The Impact of Apple’s Privacy Changes
Snap’s Growth Prospects Hurt by Apple’s Privacy Measures
Apple’s (AAPL) privacy changes, which were rolled out this spring, are starting to negatively impact the online advertising market. This is making it more difficult for ecommerce companies and tech companies including Facebook (FB) and Snap (SNAP) to make money on ads. Under the new policy, apps have to ask for users’ permission to track them. As a result, many users have opted out, which makes it harder for Facebook and Snapchat to offer brands and marketers targeted ads.
When Snap reported quarterly earnings late last week, the maker of Snapchat, the messaging app, forecast that growth will slow in its current quarter. The company pointed to Apple’s privacy changes as one of the main reasons for the slowdown. Snap said Apple’s new rules make it harder for advertisers to test and measure the effectiveness of ad campaigns.
Facebook has already warned investors that the changes Apple made to its privacy policies may hurt financial results. The social media giant has been vocal in its opposition to Apple’s change. Many small businesses from clothing retailers to jewelry makers rely on Facebook and Instagram ads to reach new customers. Facebook argues that the changes hurt these small companies.
Meanwhile, the price of Facebook ads is increasing, with clients recently paying 25% more on average to run ads on Facebook. As a result of higher prices and less ability to target customers, some brands are reigning in the amount they spend on advertising.
Consumers Appreciate Apple’s Change
Facebook will report quarterly earnings later today, which will give investors a clearer picture of how Apple’s changes are impacting the social media giant’s ad revenue. Facebook has been known to weather storms before and might be able to do so again. After all, Facebook argues that changes are helping it grow its own internal ad business.
Despite the outcry from social media companies, Apple’s change has been well received by consumers, particularly in the US. Among users in the US, only 16% allow apps to track them when given the option from Apple. The change has also been applauded by lawmakers, regulators, and privacy activists. It will be interesting to see how social media companies adjust to the new normal.
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