Apple made a significant change that hammers internet companies like Meta
Apple’s idea of a more private internet is not always profitable for web companies that rely upon advertising revenues.The lesson was apparent Wednesday with an earnings report from Meta, the company Mark Zuckerberg founded as Facebook. Meta stated that privacy-related features launched by Apple in the past year could cost Zuckerberg’s business $10 billion in sales lost this year.
The announcement, as well as an increase in spending in the context of Meta’s attempts to concentrate on the idea of a metaverse, lowered Meta’s price by more than 26% on Thursday morning. Zuckerberg declared Wednesday that Apple’s recent changes, as well as the new privacy laws in Europe, were “a clear trend where less data is available to deliver personalized ads.”
Meta’s warning and its plummeting price served as reminders that even among the tech majors, Apple has a significant influence due to its control over the iPhone. The tech industry also received the clear message that a long-planned change in how people’s information could be used on the internet was having an enormous impact on Madison Avenue and internet companies. The latter have built businesses around the sale of ads.”That disrupts the way we do business. So it’s not just a minor issue that a few tweaks can resolve. It’s about reestablishing the basis of the company.”
Other online companies that rely on advertising felt the shakes as well. However, smaller companies seem to be more agile in comparison to Meta in their responses to the changes made by Apple.
Snap’s shares that announced its fourth-quarter results on Thursday afternoon dropped around 17 percent earlier in the day. But the prices recovered after-hours trading, following the announcement that the company had its first profits. The shares of Twitter and Pinterest were also down following the earnings report of Meta. Still, they rebounded during trading after hours on Thursday, following the announcement that Pinterest announced better-than-expected earnings.
Seufert said these changes would have wide-reaching consequences that could hurt consumers’ pockets, although people generally choose not to be targeted. Although Meta and other large media companies have devised innovative ways to reach people with ads, smaller companies, whose advertisements cannot be seen by the new market, have come up with an alternative solution to raise prices.
Apple made significant changes to privacy settings on their mobile operating system last year and allowed iPhone users to decide whether or not advertisers can track their activities. Since Apple made the change in the first place, most iPhone users have opted to disable trackers.
Just 24 percent of iPhone users across the globe have agreed to be monitored by advertisers, as per information released at the end of December by an analytics firm, Flurry. This means that a comprehensive portion of iPhone users are not subject to the personal tracking that advertisers prefer to use.
It’s been a harrowing change for advertisers who have tracked users for years online to figure out how many sales their clients had made. They also use monitoring to bring up products customers have seen but did not purchase to remind users that it’s time to buy. But, for privacy advocates, this is an excellent safeguard against the invasiveness of surveillance that puts the power on everyday tech users.
“We believe the impact of iOS overall is a headwind on our business in 2022,” said Dave Wehner, Meta’s chief financial officer, in an interview with analysts on Wednesday. Google has also taken steps to alter how advertising is conducted. This month, the company announced the possibility that Chrome, the most popular web browser, may eventually eliminate traditional tracking mechanisms that serve advertisements. It also introduced a new system called Topics, that will inform advertisers about a user’s areas of interest, for example, “fitness” or “autos and vehicles” -Based on the last three weeks of a browser’s history of web surfing.
Meta estimates loss due to the limits is equivalent to what the company is losing on the other side of the universe. Meta claimed that its shift to the metaverse — which may, in theory, assist it in moving away from the influence of Appleis affecting its profits. Meta sees it as the future of the internet, where users exchange virtual experiences. It suffered losses of over $10 billion by 2021 while it created virtual reality glasses and smart glasses that enable users to gain access to the metaverse.
While Meta claimed that its revenue increased by 20% during the quarter that ended December, reaching $33.7 billion, compared to the same timeframe a year before, its quarterly earnings dropped by 8 percent, reaching $10.3 billion.
Wehner said that Apple’s iOS modifications have boosted the advertising business of Google and are not dependent on Apple to provide advertising data.
Snap, the creator of the Snapchat app and the Augmented Reality glasses Spectacles, announced in October in its third-quarter earnings report that the privacy changes made by Apple had a surprising impact on the company’s business. However, the company is evolving, Snap said in its fourth-quarter report released on Thursday, and the most significant effect of Apple’s privacy changes could be at the root of it.
“We are making solid progress,” said Jeremi Gorman, who is Snap’s chief of business. Snap offers their measuring tools that allow advertisers to assess the effectiveness of their advertisements, and the tools are used for more than 75% of direct response advertising clients, Gorman said.
Snap released its annual earnings reports. Snap stated that it has beat analyst expectations of growth in revenue and users. In the final 3 months in 2021, Snap’s revenue reached $1.3 billion, a 42% rise from the same period one year ago. In addition, the number of daily active users increased to 319 million, a 20 percent growth. The company’s net profit was $22.5 million.
Snap’s share price retreated following the announcement, rising by more than 50% in after-hours trading on Thursday.
In the final quarter of the calendar year, revenue from Pinterest was up to $847 million, 20 percent more than the same time a year ago. The company announced the news on Thursday. Its profits were $175 million, which decreased 16% from 2020. The price of shares on Pinterest rose 29% during trading after hours.
It has been the case that Twitter previously stated that Apple’s privacy policies caused no interruptions to its business since most of its advertising comes from branding awareness campaigns and significant events like the Olympics and the Olympics, not targeted ads. Twitter is scheduled to release its fourth-quarter earnings in February. 10.
However, Apple has reported its fourth-quarter earnings this week, which showed it was making money from privacy. Despite disruptions to supply chains, Apple said sales of iPhones totaled $71.6 billion, an increase of 9% over one year ago. The maker of smartphones reported a rise of 11% in its revenues and a 20 percent rise in profits.
Apple has made privacy a central part of its iPhone and other products advertising. Apple has made privacy a crucial part of its iPhone marketing and other items. For example, it gives users the option of opting out of tracking and offers measures to make the search difficult for users of the internet browser Safari. However, Apple has not stopped allowing applications like Facebook to monitor users globally, provided they do not attempt to track users individually.
The year before, Apple CEO Tim Cook made his company’s position explicit, claimed that the industry of advertising had turned into an environment comprised of “trackers and hucksters just looking to make a quick buck.”