by Apple’s privacy features are starting to take effect and, as expected, Facebook has been significantly affected. A few months ago, analysts predicted that Apple’s transparent app tracking feature — which limits the tracking of iPhone users — would cost Facebook $12 billion.
According to CNBC, those predictions are suddenly coming to fruition after it was revealed that Facebook owner Meta’s stock is trading at its lowest level since 2019.
“Wall Street’s problem with Facebook is that it’s no longer a growth story. As of this year, that’s all that’s known. The slowest year for the company’s revenue growth was the pandemic year of 2020, when it was still growing by 22%. Analysts this year predict a drop in revenue,” writes CNBC.
One issue for Facebook is that people are more concerned about their privacy after a series of high-profile breaches. It has led a large number of iPhone users to stop apps from tracking them on their devices through Apple’s privacy features. Facebook has taken a big hit because its mobile ad revenue is heavily dependent on this type of tracking.
Apple’s privacy changes don’t help Facebook’s predictions, says Jake Moore, global cybersecurity consultant at ESET. “Users may never identify their primary reasons for opting out, but privacy is becoming more of a decision-making factor, and Apple is very happy to be at the forefront of this movement.”
Apple’s privacy features are kicking in and, unsurprisingly, the biggest loser is … [+]
Facebook’s woes outpace Apple’s privacy capabilities
Apple’s app tracking transparency features aren’t the only problem of course – there are other factors at play. Facebook owner Meta has invested heavily in the so-called Metaverse, a bet that has yet to pay off. At the same time, times are tough and advertisers have cut back on spending—a blow to a Facebook ad business already affected by Apple’s iPhone privacy features.
Based on all this, the social network Facebook is fighting a losing battle. It is heavily influenced by TikTok, which has led Facebook to announce changes to its and Instagram’s news feeds.
Continued growth on video platforms, particularly TikTok, will prove difficult for platforms that have always benefited from the easier measurement path on photos, Moore says. “Video content can be more problematic to generate metrics, meaning platforms have to work harder to profile users and track their movements. Meta is currently focusing on AI as a possible answer, but with other factors adding to the pain, it is unlikely to heal its wounds.”
Meta says it continues to make improvements to its machine learning models and measurement tools, including investing in artificial intelligence. To help advertisers better track and amplify their results, Meta highlights the launch of the “Performance 5” framework and small business ad ecosystem hub.
At the same time, Meta says it has invested in building a portfolio of privacy-enhancing technologies. It says the move will 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 isn’t to young people, yet the company needs those people to make money from ads. As CNBC reports: “The next generation, as described by Jeremy Bondy, CEO of app marketing firm Liftoff, is now moving to TikTok, where users can create and watch short, viral videos instead of scrolling past political rants from distant relatives. whom they accidentally linked to Facebook.”
Going forward, Facebook doesn’t have much choice—its user data-driven business model is flawed. Many see the social network as toxic and under increasing regulatory scrutiny.
As people begin to value their privacy more and Apple’s privacy features take hold, is there a future for Facebook? To move forward, changes must be made to its data-intensive business model.
