Meta is desperate to fight Apple’s privacy changes

Meta (META) is having a difficult year. The company’s stock price has fallen 57% year to date, torpedoing CEO Mark Zuckerberg’s personal wealth to the tune of $ 72 billion, according to Bloomberg’s Billionaire Index.

As the macroeconomic climate is hammering the entire tech industry, Meta and other tech companies that rely on advertising-based revenue face a unique headwind: Apple’s massive privacy change (AAPL) called App Tracking Transparency.

The feature, which allows users to determine whether they want apps to track them on the web, is expected to cut Meta’s revenue by $ 10 billion this year, the company said in February. Now the company has been charged with attempting to circumvent the function and violating state and federal data collection laws in a proposed class action action in California.

Apple’s privacy changes have dealt a major blow to Meta’s profits, but that’s not the company’s only problem. The growth of TikTok forced the social media giant to reinvent Instagram to appeal to Generation Z. Facebook’s main app, meanwhile, has completely lost its lead with the younger set.

These problems have created a whirlwind of horror that Meta is trying to escape. And she hopes that her bet on the metaverse will be her savior.

How Meta is supposedly collecting data on the sites you visit

Apple’s Tracking Transparency App is a setting that asks you if you want to allow an app to track your movements on the web and other apps. Apps and websites always do this. I was looking for vintage game consoles on eBay (EBAY) and ads for old Nintendo (NTDOY) and PlayStation (SONY) started popping up on various sites I visited.

The idea is that by tracking users on the web, companies like Meta can create better profiles of consumer groups and use them to help advertisers target their ads more precisely to the people they hope will buy their products.

Mark Zuckerberg speaks to Into the Metaverse: Creators, Commerce and Connection during SXSW Conference and Festivals 2022 at the Austin Convention Center on March 15, 2022 in Austin, Texas. (Photo by Samantha Burkardt / Getty Images for SXSW)

However, opting out of tracking interrupts access to apps, making it more difficult for advertisers to reach specific customers. As a result, these advertisers could focus their campaigns elsewhere. Meta isn’t the only company that’s been harmed by Apple’s privacy actions. Snap also cited it as a partial reason for some of the company’s struggles with falling ad revenue.

According to the lawsuit, filed on behalf of Facebook users and citing research by Felix Krause, Meta sidesteps users ‘desire not to be tracked by collecting data from websites they visit using its apps’ built-in browsers.

For example, suppose you click a link to go to a news site’s Instagram page and click the link in their bio to read an article. After selecting a story to read, it opens in Instagram’s built-in browser. This, Krause argues and the cause, is when Meta injects its own code into sites and is able to collect data about what you are looking at.

Meta denied any wrongdoing in a statement to Yahoo Finance, saying, “These allegations are without merit and we will vigorously defend ourselves. We have carefully designed our in-app browser to respect users’ privacy choices, including how the data can be used for advertisements “.

Meta is throwing everything against the wall

Zuckerberg and the company aren’t just concerned about Apple’s privacy changes, though. The company is also facing its biggest competition in recent years with the rise of TikTok. Meta has been so obsessed with taking on the challenge TikTok launched on its way that it’s reworking Instagram to more closely resemble the short-form video app.

The changes haven’t quite won over users. A trial version of the app was ridiculed by users, including Kim Kardashian, so much so that Instagram boss Adam Mosseri released a public statement stating that the company would not publish that version of the software. However, he explained that Instagram will continue its push towards short format videos.

Meta has many reasons to be anxious about the competition. According to polls from Piper Sandler and Pew Research Center, the company is losing its edge when it comes to attracting teens.

It’s not just Instagram that the company is changing. In July, Meta announced major changes to the main Facebook app, adding the Home and Feed tabs. Home aims to mimic the kind of discovery engine that powers TikTok, providing users with a means of finding new accounts to follow, while Feed is where they’ll find posts from friends and family.

Of course, there’s also Meta’s big push into the metaverse, which it unveiled last October along with its rebranding. The effort, however, is draining money from Meta’s coffers and is expected to continue to do so for years to come.

Investors also don’t seem to care about Facebook’s metaverse efforts. Just check out its stock price trajectory over the past year and you can see the slump begin on the same day the company announced Apple’s changes were becoming a multi-billion dollar issue.

And, unfortunately for Meta, it doesn’t look like it will change anytime soon.

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Do you have a tip? Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @Daniel Howley.

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