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The Gist
- Mixed reality. Apple’s pricey Vision Pro legitimizes mixed reality, inadvertently boosting Meta’s cheaper, established alternatives.
- Ad tracking change. Apple’s ad tracking restrictions inadvertently aided Meta’s ad performance and revenue.
- Messages’ limitation. Apple’s reluctance to make Messages interoperable has inadvertently propelled Meta’s WhatsApp to greater prominence.
Apple CEO Tim Cook disdains Meta. He’s needled the company over its scandals, urged regulators to take it on, and even disabled Meta’s internal iOS apps, throwing it into momentary chaos.
But today, Cook may be Meta’s biggest asset. And certainly not by design.
In a series of moves meant to solidify Apple’s market position, Cook’s handed Meta several gifts. He’s established a category for its riskiest bet, hampered its advertising competitors and given its messaging apps a path to global leadership. With rivals like this, Meta might not need friends.
This week, let’s look at how Apple’s bolstered Meta’s mixed reality, advertising and messaging bets.
Vision Pro Establishes Mixed Reality as a Category
Meta’s return on its metaverse spending hasn’t been great. The company’s lost more than $40 billion to date and will lose billions more this year. Amid the losses, Meta’s struggled to sell virtual and augmented reality by itself. Without multiple major voices proclaiming the technology’s the real deal, mainstream developers and users haven’t jumped in at scale. But now, enter Apple.
When Tim Cook introduced Apple’s Vision Pro, he turned mixed reality into a category, not just a theory. Apple’s glossy marketing showed a new vision for the technology — one that prioritized mixed reality over virtual reality — and lifted Meta’s efforts. With Apple’s devices coming in at $3,499+, Meta can offer cheaper headsets with a more developed ecosystem. Spotify, Netflix, and YouTube have so far declined to develop for the Vision Pro, a significant setback. And as Meta’s $499 Quest headsets deliver improved passthrough (blending the digital and physical worlds) the company should be able to offer functionality similar to Apple, if a bit worse, for the newly metaverse-curious.
Related Article: Where Apple’s Vision Pro Leaves Meta
Ad Tracking Restrictions Disproportionately Damaged Meta’s Competitors
In 2021, Apple began offering users an option to sever apps’ ability to track off-app. The move slammed advertising businesses that relied on connecting ad views with off-app purchases, a key gauge of effectiveness. At first, it seemed like Apple’s restrictions would hurt Meta most, since the company relied on that data to optimize ad placements. And indeed, Meta said Apple’s changes led to a $10 billion revenue hit in 2022.
Then, a funny thing happened. Meta managed to find ways to limit the impact of Apple’s changes, using AI and other tools to improve its ads’ performance, while its competitors couldn’t adjust as fast. Snapchat, for instance, didn’t have as much data to train its models and struggled to prove its ads were working. Last year, Snapchat saw its sales slump while Meta’s revenue jumped.
Meta’s advertising rebound and its competitors’ struggles haven’t entirely been Apple-driven, but the tracking limitations played a role. The result has hampered competitors’ ability to fund new products while the Meta advertising machine continues to fund its big bets in AI research and mixed reality.
Related Article: How Apple and Google’s Tracking Rules Are Impacting Advertisers and Marketers
Apple Messages’ Interoperability Issues Provide Opening to WhatsApp and Others
In an internal email on April 8, 2013, Apple senior vice president Craig Federighi wrote, “I am concerned the imessage on android would simply serve to remove an obstacle to iPhone families giving their kids Android phones.” Allowing Apple Messages on competing operating systems, in other words, would threaten the iPhone business.
More than 10 years later, Apple remains reticent to make Messages interoperable, and this has opened the door for Meta apps like WhatsApp (which we discussed last week). Though Apple recently announced plans to support the Rich Communication Services (RCS) standard — which should make some messaging features like typing indicators interoperable with Android — communicating across operating systems will still be a bit awkward for iPhone users.
Meta is stepping in to fill the gap. WhatsApp is on the rise in the U.S., with iPhone owners making up most of its U.S. users. And the trend will likely continue as long as Apple remains reticent to unleash its Messages app across operating systems.
With a $2.9 trillion market cap, Apple is thriving. And thanks to some of its recent power moves, Meta is too. It’s perhaps not exactly what Tim Cook had in mind, and not exactly a backfire, but an unusual sequence of events for sure.
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