Apple's Privacy Policy Cuts Social Media Revenue By Nearly Rp142 Trillion

Apple fixes user privacy to the detriment of app companies. (photo: doc. unsplash)

JAKARTA - In April, tech giant Apple launched App Tracking Transparency (ATT), but its new policy has had a huge impact on social media companies.

According to reports, Snapchat, Facebook, Twitter, and YouTube lost an estimated $9.85 billion in revenue in the second half of 2021, due to Apple's changes to its privacy practices.

The introduction of the ATT policy in April provided a way for users to choose between being tracked in the app and while browsing the internet, or maintaining privacy. Half a year later, it seems that ATT is reducing the revenue of the big social media companies.

According to advertising technology firm Lotame, the four social media giants' revenue fell 12 percent in the third and fourth quarters.

Of the four companies, Facebook experienced the largest decline overall due in part to its business in the advertising market, with losses estimated at more than $8 billion. However, Snap fared worst as a percentage because it only focuses on smartphones, the company doesn't have a desktop version.

The reduced income is a continuation of the initial findings shortly after the introduction of ATT. In July, it was estimated that ATT had caused a 15 percent to 20 percent drop in revenue for advertisers on iOS.

According to Lotame COO Mike Woosley, advertisers are seeing reduced returns when advertising to iPhone users, as most have opted out of tracking for social apps.

The loss of user interest tracking capabilities has forced companies to work on their advertising systems to tackle privacy-centric ideas. According to AdTech consultant Eric Seufert, it took a year to create new tools and frameworks.

"Because they need to be developed from scratch and tested extensively before being deployed to a large number of users," Seufert told the Financial Times, quoted from The Verge, Monday, November 1.

Apple's new policy will force social media platforms and other apps to get more creative with their ads. Ad companies should also look for other sources of revenue that don't involve tracking users on iOS.

It's not clear, however, whether the advertising company will focus on Android devices alone or stay invested in Apple's advertising business, which is known to be on the verge of breaking its own rules by secretly collecting user data in the same way third-party apps do.