Facebook Expects To Lose $10 Billion Because Of One Change Apple Made
Facebook says Apple is to blame for its projected $10 million loss in revenue.
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According to Facebook, Apple’s App Tracking Transparency feature will reduce the company’s sales by around $10 billion in 2022. To date, Facebook’s revelation is the most specific data point on the impact of Apple’s privacy shift on the advertising sector. Many behind-the-scenes tactics that directly relate to mobile advertising will be disrupted by the privacy feature; this is particularly true of those that authenticate whether a transaction or download was made.
The privacy update Apple made to its iOS operating system last year, according to Facebook parent Meta, will reduce the social media company’s sales by nearly $10 billion this year. On a conference call with analysts following the company’s fourth-quarter earnings report, Meta CFO, Dave Wehner, remarked, “We believe the impact of iOS overall is negative on our business in 2022.” With the potential for reducing sales by up to $10 billion, it’s a significant headwind for the company as a whole.
What is the new Apple App Tracking Transparency feature? It is one of the latest attempts by developers to maintain privacy for users. The feature limits advertisers’ access to an iPhone’s user identity. As a result, this translates into hindering ad targeting options for media and marketing companies.
In extended trading on Wednesday, Meta shares fell 23% after the business warned of multiple obstacles and reported a shortfall in user counts. Analysts expected Facebook’s first-quarter revenue to be in the range of $27 billion to $29 billion, but Facebook indicated it would be closer to $30 billion. According to Wehner, the $10 billion revenue loss this year is only a best guess.
“We’re basically evaluating the overall impact of the cumulative iOS changes to where the sales prediction is in 2022,” Wehner said. “That’s the order of magnitude when you add up the improvements we’re seeing on iOS. We won’t be able to be specific on this. It’s only a guess.”
The ATT feature was initially offered by Apple with iOS 14.5, which was launched last year for iPhones. It’s also included in iOS 15, which Apple claims is installed on 72 percent of contemporary iPhones. When users open an app, they are asked if they want to be tracked by ATT popups. If the user declines, the app developer loses access to the IDFA, which is used to target and measure the efficacy of online adverts.
According to a report released in October by admeasurement startup AppsFlyer, 62% of iPhone users have chosen to opt out of sharing their IDFA. The iPhone apps that require targeted advertising can instead use SKAdNetwork, an Apple technology that Apple claims are more private. Since the feature was first revealed in June 2020, online advertising businesses have expressed their discontent with it, but Facebook has been the most vocal in its disapproval.
Facebook launched a marketing effort in December 2020 that included full-page ads in major newspapers. The ads criticized the feature, claiming that the change was motivated by money and not privacy or true care and concern. According to the operating head of Facebook, Sheryl Sandberg, the modifications are reducing the accuracy of Facebook’s ads, driving higher pricing based on a sale or download. She also stated that determining whether or not those conversions take place is becoming more challenging.
Alphabet’s fourth-quarter figures blew past expectations the day before Facebook’s, citing success in e-commerce ads, an area where Facebook reported weakness. Apple’s adjustments, according to Wehner, aren’t having the same effect on search as they are on other sorts of apps. He brought up how much money Google makes for Apple as the default search engine on Safari. “Given that Apple continues to take billions of dollars a year from Google Search, the incentive clearly is for this policy discrepancy to continue,” Wehner said.
