The Apple side of the story
Data privacy has been in Apple’s agenda for quite a while. In 2010, when the subject did not make the headlines as often as it does today, legendary founder Steve Jobs made his position clear on the subject:
“Privacy means people know what they’re signing up for, in plain language, and repeatedly”.
The company has focused on IDFA (Identified for Advertisers), a “license plate” for the smartphone, forcing all apps to ask users for permission before using their unique IDs. For more details, watch the latest video about privacy on Apple’s Youtube channel below.
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The Facebook side of the story
On the other hand, Facebook has argued that data share is essential, as it allows customers to have “better navigation experience”. In addition, a recent study funded by Facebook said that Apple’s app track transparency is anti-competitive, reduces consumer choice and favors Apple’s own apps.
Beyond caring for user experience, Facebook has a business motive to defend. The parent company of Instagram and WhatsApp controls more than 70% of social media market share. The most recent iOS updates could negatively impact the company’s advertising revenues, especially within the small business vertical.
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Apple is leading the battle, but be careful
Apple is probably winning the privacy dispute today. In recent years, regulatory agencies have become stricter on data sharing, which favors Apple. Also, the Cupertino company’s revenues depend much less on the monetization of user data today (see Apple’s fiscal 2020 revenue breakdown below).
This setup puts Apple in a comfortable position to adopt more rigorous measures on privacy. Facebook, on the other hand, stands to lose more from user control of the data. The company’s business model is highly dependent on ad targeting: more than 95% of the company’s revenues come from advertising.
How could this impact AAPL stock?
The bullish scenario for Apple stock is one in which users embrace Apple’s privacy guidelines to protect their data and privacy. This could be a plus for the Apple ecosystem, as new users are lured towards the company’s products and services.
The bearish scenario could result in a couple of undesirable outcomes. First, any restriction placed on Facebook’s apps could reduce the appeal of owning an Apple product, as 98% of mobile users have Facebook installed on their devices.
Second, Apple could suffer pressure from Facebook and others for the Cupertino company’s role as the “regulator” of privacy. The antitrust battle with Epic Games is an example of how Apple’s gatekeeper status can be scrutinized, which could bode ill for AAPL stock.
Apple has taken the position as the “protector of user data and privacy”. Facebook, on the other hand, believes that data sharing is crucial to ensure better user experience. Who do you think is right? Leave your opinion below and follow @AppleMaven on Twitter!
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)