Privacy vs Profits: How Apple’s New Preferences Cost Big Tech $10bn
Apple’s iOS 14.5 update last April saw the introduction of a new prompt allowing users to ask apps not to track their data. This is all part of a wider push from the tech company to improve user privacy and understanding, all contained within a campaign dubbed App Tracking Transparency (ATT). Faced with such a decision many users chose not to be tracked, and while such an outcome has proved positive for Apple, their fellow Silicon Valley competitors have fared far worse. According to Lotame, an advertising technology company, Apple’s policies are expected to see a combined $9.85bn in revenue disappear from Snapchat, YouTube, Facebook, and Twitter in the second half of this year.
Social media companies rely upon customer information to build comprehensive profiles to sell to advertisers. The more data collected, the more confident they can be that users will act upon targeted advertising, and the more they can market their ad packages for. This process accounts for the majority of the social media sector’s annual revenue and without such income, many would struggle to survive.
Therefore, it’s easy to see the threat ATT poses to Big Tech’s bottom line: by directly removing large swathes of data from the hands of social media companies, they’re left with far less information to sell to advertisers.
It’s worth noting the impact is not terminal for Big Tech. Social media companies can still rely upon the data of their Android-phone users for revenue, alongside alternative data collection avenues. For this reason, the impact of ATT is not consistent amongst the social media giants. For instance, YouTube was left relatively unscathed due to the sheer quantity of data captured through parent-company Alphabet’s own suite of services.
However, Facebook and Snapchat appear to be by far the most vulnerable. Zuckerberg’s goliath - recently rebranded as Meta - is expected to take the largest hit in terms of sheer volume, yet Snap’s reliance on mobile users presents a real difficulty for the company’s future. The day after Snapchat CBO Jeremi Gorman gave a speech outlining the effect of Apple’s new policy on revenues, their stock price fell by 27 points, wiping $30bn off their market cap in a single day.
Despite this, the advertising revenue lost by the social media giants has not disappeared from the market altogether. Instead, advertisers are simply reallocating funds to more cost-effective platforms. TikTok presents the primary alternative to the expensive American firms. Crucially, sellers are also increasingly flocking to Apple’s in-house advertising wing in search of effective exposure. Unsurprisingly, with Apple’s advertising business tripling since it first trialled ATT in April, the true reasons for the privacy changes have been called into question. With pressure mounting, Tim Cook, Apple CEO, was forced to defend the measure in front of colleagues, saying: “We believe strongly that privacy is a basic human right. And so that’s our motivation there. There’s no other motivation.”
Leaving their fiscal gain aside, the irony of Apple’s position seems to have been lost by much of the mainstream media coverage, and even Cook himself. While in the West, Apple have maintained a strong public image with respect to consumer protection, we only need to travel eastwards to see how quickly ethics can be sacrificed for increased revenue. Facing pressure from the Chinese government, Apple has willingly dropped encryption measures universally used elsewhere, instead storing user information on state-run servers. This is alongside removing tens of thousands of apps from the AppStore in accordance with local laws; such apps ranged from foreign news outlets through to gay dating services. Facing dissatisfaction from native employees, Cook’s team even dropped the ‘Designed by Apple in California’ slogan from the back of Chinese iPhones.
It was a move so egregious it prompted Nicholas Bequelin, Asia director for Amnesty International, to state that “Apple has become a cog in the censorship machine that presents a government-controlled version of the internet.” Speaking to The New York Times in May, Bequelin continued, highlighting how Apple failed to challenge President Xi’s regime, and demonstrating “…no history of standing up for the principles that Apple claims to be so attached to.”
Yet such a position is hardly surprising once you learn Apple generate a fifth of all global revenue from the region. With their Chinese income stream only ever increasing (rising 87.5% year-on-year from Q2 2020), all signs point to Tim Cook happily ignoring the hypocrisy of sharing confidential information with an authoritarian regime, while simultaneously championing privacy in the western world.
In sum, it appears we’re entering the next chapter in Big Tech’s lifespan: Silicon Valley seems to have gotten so bored in regulating itself, it has turned to the regulation of its competitors. In doing so we’re once again exposed to the business methods of an industry built on exploitation, surveillance, and marketing. What appeared to be a rare humanitarian move in a sector plagued with controversy, upon further inspection is revealed as yet another example of Big Tech protecting corporate interest.
But perhaps most importantly, Apple has forced a question on its customers. Now asked to consciously reflect on whether they want their data to be at the mercy of the social media industry, the resounding majority have come to the same conclusion: no. Thus, is it now time for Facebook, Snapchat, Google, and Twitter to change their business model; or will they simply conjure up more creative ways to bypass Apple’s security measures and the privacy desires of their users?