Apple’s privacy features are starting to take effect and unsurprisingly, Facebook has been significantly impacted. A few months back, analysts predicted that Apple’s App Tracking Transparency feature—which limits iPhone user tracking—would cost Facebook $12 billion.
According to CNBC, these predictions are suddenly taking shape, after it was revealed that Facebook owner Meta’s stock is trading at its lowest since 2019.
“The Wall Street problem for Facebook is that it’s no longer a growth story. Up until this year, that’s the only thing it’s known. The company’s slowest year for revenue growth was the pandemic year of 2020, when it still expanded 22%. Analysts this year are predicting a revenue drop,” CNBC writes.
One issue for Facebook is that people care more about their privacy after a run of high-profile violations. It has led a large number of iPhone users to stop apps from tracking them on their devices via Apple’s privacy features. Facebook has suffered a major hit because its mobile ad revenue is heavily dependent on this type of tracking.
Apple’s privacy changes are not helping Facebook’s projections, says Jake Moore, global cybersecurity advisor at ESET. “Users may never specify the core reasons for leaving, but privacy is becoming more of a decision maker and Apple is more than happy to pioneer this move.”
Apple’s privacy features are starting to take effect and unsurprisingly, the biggest loser is … [+]
Apple’s App Tracking Transparency features aren’t the only issue of course—there are other factors at play. Facebook owner Meta has invested heavily in the so called-Metaverse, a gamble that’s yet to pay off. At the same time, times are hard and advertisers have reduced their spend—a body blow to a Facebook ad business already impacted by Apple’s iPhone privacy features.
Underpinning all of this, the Facebook social network is fighting a losing battle. It’s hugely affected by TikTok, which has led Facebook to announce changes to its and Instagram’s news feeds.
The constant growth in video platforms, particularly TikTok, will prove difficult for platforms that have always profited via the easier measurement route in photos, says Moore. “Video content can be more problematic in creating metrics, meaning platforms need to work harder to profile users and monitor their movements. Meta is currently focusing on AI as the potential answer, but with other factors adding to the pain, it is unlikely to heal its wounds.”
Meta says it is continuing to make improvements to its machine learning models and measurement tools, including investments in AI. To help advertisers better track and boost their results, Meta highlights the release of its “Performance 5” framework and the Small Business Ads Ecosystem Hub.
At the same time, Meta says it has been investing to build a portfolio of privacy-enhancing technologies. It says the move should help minimize the amount of personal information processed while allowing businesses to show relevant ads and measure their effectiveness.
But let’s face it—as it stands, Facebook’s appeal is not to the young, yet the company needs these people to make money from ads. As CNBC reports: “The next generation, as Jeremy Bondy, CEO of app marketing firm Liftoff, describes it, is now moving over to TikTok, where users can create and view short, viral videos rather than scrolling past political rants from distant relatives with whom they mistakenly connected on Facebook.”
Going forward, Facebook doesn’t have much choice—its business model based on user data is flawed. Many view the social network as toxic, and it’s under increasing regulatory scrutiny.
As people start to value their privacy more and Apple’s privacy features take hold, is there a future for Facebook? To move forward, changes need to be made to its data-hungry business model.
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