Conversations and concerns about data privacy, and the use of personal information, were common in 2021. The focus was often on the world’s biggest tech companies, especially social media providers.
Although Apple wasn’t spared from criticism, it did take steps to give users more transparency in how they’re tracked. For major social media platforms, this might have cost them billions of dollars in revenue.
But why was this the case, and how significant was the impact on a more granular level? Let’s find out.
What Has Apple Changed About Its Privacy Policies?
As part of its iOS 14.5 updates, Apple introduced a new feature called “App Tracking Transparency”.
The feature lets users decide whether they want companies to track their interactions across other apps and websites or if they’d rather not pass on this information.
App Tracking Transparency is available on iOS, iPadOS, and tvOS.
Why Have Apple’s Changes Impacted Social Media Companies?
Advertising is a crucial part of many social media platforms’ business models. Meta (previously Facebook) relies on targeted ads for well over 90% of its revenue. More than 10 million advertisers have partnered with the company.
For Snap, advertising is also critical in helping the business thrive. In 2020, ads made up 99% of its revenue.
Like Facebook and Snap, advertising is crucial for Twitter’s business model. However, it’s not as significant; this channel “only” made up 86% of its total revenue in 2020.
How Badly Might Apple’s Privacy Policy Changes Have Impacted Social Media Companies?
Advertising is a crucial part of many social media companies’ business models. Mobile traffic is particularly important to the likes of Facebook, and Apple’s changes might have affected the company’s revenue in 2021.
As the Financial Times reported in the summer of that year, Facebook said that its speed of growth for the latter phases of 2021 could “decelerate significantly on a sequential basis as we lap periods of increasingly strong growth”.
Despite this, the company generated over $29 billion in Q2 2021, which surpassed experts’ predictions by over $1 billion.
Measuring how badly Apple’s privacy policy changes will impact social media companies is challenging. However, predictions don’t look good. Giving users control over how social media companies track them might have cost YouTube, Snap, Facebook, and Twitter $9.85 billion combined in the second half of 2021.
Is It All Doom and Gloom for These Social Media Companies?
The companies mentioned might have lost an average of 12% in revenue due to Apple’s changes. But while these figures are a lot of money to most businesses, it’s important to remember just how rich these social media giants are.
According to Statista, Facebook made almost $86 billion in 2020—a significant increase from the c.$70.7 billion generated one year earlier.
YouTube is also far from struggling, even if Apple’s new tracking permission features have impacted the business. As reported by CNBC in April 2021, the company—owned by Alphabet Inc.—was on course to generate between $29 billion and $30 billion in ad revenue by the end of that year.
Social Media Companies Might Need to Adapt Their Business Models
The impact of Apple’s privacy policy changes has once again brought the topic of data protection into the spotlight. But for the world’s largest social media companies, it also shows potential warning signs for the future.
Apple has shown that many users don’t want to have their online activity tracked if they have an option. And in the future, it’s possible that social media companies—as well as other prominent players in tech—may come under further scrutiny for their data practices.
Advertising will remain an important cornerstone. But these companies might need to adapt how they operate if they want to remain as profitable.