Apple made a significant update to its privacy policies in April 2021, reducing digital advertisers’ monitoring powers and allowing iPhone users to opt-out of data sharing. It was evident at the time that this had the potential to dramatically alter digital reality, but now we’re finally realizing how valuable all that personal information was. According to an original report from Markets Insider, several earnings reports from big social media companies, including Facebook, Twitter, and others, revealed a $278-billion fallout from Apple’s privacy reforms.
The revised option offered to users to opt-in to ad-tracking software from social media applications like Twitter and Facebook, rather than having to explicitly opt-out in the iOS settings, was at the heart of Apple’s upgrade (and at times, that felt like navigating a labyrinth). With the latest update, whenever users started using an app that relies on advertising and user data collecting for revenue, a pop-up would show. This was a major victory for privacy campaigners, who, among other things, objected with the reality of social media sites profiting off user engagement sales.
According to Markets Insider, Meta’s Chief Operating Officer Sheryl Sandberg noted on the call, “Like others in our business, we suffered headwinds as a result of Apple iOS upgrades.” “Apple presented advertisers with two challenges: one, the accuracy of our ad targeting reduced, raising the cost of driving outcomes; and two, assessing those outcomes got more complex.” If it sounds like Meta is having trouble complying with the new privacy regulations, just wait: the self-proclaimed future of the metaverse predicts that the consequences from Apple’s decision will “moderately worsen” as the year progresses in 2022.
According to an early MarketWatch article, JPMorgan said in a Thursday note, “We believe management’s tone around iOS effect has deteriorated, and what was formerly viewed as ‘manageable’ now appears to be a $10 billion revenue headwind in 2022.” As a result of the perceived weakness of social media businesses, investors sold at astonishingly high rates, with Meta Platforms down 22%, Snap down 18%, Twitter down 8%, and even Pinterest down 11%. The aggregate loss of $278 billion in market value is undoubtedly concerning for Big Tech platforms, but it also tells something else to the rest of us.
However, according to CFO David Wehner on the results call, Meta Platforms lost around $10 billion in annual revenue as a result of the missing user data, which made it more difficult for the company to offer tailored adverts to the people most inclined to click.
Social media isn’t a single entity – It’s close to $300 billion. That’s a little less than a year’s worth of user tracking on social networking platforms. Facebook, Twitter, and other companies have reaped huge rewards simply by using social media. Only 4% of Americans had voluntarily enabled user tracking in May 2021, with the new iOS privacy update installed, hurting the “$189 billion mobile advertising market worldwide,” according to Flurry, a Verizon-owned analytics firm. By November of that year, these social media platforms had lost nearly $10 billion in revenue, indicating that the consequences of Apple’s decision may have snowballed in the last weeks of 2021.
Whether you like social media firms or not, their central role in public debate, politics, and even science communication has become inextricably linked. However, without our user interaction and tracking data, businesses are at risk of losing a significant amount of money.
