Meta Desperate To Respond To Apple’s Privacy Changes

Meta (dead) has an approximate year. The company’s stock price is down 57% since the start of the year, blowing CEO Mark Zuckerberg’s personal fortune to $72 billion, according to the Bloomberg Billionaires Index.

As the macroeconomic climate hits the entire tech industry, Meta and other tech companies that rely on ad revenue are facing a unique headwind — Apple’s massive Privacy Change (AAPL) called App Tracking Transparency.

The company said in February that the feature, which lets users decide if they want apps to track them across the web, is expected to cut $10 billion in Meta revenue this year. Now the company is accused of trying to circumvent the feature and violating federal and state data collection laws in a proposed class action lawsuit in California.

Apple’s privacy changes have dealt a crushing blow to Meta’s bottom line, but that’s not the company’s only problem. The growth of TikTok prompted the social media giant to reinvent Instagram to attract Gen Z. Meanwhile, the main Facebook app has completely lost its edge with the younger group.

These problems create a downward spiral of horror from which Meta is trying to escape. She hopes that her gamble on metaverses will be her saviour.

How Meta is alleged to collect data on the sites you visit

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

The idea is that by tracking users across the web, companies like Meta can create better consumer group profiles and use them to help advertisers more accurately target their ads to people hoping to buy their products.

Mark Zuckerberg speaks at Into the Metaverse: Creators, Commerce and Connection during the SXSW 2022 Conference and Festivals 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 cuts off access to apps, making it difficult for advertisers to reach specific customers. As a result, these advertisers may focus their campaigns elsewhere. Meta isn’t the only company hurt by Apple’s privacy measures. Snap also cited this as a partial reason for some of the company’s difficulties in declining ad revenue.

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

For example, let’s say you click on a link to go to the Instagram page of a news site and click on the link in their bio to read an article. Once you select a story to read, it opens in Instagram’s built-in browser. This, Krause and the lawsuit claim, is when Meta injects a portion of its code into sites and is able to collect data about what you’ve been searching for.

Meta denied wrongdoing in a statement to Yahoo Finance, saying, “These allegations are baseless and we will defend ourselves vigorously. We have carefully designed our in-app browser to respect users’ privacy choices, including how data is used for ads.”

Meta throws everything at the wall

Zuckerberg and his company aren’t just concerned about Apple’s privacy changes. The company is also facing its biggest competition in years with the rise of TikTok. Meta has been so obsessed with tackling the challenge that TikTok has thrown its way that it is remaking Instagram to more closely resemble the short video app.

The changes didn’t completely capture the users. A beta version of the app has been criticized by users, including Kim Kardashian, to the point that Instagram head Adam Mosseri issued a public statement saying that the company would not be showing this version of the software live. However, he made it clear that Instagram will continue to push it towards the short video.

Meta has plenty of reasons to worry about the competition. The company is losing an edge when it comes to its appeal to teens, according to surveys by Piper Sandler and the Pew Research Center.

Changing the company is not limited to Instagram only. In July, Meta announced major changes to the main Facebook app, adding the Home and Feeds tabs. Home aims to emulate the kind of discovery engine TikTok supports, providing a way for users to find new accounts to follow, while feeds are where they’ll find posts from friends and family.

Of course, there’s also a big boost for the Meta in the metaverse, which it revealed last October along with its rebranding. However, this effort drains money from Meta’s coffers, and is expected to continue to do so for years to come.

Investors don’t seem to care about the Facebook metaverse’s efforts either. Just check out its stock price trajectory over the past year, and you can see the crash begin on the same day the company announced that Apple’s changes had become a multibillion-dollar problem.

Unfortunately for the Meta, that doesn’t look like that’s going to change anytime soon.

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