In the subsequent Antitrust Subcommittee report, both companies were accused of anti-competitive practices – Apple for its App Store policies and Facebook for its stranglehold on the online advertising market. Facebook announced $11bn in profit in the most recent quarter, boosted in part by a 22% leap in advertising revenue. But companies that rely on advertising that isn’t displayed through Facebook, such as online publishers, have foundered during the same period. Facebook argues that without the use of its hyper-targeted ads, small businesses wouldn’t be able to effectively target prospective customers, and would lose out on revenue.
Companies which sell mobile ads, including Facebook, use this IDFA to both target ads and estimate their effectiveness. Facebook has been put in a spin by this because user data – and the advertising it can generate – is what makes the company so profitable. And to reiterate, other earnings reports in recent months from Google’s parent company Alphabet and even from Twitter have shown that these companies have largely been unaffected by the changes, according to The Wall Street Journal. The flattening of Facebooks user growth metrics are probably another culprit in the disproportionate impact to the company. People seem to be tiring of the platform, and while Instagram and WhatsApp offer diverse user base and demographics, it hasn’t been enough to slow the wave of growth for TikTok.
Last year, for example, one of these reports found that Apple’s Search Ads — which appear at the top of your iPhone screen when you’re looking for a new app to buy in the company’s App Store — were the source of roughly 58% of all iPhone app downloads. And earlier this summer, one Evercore analyst projected that Apple’s App Store ads could net the company $7.1 billion in revenue by 2025. Other recent Facebook moves reveal how Apple’s iOS changes have permanently affected its existing ad business. For example, Facebook is making a renewed push into Reels, the TikTok copycat product it is promoting on Instagram and the traditional Facebook app, even though it’s barely running ads on Reels, for now. The revenue Facebook could generate from those sales is nice, but the data Facebook can legally capture about how users behave, without interference from Apple, could be invaluable. Facebook can’t tell a shoe store if someone saw their ad on the app, then clicked through to the store’s site or app and bought something — but it can tell them if a Facebook user saw the ad on Facebook and then bought the shoes on Facebook.
The move is billed as giving users far more control over how data about them is used. The ATT impact, according to Meta, is hurting not only the company’s earnings but also small businesses which rely on the company’s ad services to reach the right clients. A Financial Times report last year said 90 per cent of Facebook’s revenue comes from targeted ads. However, it noted, 80 per cent of iPhone users opted not to be tracked by Facebook, Snap and other apps. Despite all the noise it has created in the past, Facebook cannot but adapt to the changing online privacy ecosystem.
The ideas that Zuck and the Meta team have put forward have been compared to movies like Ready Player One where people strap on a headset and are in a completely different universe. And in challenging times like these, we need your support now more than ever. This result under what circumstances should a company’s management team give serious consideration to bidding is not surprising as Apple has made privacy a significant element of its iPhone and other product marketing. Meta’s revenue increased by 20 per cent in the three months ended in December last year, to $33.7 billion when compared to the same period a year ago.
After launching an attack ad campaign against Apple for the privacy improvements it was making to iOS 14, Facebook CEO Mark Zuckerburg now says that the social media company will “be in a good position” once the changes are implemented. “It became a situation where brands or agencies who had expectations of eternal growth could consistently get it from Facebook,” Sonne said, and that their funders now expected the same. But it also made them dependent on a platform that was either increasingly unreliable or downright unusable, depending on which advertiser was asked. Some small businesses reported having their ads improperly flagged by Facebook’s automated ad-review process, while other marketers expressed frustration at how buggy the back-end systems were. “Using Facebook ads for small businesses is voluntary in the same way that using email for a job search is voluntary,” said Jeromy Sonne, a longtime digital marketer who has since abandoned the platform to start his own ad-serving network. And the more your platform’s business relied on user data, the bigger sting you felt.
It took out adverts in national newspapers in December, featuring small businesses talking about how they only survived the pandemic thanks to targeted ads. But when iOS 14.5 comes out this week, the new App Tracking Transparency feature will be on by default. It will force app developers to explicitly ask for permission from users to use this IDFA. We can likely anticipate Meta to take a percentage of the sale of these virtual goods as it facilitates the marketplace — just as Minecraft and Roblox make money. It’s hard to know at this point, but it could very well be, and betting against Zuck has rarely been prudent.
The company expects the first-quarter revenue will be between $27 billion to $29 billion, while analysts predict that the number could exceed $30 billion. Facebook CEO Mark Zuckerberg has slammed Apple’s privacy change multiple times and, during Q3 results, stressed that the Cupertino-based company’s new privacy change will adversely affect small businesses. Facebook meaningfully accelerated the rollout of e-commerce features across Facebook, Instagram, WhatsApp, and Messenger over the last nine months. While the COVID-19 pandemic has certainly played a role in Facebook’s urgency to offer new tools to small businesses, the forthcoming iOS changes likely played a role as well.
This will prevent Facebook from using something called “view-through conversions” to get a complete picture of an ad’s effectiveness. Revelations that the company knowingly lied to advertisers for years about how far their campaigns were reaching didn’t send advertisers packing, and neither did the slowly rising prices that many advertisers were paying. It’s typical for ad prices on any platform to fluctuate from month to month, but Facebook’s spikes were unusually extreme. Between January 2017 and January 2018, for example, one analysis found that the prices advertisers were paying for their Facebook ads were spiking as much as 122%. Aside from its myriad privacy scandals, the other core concept that the Meta brand is synonymous with is copying competitors.
One particular target of Facebook’s ire is Apple’s ability to enforce overarching rules as a condition for appearing on its App Store. Facebook has repeatedly taken aim at what it sees as the prescriptive and haphazardly applied rules governing the App Store ecosystem. The company’s upcoming lawsuit reportedly alleges that Apple plays favouritism with its own apps, thus harming developers and small businesses.
