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 a negative on our business in 2022.” “It’s in the $10 billion range, so it’s a major headwind for our company.”
Facebook’s disclosure is the most specific data point yet on the impact of Apple’s App Tracking Transparency feature, which limits advertisers’ access to an iPhone user identity and hence limits targeting options.
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 explained. “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 ad measurement startup AppsFlyer, 62 percent of iPhone users have chosen to opt out of sharing their IDFA. Many mobile advertising’ behind-the-scenes mechanics are disrupted by the privacy feature, particularly those that authenticate if a transaction or download was made. iPhone apps that require targeted advertising can instead use SKAdNetwork, an Apple technology that Apple claims is 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, included full-page ads in major newspapers, criticising the feature and claiming that the change was motivated by “profit, not privacy.” Apple CEO Tim Cook highlighted Facebook’s app as an illustration of how the functionality works in a tweet the next day.
“We believe users should have the choice over the data that is being collected about them and how it’s used. Facebook can continue to track users across apps and websites as before, App Tracking Transparency in iOS 14 will just require that they ask for your permission first.”
Facebook’s operating head, Sheryl Sandberg, warned on Wednesday that ATT will impact small businesses that rely on digital advertising to develop and are more more reliant on targeted ads than larger corporations. It’s a recurring theme in Facebook’s criticism of Apple.
According to 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 profit from Google Search in the billions of dollars every year,” Wehner added, “the temptation plainly is for this policy disparity to persist.”