Apple change hammering companies
Apple’s vision of a more private web is not necessarily a more profitable one for internet companies that depend on advertising revenue.
That lesson was clear Wednesday in an earnings report from Meta, the company that Mark Zuckerberg founded as Facebook. Meta said privacy features introduced by Apple last year could cost Zuckerberg’s company $10 billion in lost sales this year.
The news, along with increased spending as Meta tries to focus on the new idea of a metaverse, dropped Meta’s stock price more than 26% Thursday morning. Zuckerberg said Wednesday that Apple’s changes and new privacy regulations in Europe represented “a clear trend where less data is available to deliver personalized ads.”
Meta’s warning and its cratering stock price were reminders that even among tech giants, Apple holds extraordinary sway because of its control of the iphone. And the tech industry received a clear notice that a long-planned shift in how people’s information may be used online was having a dramatic impact on Madison Avenue and internet companies that have spent years building businesses around selling ads.
“People can’t really be targeted the way they were before,” said Eric Seufert, a media strategist and author of Mobile Dev Memo, a blog about mobile advertising. “That breaks the model. It’s not just an inconvenience that can be fixed with a couple of tweaks. It requires rebuilding the foundation of the business.”
Other internet companies that depend on ads felt the tremors, too. But smaller outfits appear to have been more nimble than Meta in their response to Apple’s changes.
Shares in Snap, which reported its fourth-quarter results Thursday afternoon, fell about 17% earlier in the day. But prices bounced back in afterhours trading after the company said it made its first profit. The share prices of Twitter and Pinterest also dropped after Meta’s earnings report but recovered in after-hours trading Thursday after Pinterest reported better-than-expected earnings.
The changes have farreaching repercussions that may hurt consumers’ wallets, Seufert said, although consumers overwhelmingly are choosing not to be tracked. While Meta and other big media companies have developed new methods to target people with ads, some smaller brands, whose ads can no longer reach new customers, have found a different solution to the problem: raise prices.
Apple made significant changes to the privacy settings of its mobile operating system last year, allowing iphone users to choose whether advertisers could track them. Since Apple introduced the feature, a vast majority of iphone users have opted to block tracking. Only 24% of iphone users around the world have consented to being tracked by advertisers, according to data published in December by the analytics company Flurry. That means that a broad swath of iphone users are evading the personal tracking preferred by advertisers.