Apple’s iPhone Privacy Policy Update cost Social Media Giants nearly $10 Billion

by Emily on November 6, 2021

in Apple, iPhone, Tech News

Facebook, Snap, Twitter and YouTube have lost nearly $10 billion in revenue as a result of Apple changing the privacy policy settings on the iPhone, according to a Financial Times report.

This recent privacy policy from Apple requiring apps to ask for permission before tracking user behavior was first introduced in April. The policy enabled most users to avoid being tracked, meaning advertisers had less insight regarding how they should reach their target audiences. For instance, a men’s apparel brand would have no way of knowing whether its ads were reaching men or women. Because of this, advertisers cut spending on some of the world’s biggest social media platforms and re-directed their budgets to users of Android devices and to Apple’s own ad business.

The losses are estimated to reach $9.85 billion, which translates to an average of 12% of third and fourth quarter revenue for top social media companies, according to ad tech company Lotame. It was Facebook who suffered the most total revenue loss, due to its large size.

However, it was smartphone-focused platform Snap that was most impacted by Apple’s privacy policy change, bleeding out 13.2% of the revenue it would have collected otherwise. Snap shares dropped earlier this year after the company announced it would not be able to estimate the impact of the new rules implemented by Apple. In the past month, Snap’s stock plummeted once more, down to 22%, just after it reported revenue that fell short of analyst forecasts.

Hours after that earnings report, alarmed investors sent shares in all online ad-based companies sinking. The selloff wiped out $142 billion from the market values of those companies, though several of their shares have somewhat rebounded soon after.

In light of Apple’s new changes, experts say that social media services like Facebook may need to come up with entirely new business strategies, especially now that advertisers find cheaper yet effective alternatives like TikTok.

Meanwhile, companies like Twitter and Google parent Alphabet were not very much affected by the change because their ads do not depend heavily on tracking mobile activity.

Image: CTV News

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