Apple Privacy Boost Hurts Facebook Revenues

A change giving Apple users more control over their data has cost four major tech companies nearly $10 billion in lost ad revenue according to one estimate. But the drop is nowhere near as big as Facebook had warned.

The change, which took effect in April, affects a tag called Identifier for Advertisers that links to a specific iPhone. It lets advertisers combine data from multiple sources and build up a picture of the device owner's interests, helping them better target advertising.

Individual apps must now ask for permission (via an on-screen prompt) to access the tag, giving users greater control over who can and can't track their activity. The move went down badly with advertising and tech firms, with Facebook arguing it would hurt small businesses that could no longer benefit from targeted ads.

Facebook Among Worst Affected

A few weeks after the changes took effect, one estimate said just 13 percent of iOS users had given permission for even one app to access the tag.

Now an advertising data company estimates that four major tech firms (Facebook, Snap, Twitter and YouTube) have seen a combined drop in ad revenue of $9.85 billion. It appears advertisers are spending less because they are getting worse results from advertising. That's because the lack of tag data makes it harder to target users. (Source: businessinsider.com)

While it's a big drop as a raw number, it only represents around 12 percent of the companies' ad revenues. That compares to Facebook's forecasts of a 50 percent decline when it campaigned against the changes.

Advertisers May Have Moved Elsewhere

Some industry experts believe the actual money businesses spend on online ads isn't falling. Instead the business models of Facebook and company are most reliant on third party tracking for accurate targeting. Advertisers are instead switching their money to other advertising platforms that now offer better results.

Others argue the results are now similar for most routes to target users on iPhones. Advertisers are now switching to platforms that are significantly cheaper, which will likely result in Facebook needing to drop their rates. (Source: techspot.com)

What's Your Opinion?

If you use an iPhone, have you seen the prompt? Have you given permission for any apps to access your tracking tag? Should consumers worry about ad platforms losing revenue?