How Apple's Privacy Push Cost Meta $10 Billion
Friday February 4, 2022. 09:45 PM , from Slashdot/Apple
An anonymous reader quotes a report from The Economist: Pop-up notifications are often annoying. For Meta, one in Apple's iOS operating system, which powers iPhones, is a particular headache. On February 2nd Meta, which owns Facebook and Instagram, told investors that privacy-focused changes to iOS, including the 'ask app not to track' notification, would cost the company around $10 billion in 2022. That revelation, along with growing competition and sluggish growth in user numbers, helped to prompt a 23% plunge in Meta's share price and showed Apple's might. But what did Apple actually do, and why was it so costly?
The promise of digital advertising has always been its ability to precisely target people. Before the digital age, companies placed ads in places where they expected potential customers would see them, such as a newspaper, and hoped for the best. Online, companies could instead target ads based on people's browsing history and interests. This fueled the profits of companies like Meta, which held vast amounts of data on their users. For years, Apple helped by offering an 'identifier for advertisers' (IDFA), giving advertisers a way to track people's behavior on its devices. Users have long been able to disable IDFA in their phones' settings. But last year, citing privacy concerns, Apple turned off IDFA by default and forced apps to ask people if they want to be tracked. It seems most do not: a study in December by AppsFlyer, an ad-tech company, suggested that 54% of Apple users who saw the prompt opted out.
This change has made digital advertising much trickier. Sheryl Sandberg, Meta's chief operating officer, told investors that the change decreased the accuracy of ad targeting and slowed the collection of data showing whether ads work. Both of these changes make 'direct-response ads,' which encourage consumers to take an action like clicking or purchasing, less appealing to advertisers. The financial impact on ad-sellers like Meta has been painful. The $10 billion hit estimated by Meta amounts to over 8% of its revenue in 2021. Snap, another social-media company, and Unity, a games engine which operates an ad network, also expect Apple's changes to hurt their businesses. Apple, meanwhile, is doing well: estimates suggest its own ad business has grown significantly since it introduced the app tracking pop-up. (A different pop-up, with a more persuasive sales pitch for opting-in to tracking, appears on Apple's own apps.)
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