Facebook vs Apple: Social media giant sees future competitor

Facebook CEO sees ‘significant competitive overlap’ with iPhone maker on private messaging, augmented reality glasses.

Facebook has attacked Apple in recent months, primarily over expected changes to Apple’s iOS 14 mobile operating system [File: George Frey/Bloomberg]

Facebook Inc. Chief Executive Officer Mark Zuckerberg said he sees Apple Inc. as a “significant” future competitor as the two companies begin to build out rival business lines.

Zuckerberg discussed Facebook’s key product areas on Wednesday during a fourth-quarter earnings call, and said he expects there to be “very significant competitive overlap” with the iPhone maker on several of them, including private messaging and augmented reality glasses. He criticized Apple’s iMessage, suggesting it offered weaker privacy than Facebook’s WhatsApp, and implied iMessage’s market dominance in the U.S. was the result of unfair advantages provided by Apple.

“IMessage is the most popular service in the U.S. I think because of the fact that they pre-install it and give their app several advantages that other apps don’t have,” Zuckerberg said.

The CEO also said that Facebook and Apple are likely to become direct rivals on the “next computing platform,” referring to virtual and augmented reality headsets. Facebook already offers VR headsets from its Oculus unit, and both companies are building AR glasses. “I think we would expect to see them as more of a competitor there as well,” he added.

Facebook has attacked Apple in recent months, primarily over expected changes to Apple’s iOS 14 mobile software, which will make it harder for the social network to track users and show them ads based on their past online activity. Apple has said it is making the move to protect user privacy, and Facebook has argued that the opt-in requirement will hurt small businesses that rely on targeted advertising for sales. Facebook told analysts Wednesday that the iOS changes could curb its revenue growth.

“Apple may say that they’re doing this to help people, but the moves clearly track their competitive interests,” Zuckerberg said.

The threat to revenue growth from Apple’s changes to iOS were part of a broader warning from Facebook about “significant uncertainty” for its business heading into 2021. The Menlo Park, California-based company said sales gains may slow in the second half as pandemic lockdowns — and the accompanying growth in traffic and ad revenue — ease.

For now, the company is still benefiting from a surge in online shopping and digital advertising during the Covid-19 crisis. Facebook reported fourth-quarter sales jumped 33% to $28.1 billion, and monthly average users on its flagship site rose to 2.8 billion.

Apple also reported quarterly earnings on Wednesday, with revenue jumping 21% to $111.4 billion, propelled by the iPhone 12.

Source: Bloomberg