorneys general sued Facebook last month.
Apple, meanwhile, is the subject of a European Union antitrust investigation and is reportedly part of another Justice Department investigation.
To keep up to date with the latest commercial news, click on commercial to get your daily dose
Donate & Support