Meta is desperate to fight Apple’s privacy changes

Meta (META) is having a difficult year. The company’s share price is down 57% so far this year, torpedoing CEO Mark Zuckerberg’s personal wealth to the tune of $72 billion, according to the Bloomberg Billionaires Index.

While the macroeconomic climate is affecting the entire tech industry, Meta and other tech companies that rely on ad-based revenue face a unique hurdle: Apple’s massive privacy overhaul (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 $10 billion from Meta’s revenue this year, the company said in February. Now the company is being accused of trying to circumvent the feature and violating state and federal data collection laws in a proposed California class action lawsuit.

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

These problems have created a swirling vortex of horror that Meta is trying to escape from. And she hopes that her stake in the metaverse will be her salvation.

How Meta is allegedly collecting 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 on 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 appearing on various sites I visited.

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

Mark Zuckerberg speaks at Into the Metaverse: Creators, Commerce and Connection during the 2022 SXSW Conference & 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 being tracked cuts off that access to apps, making it harder for advertisers to reach specific customers. As a result, those advertisers could target their campaigns elsewhere. Meta is not the only company that has been affected by Apple’s privacy actions. Snap has also cited it as a partial reason for some of the company’s struggles with declining ad revenue.

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

For example, let’s say you click a link to go to a news site’s Instagram page and click the link in your bio to read an article. Once you select a story to read, it opens in Instagram’s built-in browser. That, Krause and the lawsuit allege, is when Meta injects its own code into sites and can collect data about what she’s been viewing.

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 data may be used for ads.”

Meta is throwing everything to the wall

Zuckerberg and company aren’t just worried about Apple’s privacy changes, though. The company is also facing its biggest competition in years with the rise of TikTok. Meta has been so obsessed with tackling the challenge TikTok has thrown her way that she’s reworking Instagram to be more like the short-form video app.

The changes have not completely won over users. A test version of the app was ridiculed by users, including Kim Kardashian, so much so that Instagram boss Adam Mosseri issued a public statement saying the company would not roll out that version of the software. However, he explained that Instagram will continue its push towards short-form video.

Meta has every reason to be excited about the competition. The company is losing its edge when it comes to its appeal to teens, according to surveys by both Piper Sandler and the Pew Research Center.

It’s not just Instagram that the company is changing. In July, Meta announced major changes to the main Facebook app, adding Home and Feeds tabs. Home is meant to mimic the kind of discovery engine that powers TikTok, providing a means for users to find new accounts to follow, while Feeds 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 alongside its rebranding. However, the effort 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 look at the path of its stock price over the past year, and you can see that the crash began on the same day the company announced that Apple’s changes were becoming a multimillion-dollar problem.

And, unfortunately for Meta, that doesn’t look like it’s going to change anytime soon.

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

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