![]() The short version, as COO Sheryl Sandberg told investors last week: Facebook’s ad targeting became less accurate because it now knows less about its users. Now Facebook is saying, in public, that Apple’s ad changes have been a really big deal, after all. More cynical observers wondered if Facebook was overplaying the problem in order to get sympathy from regulators looking to rein in Facebook’s power - or to get them to focus their attention on Apple, which is also under antitrust scrutiny. And while Facebook continued to warn investors in its quarterly updates that Apple’s moves would be a problem, it used generic terms like “headwinds” when it did. While there were lots of signs that Apple’s change was in fact hurting Facebook’s ad sales, people in and out of the company also assumed that Facebook would figure out how to handle it because Facebook is a giant company flush with cash and bright engineers. The fight between the two companies got more intense after that, with both sides lobbing public attacks at each other. And in Facebook’s case, it’s crucial for finding people advertisers want to reach and, importantly, telling them what happens after those people see or interact with their ads.Ī month later, Facebook began warning investors that those changes would hurt their ad business. ![]() That tracking system is the backbone of the internet’s advertising infrastructure, and you’re familiar with it even if you never think about it: It’s why, for instance, you see ads for shoes you’ve already looked at on Zappos when you’re visiting other sites. In June of 2020, Apple announced changes to its mobile operating system that would give iPhone users a chance to tell app-makers not to follow them around the internet. The background: The seeds for last week’s news were planted many months ago. ![]() Wall Street has prized Facebook for its ability to grow at a rocket velocity, and now that rocket may be sputtering. ![]() But that would mean its ad business will only grow about 12 percent this year, compared to a 36 percent increase the previous year. But the idea that Apple has hurt Facebook’s revenue in a direct and meaningful way seems the truest: Facebook says changes Apple made that affect how ads work on iOS apps - namely, that it’s now much harder for app-makers and advertisers to track user behavior - will cost it $10 billion in revenue this year.įor context: Facebook is still making an enormous amount of money from advertising - analyst Michael Nathanson estimates the company will generate $129 billion in ad revenue in 2022. And if you thought TikTok was eating Facebook’s lunch, you could cite Mark Zuckerberg himself, who acknowledged on the company’s earnings call that the video app was “so big as a competitor already, and also continues to grow at quite a fast rate off of a very large base.”Īnd all of those stories have a degree of truth. If you thought Mark Zuckerberg’s pivot to a yet-to-exist metaverse is a fantasy, you could point to the $10 billion the company said it sunk into the effort last year. And there were a lot of narratives.įor a large and vocal group of Facebook haters, the stock crash was a chance to reaffirm your priors: If you thought Facebook was getting comeuppance for creating a toxic product that made the world worse, you could point to its first-ever loss of users. That’s one of the narratives that sprang from last week’s news, when Facebook’s parent company Meta delivered an alarming earnings report to Wall Street, which promptly cut an astonishing $250 billion out of the company’s value in a single day - a 26 percent drop. Then Apple came and threw a wrench in the gears. Facebook built one of the most amazing money machines the world has ever seen.
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