Why Apple’s privacy policies could cost social media companies billions of dollars

Why Apple’s privacy policies could cost social media companies billions of dollars

Conversations and concerns about data privacy and the use of personal information were common in 2021. The focus was often on the world’s largest technology companies, especially social media providers.

Although Apple was not without criticism, it has taken steps to give users more transparency in how they are tracked. For the major social media platforms, this may have cost them billions of dollars in revenue.

But why was this the case, and how important was the impact on a more subtle level? Let’s find out.


What has Apple changed about its privacy policies?


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As part of the iOS 14.5 updates, Apple introduced a new feature called “App Tracking Transparency”.

The feature allows users to decide whether they want companies to track their interactions across apps and other websites or whether they prefer not to pass this information on.

App Tracking Transparency is available on iOS, iPadOS, and tvOS.

Advertising is an important part of the business models of many social media platforms. Meta (formerly Facebook) relies on targeted advertising for over 90% of its revenue. More than 10 million advertisers partner with the company.

For Snap, advertising is also critical in helping the business thrive. In 2020, advertising made up 99% of its revenue.

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Like Facebook and Snap, advertising is critical to Twitter’s business model. However, it is not important. This channel “only” made up 86% of its total revenue in 2020.

Related Topics: Is social media doing more harm than good to society?


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Advertising is an important part of many social media companies’ business models. Mobile traffic is especially important to the likes of Facebook, and Apple’s changes may have affected the company’s revenue in 2021.

As the Financial Times reported in the summer of that year, Facebook said its growth pace for the latter stages of 2021 could “slow significantly on a sequential basis with periods of increasingly strong growth”.


Despite this, the company made more than $29 billion in the second quarter of 2021, which exceeded experts’ expectations by more than $1 billion.

Gauging the impact of Apple’s privacy policy changes on social media companies is challenging. However, the outlook does not look good. Giving users control over how social media companies track them could cost $9.85 billion on YouTube, Snap, Facebook and Twitter combined in the second half of 2021.

Related Topics: How to Check Who’s Tracking You Online

Is it all doom and gloom for these social media companies?

The companies listed may have lost an average of 12% in revenue due to Apple’s changes. But while these numbers represent a lot of money for most companies, it is important to remember how wealthy these social media giants are.

According to Statista, Facebook generated nearly $86 billion in 2020 – a significant increase from the $70.7 billion it raised one year earlier.

YouTube is also far from suffering, even if Apple’s new tracking permission features impact business. According to a CNBC report in April 2021, the company – owned by Alphabet Inc. On track to generate between $29 billion and $30 billion in advertising revenue by the end of that year.

The impact of changes to Apple’s privacy policy has put the spotlight once again on the topic of data protection. But for the world’s largest social media companies, they are also showing potential warning signs for the future.

Apple has shown that many users would not want to track their online activity if they had a choice. In the future, it is possible that social media companies – as well as other prominent players in technology – will come under more scrutiny of their data practices.

Advertising will remain an important cornerstone. But these companies may need to adapt how they operate if they are to remain profitable.


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