New report says that Apple wanted to "build businesses" with Facebook

Apple and Facebook were BFFs at one time. Well, that might be exaggerating a little. But according to a fresh report in The Wall Street Journal, Apple and Facebook considered teaming up between 2016-2018. The idea was actually Apple's as it looked to grab a piece of Facebook's revenue according to those in the know. One of those sources was quoted in the WSJ as saying that Apple wanted to "build businesses together" with Facebook.

One possibility discussed was a special ad-free version of Facebook that would be offered to iOS users via the App Store. Since this would be a subscription service, Facebook would collect revenue and Apple would get its usual 15%-30% cut. But when you are dealing with two money-focused firms like Apple and Facebook, negotiations over who gets to collect every extra penny becomes intense.

The Journal report claims that both firms fought over whether Apple should get a cut from so-called boosted posts. By paying Facebook (now Meta), the author of a post can have it viewed by more Facebook users. Facebook contended that Apple would not be entitled to the revenue from boosted posts. Since many small businesses use the feature to reach more potential customers, and Apple does not take ad money from developers, Facebook argued that this revenue was hands-off.

Apple, on the other hand, considered the revenue generated by boosted posts to be in-app revenue that it should be able to take 30% of. With talks going nowhere, it was eventually agreed that both firms should break off negotiations. At the time that the talks came to an end, Facebook was working on changes to enhance privacy on the site. But co-founder and CEO Mark Zuckerberg decided at the time to hold off on making changes in favor of user privacy in order to keep Facebook's advertising business humming.

Whatever camaraderie Apple and Facebook had was all gone when the iPhone maker announced its App Tracking Transparency (ATT) feature IN 2020. This would allow iPhone and iPad users to avoid getting tracked by apps and websites for the purpose of being served targeted ads for products that they had looked up online. Mark Zuckerberg was so upset that he paid for full-page ads to run in major metropolitan newspapers stating that Facebook was standing up for small businesses against Apple.

According to Insider Intelligence, only 37% of iPhone and iPad users opted in to continue being tracked reducing the number of potential iOS and iPadOS users who would see a targeted advertisement. The ATT feature was disseminated to iPhone and iPad users in iOS 14.5 and iPadOS 14.5 in April 2021. Citing a report from Data management firm Lotame, the Journal report says that Facebook, Twitter, Snap, and YouTube together have lost some $17.8 billion in revenue this year thanks to Apple's ATT.

Investors have noticed. The market capitalization of Meta (Facebook's new corporate name) has declined by $600 billion over the last year. And last month the company reported its first year-over-year decline in quarterly revenue...ever.

While Apple has been touting the privacy of the iPhone, Facebook was hit by scandals like the Cambridge Analytica  mess which saw the personal data of 87 million Facebook users used without permission by political consultancy Cambridge Analytica (whose vice president was Trump strategist Steve Bannon). The data was reportedly sold to the Trump campaign during the 2016 presidential race and used to determine areas where additional advertising money needed to be spent.

A Meta spokesman said that it has "made significant changes over the past five years to protect people's data while also allowing businesses of all sizes to grow. The decisions we make aren’t dictated by another company, but by our commitment to the people using our products and our belief that privacy and personalization are not at odds." But online, is it possible to straddle that fine line between using your customers' data to sell targeted ads, and claiming to protect their data?

And there we have the tale of two companies that for a brief moment in time tried to find common ground so that they could work together. But Apple's decision to promote privacy and Facebook's decision to continue mining personal data to help push targeted ads had both moving in opposite directions. It's no surprise that deal couldn't be worked out.