Posted by Jack Lynch.
Social media companies such as Facebook, Snapchat, and Twitter, rely heavily on their advertising revenue. This revenue is earned by companies paying these social media apps to advertise their products on their platforms. As many of us know, social media companies rely on targeted advertising to increase their revenue. This means that apps such as Facebook have access to your phone in order to analyze what you are searching for and advertise products that you are more likely to have an interest in and possibly buy. However, there have been some recent privacy concerns around the world regarding targeted advertising and legality of the access that companies have to our information. As a result of this concern Apple began modifying its privacy policies in April 2021. The new privacy policy allows iPhone users to choose whether or not they consent to advertisers using their information. Many people have declined this option, and it is having some serious consequences for social media companies.
Since many iPhone users have declined the option to give advertisers access to their personal data, companies such as Facebook, Snap, and Google are losing the advertising revenue that they rely on. Facebook has taken the worst hit because most of the site’s traffic comes from mobile users, and their revenue relies heavily on advertising. This fear of losing revenue is shown when the author explains, “Ahead of Facebook Inc’s (FB.O) financial results on Monday, the social media giant is expected to be hurt more than others in big tech by Apple Inc’s (AAPL.O) iPhone privacy changes, investors fear, after Snap Inc (SNAP.N) missed revenue targets last week” (Balu, Dang 2021). Facebook and other companies are furious with Apple because they knew that making these privacy adjustments would decrease the number of ads and therefore hurt the revenue of social media giants. These companies are making the argument that Apple’s privacy policy is hurting small businesses by restricting their ability to advertise on iOS devices.
In my personal opinion, I believe that Apple has every right to adapt their privacy policies. Apple customers asked for better privacy standards and for stronger protection of their personal information, and Apple delivered on their desires by strengthening the privacy policies. While I support small businesses and the idea that larger corporations should do their part in helping smaller companies, I think that Apple increasing privacy is a good thing in this day and age. Companies such as Facebook are angry that they are going to be losing revenue, but they have failed to consider the benefits of increased privacy. This event has shown to the world that companies such as Facebook have become too dependent on advertising on Apple devices. However, Apple’s intent behind these changes is the true question that needs to be asked. Are they really worried about the privacy of their customers or were they trying to boost their revenue by increasing the use of their own advertising system? Apple has the right to change their own policies, but they could have considered the effect that those changes have on other companies, especially small businesses.
Jack is an accounting major at Seton Hall University, Stillman School of Business, Class of 2024.
Article Link: https://www.reuters.com/technology/facebook-ad-revenue-seen-feeling-brunt-apple-privacy-changes-2021-10-25/