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Facebook announced its quarterly results and it was reported that this is the first time the social media platform’s users didn’t grow. If that wasn’t a blow enough, the company’s CFO revealed that a feature introduced by Apple is set to cost the social media giant about $10 billion in 2022. The feature — not new but was introduced last year — is called App Tracking Transparency (ATT). Here we explain what is ATT and how it’s costing Facebook billions of dollars


What is App Tracking Transparency?

Apple first showcased the feature in 2020 at WWDC, its annual developer conference. There were many sceptics and Apple did give developers — including Facebook — time to understand and get used to the idea. The feature was rolled out last year and what it does is that it gives more control to iPhone users on whether or not they want to be tracked by advertisers online across apps. Apple says that it’s the user and not the developer who should decide what data they get or share. App Tracking Transparency allows you to choose whether an app can track your activity across other companies’ apps and websites for the purposes of advertising or sharing with data brokers. “If you see a request to track your activity, you can tap Allow or Ask App Not to Track. You can still use the full capabilities of the app, regardless of whether you allow the app to track your activity”, explains Apple.


What is Facebook’s ‘problem’ with Apple and ATT

Most apps use something called IDFA or Identifiers for Advertisers. What IDFA does is that it uses random identifiers to deliver customised advertising. Like you would’ve searched for “vacation in the hills” and you suddenly see ads related to hotels in the hills or other weekend getaways on the internet. It’s IDFA that delivers advertising to users and revenue to apps. It’s the data that Facebook and others use and it’s a rather common business model. Facebook says that IDFA helps it understand and now how the ad campaigns have done. It also helps a lot of small developers in generating revenue as it remains their biggest source of income. Apple argues that it is giving users the choice — if they want apps to track them then they are welcome to do so. “We believe users should have the choice over the data that is being collected about them and how it’s used. Facebook can continue to track users across apps and websites as before, App Tracking Transparency in iOS 14 will just require that they ask for your permission first,” Apple CEO Tim Cook said about the feature in December 2020.


How’s Facebook losing money because of this?

Targeted ads is a big source of revenue for Facebook and ATT stops that considerably. A report by Financial Times last year revealed that 90% of its revenue from Facebook comes from targeted ads. The report also noted that 80% of iPhone users opted to not be tracked by many apps, including Facebook, Snap and others. That means a huge loss of revenue and just because of one big change Apple brought to iPhones. A report by CNBC quotes Sheryl Sandberg, COO, Meta, where she said that the iOS changes are diminishing the accuracy of Facebook’s ads, driving up prices based on an outcome like a sale or download. She also said that small businesses are being hurt by Apple more — which is something Facebook has been arguing about since the time ATT was announced.



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