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The privacy change that Apple made to its iOS in 2021 will decrease Facebook’s sales this year by about $10 million, says Meta. Apple’s App Tracking Transparency (ATT) feature reduces targeting capabilities by limiting advertisers from accessing an iPhone user identifier.
Dave Wehner, Meta CFO, said they believe the impact of iOS overall is a headwind on the company’s business in 2022. “Its on the order of $10 billion, so it’s a pretty significant headwind for our business.” On Wednesday, Meta shares sank 23% in extended trading after the company warned about numerous challenges. The social media giant said first quarter revenue will be $27 billion to $29 billion, but analysts expect it to exceed $30 billion.
Wehner said the $10 billion revenue hit is just a guess. “We are just estimating what we think is the overall impact of the cumulative iOS changes to where the 2022 revenue forecast is. If you aggregate the changes that we are seeing on iOS, that’s the order of magnitude. We can’t be precise on this. Its an estimate.”
The ATT feature in iOS 14.5 was released for iPhones in 2021 and is also included in iOS 15, which is running in 72% of modern iPhones. Apple says the ATT consists of popups that ask users whether they want to be tracked when opening up an app. If the user says no, the app developer can no longer access the IDFA. The IDFA is a device ID that targets and measures the effectiveness of online ads.
The privacy feature disrupts the behind-the-scenes mechanics of many mobile ads, especially those that confirm whether a purchase or download was made. iPhone apps with targeted advertising can instead use SKAdNetwork, an Apple tool built as an alternative.
Sheryl Sandberg, operating chief at Facebook, believes that ATT would hurt small businesses that rely on digital advertising to grow and are much more dependent than larger companies on personalized ads. Sandberg said the changes are diminishing the accuracy of Facebook’s ads, driving up prices based on an outcome like a sale or download. She also highlighted that measuring whether those conversions occur is becoming more difficult.