When it comes to key competitors to Apple (NASDAQ:AAPL), there are some big names that always seem to come up. Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google is the company behind Android, the operating system that powers AAPL’s smartphone and tablet competition. Samsung tops Apple in smartphone sales and competes against it with other hardware, including smartwatches, wireless earbuds, tablets and laptops. The tech giant that’s really gunning for Apple at the moment may be a surprise: Facebook (NASDAQ:FB).
And the social media giant appears to have iMessage in its sights.
Unless you’ve been living under a rock, you’re probably aware of the battering Facebook has been taking over privacy issues and the spread of misinformation over its social network.
The difficult position the company finds itself in has not been lost on Mark Zuckerberg. On Mar. 6, the Facebook CEO published a post that laid out his company’s strategy going forward. He titled it “a privacy-focused vision for social networking” and stated that while people enjoy using Facebook and Instagram for connecting and sharing with a wide community, the future is in private, encrypted communication and posts that don’t remain online forever.
Re-Code was quick to point out that FB currently collects $55 billion in annual advertising revenue based on its social network lacking all of those features. Targeted advertising doesn’t work very well when the data advertisers are looking for is encrypted, which puts that revenue in jeopardy. The company likely has a few years to figure out how to monetize privacy, but in shifting focus to private messaging, Facebook will find itself competing directly with Apple and its popular iMessage app.
Slate published a post on Friday evening, laying out the case for the coming Facebook versus Apple battle. The argument is that with Mark Zuckerberg determined to “dominate private online communication to the same degree that it dominates what we call social networking today,” the company will have to convince iPhone users to drop iMessage in favor of Facebook Messenger or WhatsApp. FB’s messaging platforms are popular on Android, but on the iPhone, iMessage rules.
Apple’s iMessage is available only for the iPhone and other Apple hardware. The company has resisted the temptation to release its popular, encrypted, SMS-supporting messaging platform for Android. Doing so is one of the ways AAPL keeps people on the iPhone instead of jumping ship to an Android device.
One of the big questions facing Apple at the moment is whether it should finally consider giving in to demand and releasing iMessage for Android. With iPhone revenue slipping, all bets are off as to what the company might do to wring more money out of other divisions.
That would be a nightmare scenario for Facebook. Back in October, Facebook’s CEO told investors (via CNBC) that Apple’s service was the one FB had to beat if its own messaging apps were to succeed:
“Our biggest competitor by far is iMessage. In important countries like the U.S. where the iPhone is strong, Apple bundles iMessage as a default texting app and it’s still ahead.”
China is pretty much a lost cause with WeChat absolutely dominating the market, so FB’s focus is on the U.S., but that means having to beat Apple. Which is something no-one has been able to do yet. And iMessage is also popular for messaging, posting videos and sharing new music among teens — a group that has been abandoning traditional social media platforms. In the American market, iMessage use has topped the combined totals for Facebook Messenger and Snapchat (NYSE:SNAP) among teens in recent years, despite not being available for Android.
AAPL has been fighting back, with CEO Tim Cook publicly slagging Facebook’s privacy record. At the end of January, Apple temporarily revoked FB’s access to private iOS apps after discovering the company had breached privacy rules. That move left 35,000 Facebook employees unable to check calendars, access campus maps or communicate using Facebook Messenger. It’s not lost on FB that in terms of the iPhone, Facebook itself is an app that’s downloaded from the App Store. And Apple has complete control over that.
Apple looks at iMessage as a key feature that keeps users buying iPhones. And its messaging app is increasingly being monetized, through features like Apple Pay support, apps and add-ons. With Facebook hell-bent on shifting to private messaging as its future, the conflicts between Apple and Facebook are likely to only get more intense, with the U.S. market as the key battleground.