Battle of Tech Giants: Apple and Facebook Clash Over Consumer Data Privacy

Beatriz da Rosa – Two Silicon Valley titans, Apple and Facebook, continue crossing swords over what could be the start of a new era of data privacy regulation in the United States. These tech giants currently dispute Apple’s iOS 14.5 update, expected to become available to iPhone and iPad users sometime this month. This new update will explicitly require consumers to allow or deny permission before the app is allowed to track the user’s data and activity. Ultimately, users would be prompted to accept or deny after receiving the following message: “[X App] would like permission to track you across apps and websites owned by other companies. Your data will be used to deliver personalized ads to you.”

This update gives users the choice of what happens with their data. The type of tracking this update addresses includes information about which apps are being used, which websites are visited, and even data about a user’s location. The harvested data is then used by advertisers to provide targeted advertisements based on each individual’s consumer behavior. This monumental change will curb the ability of companies, like Facebook, to collect data about consumers and provide targeted advertising based on the data collected. In fact, a recent poll conducted in February of 2021, determined that 55% of Facebook users would not allow Facebook to track app and web activity for better ads or to help ad-supported businesses.

This clash over consumer data privacy highlights the differences in how each company makes their money. Apple’s business model entails charging Apple customers for purchasing iPhones, iPads, and computers; but Apple also charges developers fees for having the app in the App Store. Facebook, on the other hand, does not charge Facebook users anything, instead, it sells ads that it can target precisely based on consumer data gathered on its users.

Facebook criticized Apple over the plans to give consumers the choice of whether or not they allow app developers to track their data. Facebook argued that the software changes around data gathering are bad for small businesses. The social media mogul even ran ads in the New York Times, Wall Street Journal and Washington Post that read “We’re standing up to Apple for small businesses everywhere.” Although Facebook has framed its disagreement with Apple’s operational system update as concern for small businesses, Facebook’s business model is centered on charging advertisers for access to precisely targeted segments of their consumer database.

It is not surprising that Facebook has reacted this way upon the announcement of Apple’s mission to reform business and consumer privacy protection. This war between these tech giants, which some have argued have spanned almost a decade, illustrates fundamental differences in outlook of how business should be conducted online. Apple’s CEO, Tim Cook declared during the 2021 Computers, Privacy, and Data Protection conference earlier this year that “[t]echnology does not need vast troves of personal data, stitched together across dozens of websites and apps in order to succeed” and “[i]f a business is built on misleading users, on data exploitation, on choices that are not choices at all, then it does not deserve our praise. It deserves reform.” This is not the first time that the CEOs of Facebook and Apple have made comments about the other company’s business practices. Facebook’s Mark Zuckerberg has previously commented about Apple’s practices in saying “[y]ou think because you’re paying Apple that you’re somehow in alignment with them? If you were in alignment with them, then they’d make their products a lot cheaper.”

The social media platform has discussed the possibility of filing an antitrust lawsuit against Apple over App Store Practices and how Apple plans to treat consumer data. Ultimately, Facebook claims that Apple’s new operational update requirement is anticompetitive and an abuse of market power.  Facebook argues that Apple’s action is not about providing consumers more control over data collection practices, but instead that Apple is attempting to push free apps to move to subscription-based models. Facebook’s theory of Apple’s motives is based on Apple’s App Store tax, which collects 30% of in-app purchases. Facebook’s Director of Privacy and Public Policy, Steve Satterfield, said this is ultimately an attempt to challenge Facebook’s business model.

Apple’s iOS 14.5 update has monumental implications for consumers, small businesses, and even the development of regulations of consumer data privacy in the United States. Currently, the United States does not have one overarching data protection legislation. Instead, there are several federal and state laws that aim to protect consumer’s personal data. For example, the Federal Trade Commission Act (15 U.S. Code § 41 et seq) authorizes the Federal Trade Commission  to “bring enforcement actions to protect consumers against unfair or deceptive practices and to enforce federal privacy and data protection regulations.” There are also sector-specific data protection laws that focus on particular types of data. However, other parts of the world, such as the United Kingdom, have developed consumer data protection legislation that is directly focused on controlling how a consumer’s personal information is used by organizations, businesses, and even the government. The United Kingdom’s Data Protection Act of 2018 is the implementation of the General Data Protection Regulation (GDPR), provides increased protection of people’s online data rights. The GDPR provides blanket coverage for all European Union members.  While other countries have taken significant strides in the protection of consumer data, the United States currently lags behind. Currently, California is the only state in the United States that offers similar protections to consumers with the California Consumer Privacy Act (CCPA) which went into effect in 2020.

It is possible that with Apple’s push for consumer choice in data privacy more consumers will become aware of how frequently their activities online are being monitored. As data regulations increase across the world, it is possible that legislatures will take this opportunity to increase consumer protections online. It is likely that this fight between tech giants is far from over, and that the fight for consumer data privacy in the United States is just beginning.

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