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Technology


META IS NOW CALLING OUT GOOGLE OVER APPLE'S APP PRIVACY RULES

 * Facebook owner hit hard by new rules while Google spared
 * Google isn’t as reliant on third-party data to target ads

Meta headquarters in Menlo Park, California.

Photographer: Nick Otto/Bloomberg
By

Kurt Wagner

, Mark Bergen

, and Matthew Townsend

+Follow
February 9, 2022, 3:00 PM GMTUpdated onFebruary 9, 2022, 6:44 PM GMT


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Meta Platforms Inc.’s revenue is taking a multibillion-dollar hit this year
because its social networks can’t gather as much data on iPhone users. The
company spent last year attacking Apple Inc. for the change; now it’s publicly
calling out Google, too.

The Facebook owner is alleging Alphabet Inc.’s Google, which also sells
personalized ads on iPhones, has an unfair advantage under Apple’s new policies.
Apps including Facebook have to ask users if they consent to being tracked, but
Google’s search results and browser don’t -- causing some advertisers’ budgets
to shift to Google for more effective targeting.




Meta only started critiquing other tech giants by name in recent years. The
social media behemoth, now facing antitrust scrutiny around the world, stands to
benefit from framing itself as an underdog, threatened by larger forces. Still,
Meta told investors it expected to miss out on $10 billion in ad revenue in 2022
because of Apple’s changes, making it clear the company is more severely
impacted than others. Facebook had relied on data from other apps and websites
to make its ads effective. Without it, advertisers need to spend more money to
achieve the same results. 



Facebook ads are “still important, just costing a heck of a lot more,” said Doug
Zarkin, chief marketing officer of Pearle Vision, which relies on Facebook and
Instagram to drive people to its eye-care website and stores. He estimated that
campaigns are 15% to 30% more expensive than last year.


Meta, still an advertising giant, warned that it would miss out on $10 billion
in 2022 revenue with Apple’s changes.
 

Last year, Google said it wouldn’t prompt consumers about data collection
because, after Apple’s change, it decided not to use any of the data on iPhones
that would require permission. 



Google also doesn’t need the kind of data Facebook does from third parties in
order to make its ads work. It runs its own mobile operating system, Android,
and its own ad exchanges. When users make a search, their intention provides
enough data to advertise to them effectively across Google-owned properties,
which may incentivize marketers to move their ad budgets to Google as opposed to
Facebook.

“Google just happens to be in the right place at the right time,” said Rick
Watson, chief executive officer of RMW Consulting. “They were the biggest
recipient of the ad dollars that were shifted because of effectiveness.”

The lack of tracking data also means it has been difficult for Meta to prove
that its ads are leading to sales, which makes them less valuable. Chief
Operating Officer Sheryl Sandberg noted last Wednesday that this was an issue
for Meta during the holiday quarter, saying Meta receives “less granular
conversion data on a delayed basis.”



“This makes real-time decision-making especially difficult,” she said. “That’s
particularly important during the holiday period, where people are often
spending a lot and really monitoring their ads and adjusting spend not even on a
daily basis, but often on an hourly basis.”



Read more about Meta’s disastrous quarterly earnings report

Apple said that it has a long history of helping users prevent unwanted tracking
and that it started blocking cross-site tracking in its Safari browser in 2017.
Those privacy protections extend to search in Safari, minimizing the amount of
data passed to third-party search engines. It also said it offers alternatives,
such as Duck Duck Go, for search in Safari. 

Apple’s newer changes aren’t just affecting Facebook. People are giving the
average app permission to track their behavior just 27% of the time, according
to Branch, a company that analyzes mobile app growth and deep linking. Those
numbers have stayed consistent for months since Apple first started pushing the
the iOS update to users last summer, says Alex Bauer, head of product marketing
at Branch.

But Facebook relied on the data more heavily than others, including smaller
social media peers, such as Snap Inc. and Pinterest Inc. Both of those companies
reported strong sales, downplaying Apple’s impact. 



Snap said it has pushed advertisers on its Snapchat app toward Apple’s new
measurement tools for tracking ad conversions. Pinterest Chief Financial Officer
Todd Morgenfeld said that Apple’s changes have not had a material impact on the
company’s advertising yet, but that he still believes they could in the future.
“We’re not immune to these issues impacting our business over time,” he said.



Meta’s criticisms of Apple and Google may bring more scrutiny from regulators,
though it’s unclear whether that scrutiny will lead to any actual changes. Apple
has become the primary target for attacks from Meta in recent years, as the
social media company has criticized the iPhone maker’s privacy policies and its
app store fees, saying they hurt small businesses.

Meta called out Google’s advantage during a disappointing earnings report last
week that caused the company to shrink by $251 billion in market value in a
single day. Google, which a day earlier had reported fourth-quarter ad revenue
that blew past expectations, was barely impacted by Apple’s changes. 



“We believe Google’s search ads business could have benefited relative to
services like ours that face a different set of restrictions from Apple,” Meta
CFO Dave Wehner said during the company’s earnings report. He implied Apple was
being easier on Google intentionally because the search giant pays Apple to use
Google as the default search product on iPhones. “Given that Apple continues to
take billions of dollars a year from Google Search ads, the incentive clearly
exists for this policy discrepancy to continue.”



Some of Google’s mobile ad sales and YouTube, its video giant, are affected by
Apple’s bans, though Google hasn’t disclosed the exact damage. Google has set
loose targeting restrictions on Android, its mobile software, and pushed back a
ban on ad cookies for Chrome to 2023.

Read more about Google’s gains in advertising revenue

But search ads are Google’s primary business -- one Apple seems to have carved
out an exemption for, said Eric Seufert, an analyst at Mobile Dev Memo, a
marketing industry publication. “It’s so blatant,” he said. 

Apple’s new rules may shift advertising market share to any platform with direct
data on what people purchase, Brian Wieser, president of business intelligence
at GroupM, said in an email. That includes Amazon.com Inc., the other tech giant
trying to grow an advertising business.



Smaller rivals benefit, too, said David Spector, co-founder of the lingerie
company ThirdLove. “Facebook does deliver you customers. It’s great for that.
But at some point it becomes too expensive,” he said. “You start to realize:
Snapchat is pretty effective. Wow, TikTok is pretty effective.”



Apple and Meta are beginning to compete more directly on products like private
messaging. Apple’s plans to build augmented and virtual reality headsets put the
companies on a clear collision course. Meta’s Quest VR headsets have become a
core part of the company’s plan to develop a more immersive version of the
internet, known as the metaverse.



Meta hopes to build more advanced technology that will enable targeted ads
without the need to collect as much precise personal user data. This new system
would rely on aggregated or anonymized data, but would likely require web
browsers to cooperate on a new type of cryptographic protocol so data could be
shared securely. Meta believes this strategy will lead to a more privacy-safe
way to run targeted advertising.



Since introducing its new privacy rules, Apple has benefited directly, too: Ads
that appear in App Store search grew 33%, according to Singular, a marketing
analytics company. 

“Facebook and Google have simply built the largest communities of people around
their services virtually anywhere on the planet,” Singular said in its Tuesday
report. But “nothing about the future is certain, and past performance doesn’t
guarantee future success.”



— With assistance by Naomi Nix, and Mark Gurman

(Updates with response from Apple in tenth paragraph)




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