Instagram CEO says Apple has 'an immense amount of power' as app makers worry over impending iPhone software update

Instagram CEO Adam Mosseri said the company will push back on a planned change to Apple’s iPhone operating system that would impact how it and other mobile advertisers track users. But, he said, “I don’t think we have much influence over Apple,” and pointed to the power Apple has as the sole gatekeeper for apps across about 1 billion of its devices in use today.

The change affecting Apple’s identifier for advertisers, or IDFA, was previously planned as a feature in iOS 14, the version of the iPhone operating system that will be released to the public this fall. But Apple said last week it is delaying the rollout until 2021 “to give developers time to make necessary changes.”

In June, Apple said iPhone users would be given the option to block tracking when opening an app. Advertisers use that identifier to better target ads to individual users and estimate how well they work. But whereas the option to turn off the tracking is usually buried in a user’s options today, many expect having it be front-and-center would encourage most users to opt out.

On CNBC’s “Squawk Box” on Friday, Mosseri said Instagram’s advertising business requires certain data to show users relevant ads and to provide value for its advertisers, the majority of which are small and medium-sized businesses.

“If the ecosystem changes in a way that advertisers can’t really measure their return on instagram private account photos investment, that’s really going to be, yes, somewhat problematic for our business, but it’s going to be problematic for all the big ad platforms roughly equally, so I’m not that worried about it over the long run,” he said.

“It’s going to be much, much more problematic for all the small businesses,” he said. “There are millions of them out there that rely on us to target customers and to reach those customers. Particularly during a pandemic when they’re hurting.”

He argued that Instagram wants its users to have control over their data and understand what data it has.

“We believe that there’s a way to be really responsible and give people control over their data and transparency into their data but without cutting off our understanding and therefore operating blind,” he said.

Instagram parent Facebook has also been outspoken about the change, saying it will “severely impact publishers’ ability to monetize through Audience Network on iOS 14.”

Mosseri said the company will need to “make our case as strongly as we can” to Apple, the public, policymakers, influencers and academics but said the company does “own the majority of the market here in the U.S.” and ”[controls] the ecosystem end to end.”

“They have an immense amount of power,” he said. “They can just decide we can’t launch new apps at any given moment. We’ve seen a series of articles and even some lawsuits and their influence and power over developers over the last couple months.”

Apple has been in a protracted battle with Fortnite creator Epic Games since Aug. 13, when Epic Games published a version of Fortnite to the Apple App Store that included a method for users to pay for in-game content without giving Apple its usual 30% cut. Apple removed the app from the App Store, and Epic Games sued Apple later in the day.