Meta asks to be spared tighter rules in Australia, saying iPhone’s tracking blocker is hurting business

Meta says Apple's decision to allow users to stop apps tracking them on their phones has diminished Facebook's advertising market power, and therefore the social media giant should not face further regulation in Australia.

In mid-2021 Apple rolled out a new feature in iOS 14.5 called "app tracking transparency" which asks for users' consent before an app can track their activity across websites and apps, and allows users to opt out of the tracking at any time.

This tracking had been used to collect data on what users were shopping for online or looking up in search engines, in order to target them for advertising specific to them.

The change has had a significant impact on the revenue of a number of companies that were reliant on this data - most notably Facebook's parent company, Meta.

It is estimated that Meta, YouTube, Snap and Twitter lost nearly $10bn in the second half of last year, and will lose $16bn in 2022.

Meta alone expected to lose $10bn in 2022, the company said in a submission to the Australian Competition and Consumer Commission's digital platforms services inquiry.

The ACCC said in a discussion paper released in February that Meta had significant market power in online advertising through "unrivalled access to consumers on social media".

However, Meta has argued it should not be subject to more competition regulation because the ACCC's view of its market power is inaccurate and outdated, in part in light of the changes made by Apple.

In a submission published this week, Meta said the opt-out advertising tracker made it harder for advertisers to reach people on iOS devices.

"Following Apple's implementation of these changes, some advertisers cut their spending on Facebook ads targeting iPhone users by about 90% to less than $100 per day," Meta said.

But it argued the change had helped Apple expand its advertising business, meaning the ACCC's claim of Meta's market dominance was based on "misrepresentative and outdated" estimates of Meta's share of advertising.

"This fails to take into account the large number of ad venues that we compete with each day, and the wide and increasing range of choices available to advertisers at all levels of the marketing funnel.

"Meta is only one option that is available to advertisers - and not even the largest."

Apple, in its own submission published earlier this month, said it was puzzled that the competition regulator would consider forcing the company to loosen its grip over the app store and the information it holds, and share it with developers looking to compete against Apple's own apps. The company said it would lead to a huge rise in malware on iOS.

"Replacing Apple's robust systems of App Review and quality control with a blanket obligation to provide access to hardware and iOS features to third-parties would in no way be sufficient to match the protection offered by Apple's current approach," the company said.

Apple said it would also render the opt-out ad tracking feature ineffective because apps would be able to access user data without the user's permission.

In its submission to the inquiry, Australia's third-largest telecommunications company, Optus, argued content providers like Facebook, Netflix and online gaming companies had been getting a free ride on people using their services over the internet for too long.

"The current misalignment between the beneficiaries of investment in communication networks and those who actually have to invest places strain on the whole digital ecosystem and threatens the achievement of Australia's digital economy vision," Optus said.

"It also creates a fairness issue, since users of high bandwidth services, such as gaming, are being subsidised by other users of broadband networks.

"In effect, all consumers are paying for inefficiently delivered traffic even if they do not generate that traffic."

Optus argued that if it was able to charge companies a fee for use during peak periods, it could then offer customers lower broadband prescription prices.

The ACCC is due to report back to government on the inquiry at the end of September.