Apple made Facebook lose a lot of money

Apple’s new privacy rules on iPhones have slashed revenue for Facebook, Snapchat, Twitter and YouTube by nearly $10 billion, according to an analysis by online advertising company Lotame. recovery from financial times. The new settings make it more difficult to track users while they are using apps, which results in the inability to show personalized ads that would normally be more profitable for businesses.

Apple introduced the new system, called Application Tracking Transparency (ATT), last April Receive many criticisms and protests especially from Facebook, which depends in large part of its revenue on online advertising. ATT provides that each app offers users a choice between being tracked or not tracked, even through different apps, in order to receive personalized or generic ads. Most users in recent months have opted not to be tracked, which leaves companies with fewer opportunities to reach them based on their interests and the things they see online.

The financial times Reports indicate that after ATT, many advertisers decided to reduce their investment in advertising on iOS apps (the operating system for iPhone and iPad) from Facebook, Snapchat and other social networks. Part of the investment has been transferred to Android, where privacy rules differ, and advertising delivery systems run directly by Apple, which offers some additional guarantees in terms of confidentiality and at the same time allows you to better target advertising campaigns. users.

Lotame analyzed quarterly data performance from Facebook, Snapchat, Twitter and YouTube, estimating that the four social networks will face a 12 percent decline in revenue by the end of the year, equaling a $9.85 billion revenue decline.

Snapchat loses proportionally more than other platforms, because its platform is highly focused on smartphones without having many other sources of income. In absolute terms, Facebook (which also owns Instagram) is still the most interesting social network, as it has a larger user base.

To explain the effects of ATT, Lotame’s chief operating officer gave an example of financial times In a virtual clothing company that once got 1 male customer for every $5 invested in showing an online marketing campaign to a thousand people: “Okay, now to reach a thousand men, you have to show the same ad to two thousand people, because all of a sudden you don’t know anymore “Who’s male and who’s female. And you’re still getting $5 for 2,000 views. So you double the costs of treating a client and you have a 50 percent loss of revenue.”

The decline in advertising investments on Facebook was even more pronounced because in recent years the cost of advertising on the social network has increased significantly: with a possible lower return, many advertisers immediately reduced their investment, directing them to other, more economical platforms. To manage ads. Among these, TikTok, a social network on which the cost of advertising is still relatively low, has had good growth.

According to some analysts, Lotame’s estimates may still be wrong, especially for Facebook, which risks having problems selling ads even in the early months of 2022. The social network is developing new systems to provide more details about users who use the iPhone, using other technologies. Other than those for tracking which can be excluded via ATT. However, development takes time and until new options emerge, Facebook will continue to generate lower revenue, compared to growth in recent years.

During the October presentation of this year’s third quarter financial results, Snapchat mentioned It failed to meet its $3 million revenue goals in large part due to Apple’s privacy changes. The company also indicated that it expects an additional impact of the new system on its advertising revenue as well for the fourth quarter of this year.

Twitter appears to have been less affected by ATT, seeing a 41 percent increase in ad sales on its platform last quarter, compared to the same period last year. The company believes that it is less vulnerable to the changes imposed by Apple because it displays ads based on content rather than the browsing habits of its subscribers. Alphabet, which controls Google and YouTube, has also found limited effects in the new rules on iOS.

For Apple, the new ATT is instead an opportunity to increase its revenue in a sector like online advertising, which until now has not been central to its business.

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