Snap, Facebook, Twitter, and YouTube lost $9.85 billion in revenue because of Apple’s privacy policies

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Photo: Drew Angerer (Getty Images) – Apple’s App Tracking Transparency policy has had a negative impact on IT companies who rely on ad targeting in the second half of 2021. Apple revamped the privacy settings on its iPhone series in April with the release of its App Tracking Transparency feature, giving customers more control over their data. According to the Financial Times, the feature has cost Snap, Facebook, Twitter, and YouTube a combined $9.85 billion in lost revenue in the second half of the year.

Lotame, a research and advertising technology business, believes that in the third and fourth quarters of 2021, the four largest internet companies would have lost an average of 12 percent of their income. Companies that were particularly hard impacted were Snap, whose whole business model is based on smartphone use, and Facebook, which, according to Statista, derives nearly all of its revenue from targeted advertisements.

Some analysts, on the other hand, believe Lotame’s figures are cautious. An ad-tech expert told the Financial Times that by the second half of 2021, Facebook alone might have lost up to $8.3 billion in income due to falling ad revenue. With marketers shifting to business models that consider user privacy protections, it’s likely that the company’s problems will only grow worse.

Facebook, for example, has had to start from scratch since ATT took over, according to him in an interview with the publication. The time it takes to create new infrastructure, in my opinion, is at least one year.” Prior to being made available to a large number of people, new tools and frameworks must be built from the ground up and thoroughly tested.”

According to the Financial Times, Apple exceeded advertising revenue forecasts by $700 million in the most recent quarter, totaling roughly $18.3 billion.

In order to serve targeted advertising, applications must ask users’ permission to track their behaviour using iOS 14.5’s transparency feature. Apple has been dragging its feet on resolving this issue, but, some unethical software developers have devised loopholes that allow them to follow you nonetheless).

Most users have chosen to reject permissions thus far. Only 4% of U.S. iPhone owners opted to allow applications monitor them after upgrading their devices in the weeks after the debut of the capability. As a result, marketers have been forced to fend for themselves when it comes to iOS ad targeting, prompting some to divert funds away from the platform in question and reduce their expenditure on sites like Snap and Facebook.

When comparing 2021 to other years, the total amount of advertising spending is basically steady, but social media firms are experiencing a worrying pace of shrinkage of their piece of the pie from the pie.

CEO Charles Manning of mobile marketing firm Kochava told the Financial Times that spending was not declining but rather shifting. “Marketers see outcomes where they put money.”

Companies in the social media sector are still reeling from the blow. Sheryl Sandberg, Facebook’s chief operational officer, addressed various issues caused by Apple’s new policy in the company’s third-quarter earnings report earlier this week.

After a slow start, consumer adoption picked up steam in the second quarter and reached a tipping point in the third, she explained. Because of this, we’ve run across two problems. First, our ad targeting precision slipped, increasing the expense of generating results for our advertisers. 2. The other is that it became increasingly difficult to measure the results.”

Despite the fact that these losses might harm Facebook (now renamed Meta), they are unlikely to have a significant impact on the firm in the near term. The situation may not be as favorable for Snap, on the other hand. Apple’s stock dropped by about 25% following a disappointing third-quarter earnings announcement, which was blamed in part on the company’s privacy policies.

Snap’s chief business officer, Jeremi Gorman, said in a prepared statement to CNN that the company “grappled with industry changes to the way advertising is targeted, optimized, and measured on iOS” that had a greater impact on its business than planned. Additionally, Snap attributed its sales shortfall on problems with the global supply chain—a problem that internet businesses around the world are increasingly confronted with as the Christmas shopping season approaches.