Apple’s Application Tracking Transparency Feature Costs Social Media Apps Almost $ 10 Billion in Ad Revenue

Back at the end of April this year, Apple released iOS 14.5 which included the App Tracking Transparency (ATT) feature. ATT gives iOS users the ability to opt out of being tracked by third-party applications for the purpose of receiving targeted advertisements. Once the user agrees to opt out of tracking, their unique IDFA, used to track iPhone users, becomes nothing more than a series of zeros, preventing advertisers from tracking them across the internet. or by using apps.

Transparency of app tracking is great for iOS users, not so much for advertisers

In other words, Apple asks users if they allow third-party apps to share data such as their age, location, browsing history, spending habits, and health. Some apps with built-in trackers share this data with advertisers and data brokers. This information becomes a digital profile which is sold to others who use the profile to send these users targeted advertisements and to make predictions about how they will react in certain circumstances.

Apple's Application Tracking Transparency Feature - Apple's Application Tracking Transparency Feature Costs Social Media Apps Almost $ 10 Billion in Ad Revenue

Apple Application Tracking Transparency Feature

As Apple notes, this happened without your permission and made you the product. When ATT was first announced by Apple, Facebook struggled to say it was going to hurt small businesses, as the vast majority of iOS users would likely deny permission to be tracked. And, by the way, Facebook was also worried about its own business, which is as heavily ad-dependent as it is.

The Financial Times (Going through The edge) did some math and found that apps like Facebook, Snapchat, Twitter, and YouTube lost a huge amount of revenue, roughly $ 9.85 billion after Apple changed its privacy practices. The Financial Times report said that in absolute terms, Facebook lost the most revenue due to its size compared to the other apps mentioned.

As a percentage, Snap lost the most money because its advertising is the most related to smartphones. Marketing consultant Eric Seufert told the Financial Times that “Some of the most affected platforms – but especially Facebook – have to rebuild their machines from scratch as a result of ATT. I think it takes at least a year to building a new infrastructure.. New tools and frameworks must be developed from scratch and thoroughly tested before being deployed to large numbers of users. “

Companies that made their living following iPhone users and sending them targeted ads will need to find another way to make money without following iOS users. So now some online advertisers only serve ads to Android users, even though the prices for doing so have increased by 30%. Advertisers are quick to pay more to target consumers with an Android device, as they have more targets to choose from than iOS users.

Is Apple using ATT as a smokescreen to hide its own advertising ambitions?

Some also believe that Apple created App Tracking Transparency and its other privacy features in order to grow its own advertising business. One analyst said that ATT could be a smokescreen used to hide Apple’s real desire to create its own search algorithm. On the one hand, Apple’s advertising activity has tripled since it made privacy changes.

Apple would make $ 15 billion a year just for making Google search the default search engine on iOS. It’s free money when it comes to Apple and you’d think they wouldn’t want to give it up. On the other hand, Apple might think that if Google can afford to pay it $ 15 billion just to be the iPhone’s default search engine, the search industry must be very, very good at it. Google.

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