(Bloomberg) — Meta Platforms Inc.’s revenue is taking a multibillion-dollar hit this year because its social networks can’t collect as much data on iPhone users. The company has spent the last year attacking Apple Inc. for change; now he also calls Google publicly.
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The Facebook owner alleges Alphabet Inc.’s Google, which also sells personalized ads on iPhones, has an unfair advantage under Apple’s new policies. Apps, including Facebook, must ask users if they consent to being tracked, but Google’s search results and browser don’t, forcing some advertisers’ budgets to shift to Google for more targeting. effective.
Meta has only started criticizing other tech giants by name in recent years. The social media giant, now the subject of antitrust scrutiny around the world, has everything to gain from portraying itself as an outsider, threatened by larger forces. Still, Meta told investors it expects to lose $10 billion in ad revenue in 2022 due to Apple’s changes, making it clear that the company is hit harder than others. Facebook had relied on data from other apps and websites to make its ads effective. Without it, advertisers have to spend more money to get the same results.
Facebook ads are “still important, they just cost a lot more,” said Doug Zarkin, chief marketing officer of Pearle Vision, which relies on Facebook and Instagram to direct people to its website and eye care stores. He estimated that the campaigns are 15 to 30% more expensive than last year.
Last year, Google said it would not tell consumers about the data collection because after Apple changed it decided not to use data on iPhones that would require permission.
Google also doesn’t need the kind of data that Facebook receives from third parties to run its ads. It runs its own mobile operating system, Android, and its own ad exchanges. When users search, their intent provides enough data to effectively advertise them on Google-owned properties, which can prompt marketers to shift their ad budgets to Google rather than Facebook.
“Google is in just the right place at the right time,” said Rick Watson, managing director of RMW Consulting. “They’ve been the biggest beneficiary of ad dollars that have shifted because of efficiency.”
The lack of tracking data also means that it has been difficult for Meta to prove that its ads are generating sales, which makes them less valuable. COO Sheryl Sandberg noted last Wednesday that this was an issue for Meta during the holiday quarter, saying Meta was receiving “less granular conversion data on a delayed basis.”
“That makes real-time decision-making particularly difficult,” she said. “It’s especially important during the holiday season, when people are often big spenders and really watch their ads and adjust their spending not even on a daily basis, but often on an hourly basis.”
Read more about Meta’s disastrous quarterly earnings report
Apple said it has a long history of helping users prevent unwanted tracking, and began blocking cross-site tracking in its Safari browser in 2017. These privacy protections extend to search in Safari, minimizing the amount of data transmitted to third party research. engines. It also said it offers alternatives, such as Duck Duck Go, for searching in Safari.
Apple’s new changes don’t just affect Facebook. According to Branch, a company that analyzes mobile app growth and deep linking, users only allow the average app to track their behavior 27% of the time. Those numbers have remained consistent for months since Apple began rolling out the iOS update to users last summer, says Branch product marketing manager Alex Bauer.
But Facebook has relied more heavily on data than others, including smaller social media peers, such as Snap Inc. and Pinterest Inc. Both of these companies saw strong sales, minimizing the impact of Apple.
Snap said it pushed advertisers on its Snapchat app to Apple’s new measurement tools to track ad conversions. Pinterest chief financial officer Todd Morgenfeld said Apple’s changes haven’t had a significant impact on the company’s advertising yet, but he still thinks they might in the future. to come up. “We are not immune to these issues affecting our business over time,” he said.
Meta’s criticism of Apple and Google could prompt further scrutiny from regulators, though it’s unclear whether that scrutiny will lead to any actual changes. Apple has become the main target of Meta attacks in recent years as the social media company has criticized the iPhone maker’s privacy policies and app store fees, saying they are hurting small businesses.
Meta pointed to Google’s advantage during a disappointing earnings report last week that sent the company’s market value plummeting by $251 billion in a single day. Google, which a day earlier reported fourth-quarter ad revenue that beat expectations, was barely impacted by Apple’s changes.
“We think Google’s search ads business could have benefited compared to services like ours which face a different set of restrictions than Apple,” Meta CFO Dave Wehner said when reporting on business results. He hinted that Apple was intentionally making it easier on Google because the search giant is paying Apple to use Google as the default search product on iPhones. “Given that Apple continues to take billions of dollars a year from Google search ads, there is clearly an incentive for this policy divergence to continue.”
Some of Google’s mobile ad sales and YouTube, its video giant, are affected by Apple’s bans, though Google hasn’t disclosed the exact damage. Google has set loose targeting restrictions on Android, its mobile software, and pushed back the ad cookie ban for Chrome until 2023.
Learn more about Google Ad Revenue Earnings
But search ads are Google’s core business — an Apple appears to have provided an exemption, said Eric Seufert, an analyst at Mobile Dev Memo, a marketing industry publication. “It’s so egregious,” he said.
Apple’s new rules could shift advertising market share to any platform with direct data on what people are buying, said Brian Wieser, president of business intelligence at GroupM, in a statement. E-mail. This includes Amazon.com Inc., the other tech giant trying to build an advertising business.
Smaller rivals also benefit, said David Spector, co-founder of lingerie company ThirdLove. “Facebook delivers you customers. It’s great for that. But at some point it gets too expensive,” he said. “You start realizing: Snapchat is pretty good. Wow, TikTok is pretty good .
Apple and Meta are starting to compete more directly on products like private messaging. Apple’s plans to build augmented and virtual reality headsets put the companies on a clear collision course. Meta’s Quest VR headsets have become a central part of the company’s plan to develop a more immersive version of the internet known as the Metaverse.
Meta hopes to build more advanced technology that will enable targeted advertising without needing to collect as much precise personal user data. This new system would rely on aggregated or anonymized data, but would likely require web browsers to cooperate on a new type of cryptographic protocol so that data can be shared securely. Meta believes this strategy will lead to a safer way to deliver targeted ads.
Since introducing its new privacy rules, Apple has also benefited directly: Ads that appear in App Store search have increased by 33%, according to Singular, a marketing analytics firm.
“Facebook and Google have simply built the largest communities of people around their services virtually anywhere on the planet,” Singular said in its Tuesday report. But “nothing is certain for the future, and past performance is no guarantee of future success.”
(Updates with Apple’s response to tenth paragraph)
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