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Facebook Says iOS 14 Will Hurt Its Business Model, Expects Audience Network Revenue To Drop 50%

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Facebook Says iOS 14 Will Hurt Its Business Model, Expects Audience Network Revenue To Drop 50%

Facebook Inc (NASDAQ: FB), in a statement Thursday, claimed Apple Inc's (NASDAQ: AAPL) latest operating system for iPhone devices will make it harder to track user data across apps, and thus, impact targeted advertising on its platform.

What Happened: The Mark Zuckerberg-led company acknowledged that it would stop collecting the identifier for advertisers (IDFA) on its apps on iOS 14, but may revisit this decision at a later time.

Separately, in a blog post, the social media company claimed it is being forced to stop collecting the IDFA by the actions of the Cupertino-based technology titan. 

The social network behemoth also detailed the impact on its Audience Network, an advertising network for mobile apps that allows publishers to place their ads on mobile sites and apps other than Facebook.

“We know this may severely impact publishers’ ability to monetize through Audience Network on iOS 14, and, despite our best efforts, may render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14 in the future,” the company said.

According to Facebook, it is difficult for the company to quantify the impact on publishers and developers due to many unknowns. Nevertheless, it admitted that it had observed a 50% drop in Audience Network publisher revenue in its testing.

Why It Matters: In the upcoming release of iOS 14, iPadOS 14 and tvOS14, user permission would be mandatory for displaying targeted advertisements, according to Apple.

Both Facebook and Twitter Inc (NYSE: TWTR) rely on IDFA for a large share of their revenue, but the financial impact is not expected till Q4 2020 as changes will not take effect until September with most devices expected to be updated by October, Forbes reported.

The social platform claims to have paid out billions of dollars to its 19,000 developers and publishers around the world, many of which it says are small businesses.

The company pressed for the need for consultations for critical changes to platform policies, claiming “these updates have a far-reaching impact on the developer ecosystem.”

Price Action: Facebook shares closed nearly 8.2% higher at $303.91 on Wednesday and fell 0.27% in the after-hours session.

 

 

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