Facebook may lose $13 billion in 2022 because of Apple App Tracking Transparency feature

Apple dealt a blow to companies such as Meta (formerly Facebook) when it introduced the anti-tracking feature called App Tracking Transparency last year. The feature was a hot topic because while it gave Apple users the choice to allow or reject tracking in an app, it hampered the advertising business of internet companies. Meta was at the frontier, criticising Apple left, right, and centre for its controversial move, hoping for a rollback of the feature. That did not happen and consequently, Meta reported huge losses in revenue, and if a new report is to be believed, that trend will continue this year.

A report by Lotame has pointed out that the revenue of Meta from online user tracking may take a hit of a whopping $12.8 billion this year because of Apple’s App Tracking Transparency feature. That is significantly higher than the loss of $10 billion in revenue Meta projected earlier this year. The report said that the overall loss in revenue of big tech platforms, such as Meta, Snap, Twitter, and YouTube, may be around $16 billion this year. At nearly $13 billion, Meta is likely to emerge as the most impacted company this year with an 81 per cent share.

“…these changes would have material impact on Facebook and the rest of the industry, but that for the dominant players, the impact would be reflected in reduced future growth, as opposed to any direct setback in top-line sales,” said the report.

Advertisers on Meta, the report highlighted, were forced to minimise or eliminate their spending on Facebook because “it simply wasn’t effective without the targeting and tracking capabilities.” In its earnings call for the fourth quarter, Meta CFO David Wehner called Apple’s App Tracking Transparency a headwind on the company’s business with an impact in the order of $10 billion. What Lotame’s report has estimated is a much higher figure, which ultimately will put a large dent in Meta’s revenue from e-commerce.

Apple’s App Tracking Transparency is an anti-tracking feature that debuted with iOS 14.5. The feature met with big controversies as it limited the ability of apps to track the online activities of iOS users. If your iPhone has the latest iOS software, you will be prompted by your device asking your permission to allow an app to track you when you run an app, such as Twitter or Facebook, for the first time. If you deny the request, that app cannot track your online activities or behaviour — a move that deprives the online trackers of gathering data on you.

In an otherwise situation, this data on you is shared among several advertisers to personalise advertisements for you. In a way, this practice is how services such as Facebook and Instagram have remained free for users since their inception. You unknowingly give your data instead of money to these platforms. Apple’s App Tracking Transparency feature just gives you control over this.