| Hey all, it's Kurt. Facebook Inc. made an important announcement on Wednesday that few people understood. What came through crystal clear, though, is how much the company dislikes Apple Inc. First, the details. Facebook said that when Apple launches the latest iOS software this fall, the social network will no longer collect unique device identifying information, known as IDFA, from iPhones. Facebook has historically used IDFAs to help target ads to specific devices, but Apple will now warn users and ask them to opt-in to sharing that data with developers like Facebook. Many people will probably say no, and Facebook apparently isn't waiting to find out. The change hurts Facebook in one area: An advertising system called Audience Network. When third-party app developers want to make money from ads, they often don't have the systems or sales team in place to sell marketing spots themselves. In many cases, they turn to Facebook. Audience Network fills ad space for developers in exchange for a cut of the revenue, and the system uses Facebook's data trove ensure the ads are targeted well. Without the IDFA information, however, Facebook says that targeting ads inside apps will be much more difficult. So difficult in fact, Facebook says it may shut down Audience Network for Apple users with the new iOS 14 software. Audience Network is a small part of Facebook's business, but not insignificant. Facebook doesn't break out Audience Network sales but the company said in 2016 that the service was on track to make $1 billion in revenue. Without IDFA, sales from this business could drop as much as 50%, Facebook added. Normally a warning like that would send a company's stock spinning. But Facebook investors didn't bat an eye. The shares actually surged 8% to close at a record. There may be two reasons: - Facebook warned during a July earnings call that iOS 14 would be a problem for the business. So Wednesday's announcement wasn't a total surprise.
- While this hurts outside developers and publishers that rely on Facebook, the company said its main business won't suffer much. That's because Facebook doesn't need IDFA data for most of its own ad targeting. The company's social network, its Instagram app and other offerings provide a trove of phone numbers, emails, profiles and other personal information from billions of people. So when Facebook targets its own ads on its own services, the marketing dollars will keep rolling in.
Which brings us to point two: Wednesday's announcement was as much about slamming Apple as anything. Facebook said Apple's decision will hurt developers "at an already difficult time," suggesting that Apple is hurting small businesses during an economic crisis. It's the same criticism Facebook threw at Apple earlier this month for the fees it charges in the App Store. The battle lines have been drawn. Apple has positioned itself as a champion of user privacy, an area where Facebook certainly struggles. And Facebook is arguing it's fighting for the small business owner during a global pandemic, something that Apple, with its expensive iPhones, wouldn't understand. Both arguments are flawed and self-serving, but they're also compelling in a world where both companies are under threat of antitrust regulation. As far as tech rivalries go, pull up a seat: This one is just getting started. —Kurt Wagner | 
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