this is the main event you've all been waiting for,

the release of iOS 14.5..

In one corner, Apple's CEO, Tim Cook.

In the other, the Facebook CEO, Mark Zuckerberg.

(bell ringing)

(characters banging) (characters punching)

(crowd cheering)

- Well, folks, that's gonna leave a mark.

Pun intended.

(crowd booing) (cup clattering)

Uh.

What we're seeing unfold in this fight

is quite complicated.

In fact, you're probably thinking

what's this beef all about?

Apple makes phones, tablets, laptops and more.

Facebook makes social networks.

Why the slug fest?

The simple answer?

Differing views of our privacy

and it's playing out big time in Apple's new iOS 14.5.

But that's just the first round.

This is a fight that could shape the future

of the internet

and certainly, the next wave of computing.

Yeah, it's a lot.

So I thought it was best to explain it

with the help of these guys.

No, you cannot buy these

because they're just terrifying.

(dramatic music)

Okay, let's explain this all,

starting with what brought this to a head.

iOS 14.5.

And a new feature called App Tracking Transparency.

Now, for years, every iPhone

has had a secret string of numbers inside it.

It's called the IDFA, Identifier for Advertisers.

We'll call it your very own ad tracking number

and it's used to help apps identify you

and know what you're up to on your phone.

So for instance, say Mr. Cook,

let's call him user 098002,

has decided to relax and download a new meditation app.

The app records his number, (app dinging)

and here's the thing,

the Facebook app and other apps

on his phone also have that number.

If that same meditation app wants

to try to get Mr. Cook

on its mega super relaxing subscription plan,

it can go to Facebook and say hey,

let me advertise to user 098002.

If Facebook has that number and there's a match,

boom, the personalized ad shows up

in Mr. Cook's Facebook feed.

There's another way this all used.

Say that meditation app shows ads in its feed.

It can use Facebook's Ad Network,

which again uses that number

to keep track of your other interests

and feed you highly personalized ads.

So you get it.

These user numbers are good for Facebook

and other social networks

that wanna know what we're doing on our phones.

And they're good for businesses

that want us to buy stuff.

But now with iOS 14.5,

Apple turns off that ad tracker by default.

If an app wants to track you using that number,

it will have to ask.

If Mr. Cook taps Ask App Not to Track,

then his meditation app won't get his number.

Apple is giving companies a chance

to plead their case with this area right here

that explains what the company uses the data for.

Don't want those popups at all?

You can opt out of all tracking

by going to Settings, Privacy, Tracking

and turning off Allow Apps to Request to Track.

All in all, this is Apple's big play

to give people a choice whether they wanna be tracked.

And chances are, more people are going

to tap Ask App Not to Track.

And guess who isn't happy about that all?

Eminem, the rapper.

(upbeat music)

Sorry, I mean Mark Zuckerberg.

Our custom designs were rush ordered.

See, Facebook's business is built

on personalized advertising.

Instead of charging you to use Facebook,

Facebook charges companies to advertise.

These ads are targeted at you based

on everything Facebook knows about you.

Here's an ad Facebook ran

in The Wall Street Journal at the end of 2020.

We're standing up to Apple for small businesses everywhere.

Many in the business community

have shared concerns about Apple's forced software update,

which will limit businesses' ability

to run personalized ads

and reach their customers effectively.

(bell dinging) (crowd cheering)

(characters punching)

Facebook CFO, Dave Wehner,

was clear about how it will impact Facebook directly

on a January 2021 earnings call.

- [Dave] We continue to believe

that that will be a headwind in the ads business.

We're gonna have to be providing a prompt asking people

for permission to use third-party data

to deliver personalized ads

and we do expect there to be high opt-out rates

related to that.

- [Joanna] The company added that the Apple prompt

doesn't give enough context about the benefits

of personalized ads.

Still, while Facebook has said recently

that it won't have a big impact to its own business,

Facebook seems to be acknowledging

that given the choice,

users would prefer not to be tracked.

A Facebook spokesman said,

"While Apple claims the update is about privacy,

it's about forcing small businesses

and developers to charge for apps

that were once free,

hurting consumers in the process.

Free, ad-supported services have been essential

to the growth and vitality of the internet,

and we're joining others to point out Apple's hypocrisy

and anti-competitive behavior."

An Apple spokesperson responded.

"Apps and advertisers can continue

to track users across apps and websites as before.

App Tracking Transparency in iOS 14

simply requires that they ask for users' permission

before sharing their data with other companies.

Supporting small businesses has been at the heart

of the App Store since it was created

to help developers of all sizes develop,

test, and distribute apps around the world."

The company also says it has introduced new free tools

for advertisers to measure their campaigns

while respecting user privacy.

As a company based on hardware sales

and more recently, more subscription services,

Apple has long stood on the side of user privacy.

Here's Steve Jobs in 2010.

- Privacy means people know what they're signing up for

in plain English.

And some people wanna share more data than other people do.

Ask 'em.

Ask 'em every time.

- [Joanna] And Cook has taken over that mantle

and said this in January 2021.

- If a business is built on misleading users,

on data exploitation,

on choices that are no choices at all,

then it does not deserve our praise.

It deserves reform.

At its foundation, ATT is about returning control to users,

about giving them a say over how their data is handled.

(bell dinging) (crowd cheering)

(characters punching)

- But of course, there is benefit to Apple's business.

Mr. Cook and his team see privacy

and other security features,

like encryption as a selling point

of its hardware and software combo.

So two men, two very different business models

and two very different visions

of how technology and the internet should work for us.

And the future fights are going to go way behind privacy.

On that same earnings call from January,

Mark Zuckerberg said,

- [Mark] I do wanna highlight

that we increasingly see Apple

as one of our biggest competitors.

- [Joanna] He pointed out products like iMessage competes

with Facebook's messaging business,

which includes WhatsApp, Instagram and Facebook Messenger.

- [Mark] Apple has every incentive

to use their dominant platform position

to interfere with how our apps

and other apps work, which they regularly do

to preference their own.

(bell dinging) (crowd cheering)

(characters punching)

- But where's this really heading?

Literally our heads.

The fight for the future of computers,

augmented reality glasses.

When the tech is ready

and these aren't just big, bulky headsets,

these glasses will probably run an operating system made

by one of these companies.

And it could be a fight bigger than Android versus iOS

or Windows verse Mac.

Facebook, which owns Oculus,

is investing heavily in the software and hardware side

of glasses, and is planning to release some smart glasses

in the next year.

- I can't go into full product details yet

but they're gonna be the next step

on the road to augmented reality glasses.

- [Joanna] Apple is working on its own headset,

according to various reports

and Tim Cook has shared his interest

in augmented reality for years now.

- And I think AR can help amplify the human connection.

I've never been a fan of VR like that

because I think it does the opposite.

- So you see, this change in iOS 14.5

is just the start of this fight.

You know what's not gonna be happening any time soon?

(groovy beach music)

As for who ultimately wins,

there's not telling

but at least with iOS 14.5,

the winners are users

who have wanted control of their privacy and data.

Do you guys do anything else?

You just go to the gym all the time?

Tim Cook has the same abs as Mark Zuckerberg.

They're both ripped.