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Has Apple soured its big tech rivals?

Back in the spring, Apple [AAPL] brought out its App Tracking Transparency framework as part of its new operating system, iOS 14.5.

It introduced new privacy rules that made it harder for apps and websites to gather user data.

“We anticipate this will deliver a major blow to targeted advertising, crucial to Facebook (which rebranded to Meta in late October), Google, and many news outlets,” wrote Harvard Business Review at the time.

It caused an estimated $9.85bn of revenues to be lost in the second half of this year at Snap [SNAP], Meta [FB], Twitter [TWTR] and YouTube, reported the Financial Times.

AdTech company Lotame, again reported by the Financial Times, said the changes had a 13.2% impact on Meta revenue, 7.7% on YouTube and 7.4% on Twitter.

 

 

Impact on Twitter

In its Q3 results, Twitter started testing aggregated measurement for website clicks, which “allows us to measure, in an aggregated and anonymised way, accounts that have opted-out of tracking on iOS using the ATT prompt”.

The company added it continued to see opportunities around personalisation on Twitter and shows users more effective ads across both brand and direct response.

“The revenue impact we experienced from ATT in Q3 increased on a sequential basis but remained modest. The mitigations we have put in place, and the speed with which we have adopted new standards, like SKAdNetwork and resulting changes across our technical stack, have contributed to minimising the impact to us,” Twitter explained.

SKAdNetwork (StoreKit Ad Network) is a set of Apple software and protocols allowing marketers to get aggregated attribution of mobile app marketing campaigns.

“The mitigations we have put in place, and the speed with which we have adopted new standards, like SKAdNetwork and resulting changes across our technical stack, have contributed to minimising the impact to us” - statement from Twitter

 

According to the Singular website, it means “marketers know which advertising campaigns worked and what marketing channels are performing, but it’s still privacy-safe: they don’t get device-level data on what individual people are doing”.

Twitter added: “Since the launch of ATT in April, we have invested in supporting SKAdNetwork, opening up 30%+ more inventory and scale on iOS. It is still too early for Twitter to assess the long-term impact of Apple’s privacy-related iOS changes.”

 

Impact on Alphabet

Ruth Porat, CFO of YouTube and Google owner Alphabet [GOOGL] said in its Q3 results the iOS 14 changes had a modest impact on YouTube revenues, which were only $200m lower than analyst estimates of $7.4bn.

Philipp Schindler, SVP and CBO of Google added: “From our standpoint, we see ATT as one aspect of the many broader ecosystem changes that are underway.

And we really see the future of digital advertising being built on advances in privacy-preserving on-device technologies which support the free and open internet and, a robust ads ecosystem.”

 

Impact on Meta

In Q3, Meta reported earnings per share of $3.22 and revenues of $29.01bn. Analysts had forecast earnings of $3.19 and revenues of $29.5bn. The iOS changes were partly to blame for the revenue shortfall.

“The accuracy of our ads targeting decreased, which increased the cost of driving outcomes for our advertisers. And . . . measuring those outcomes became more difficult,” said Sheryl Sandberg, Meta’s COO.

Meta added that it now expected Q4 2021 total revenue to be in the range of $31.5bn to $34bn, compared with previous estimates of almost $35bn, in the light of “significant uncertainty”.

Meta also has goodwill and reputational challenges ahead following data secrecy concerns, failure to crack down on abusive messages and whistleblowing staff, but there is still much to like at the group.

“The accuracy of our ads targeting decreased, which increased the cost of driving outcomes for our advertisers. And . . . measuring those outcomes became more difficult” - Sheryl Sandberg, Meta’s COO

 

As reported by the Motley Fool, daily active users jumped to 1.93 billion in Q3 from 1.82 billion a year earlier. Even its ad revenue, despite the iOS kerfuffle, rose 33% year over year.

Meta also has its new virtual reality and augmented reality devices in the pipeline, and the challenges around iOS could lead to further develop its own e-commerce ambitions to gain advertisers and revenue.

According to Statista, Meta remains the most popular social network ahead of YouTube and WhatsApp. Market Screener indicates analysts are also fans, holding a ‘Buy’ rating and $403.7 target price.

Apple will have to do more if it wants to really batter the new Meta.

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