Apple’s Privacy Policy Cost Snap, Facebook, Twitter, and YouTube an Estimated $9.85 Billion in Revenue

With its App Tracking Transparency feature launched in April, Apple overhauled its iPhone lineup’s privacy settings to give users more control over their data. The feature has cost Snap, Facebook, Twitter, and YouTube an estimated $9.85 billion in lost revenue in the second half of this year, the Financial Times reports.

That’s according to data from research advertising technology firm Lotame, which estimates that the four tech giants lost an average of 12% of revenue in the third and fourth quarters of 2021. Among the companies most heavily hit were Snap, which has a business model entirely built around smartphone use, and Facebook, which depends on targeted ads for close to 98% of its revenue, according to Statista.

However, some experts consider Lotame’s estimates conservative. Adtech consultant Eric Seufert told the Financial Times that Facebook alone may have seen as much as $8.3 billion in revenue evaporate in the second half of 2021. In all likelihood, its troubles are only going to get worse moving forward as advertisers transition to business models that take these kinds of user privacy measures into account.

“Some of the platforms that were most impacted—but especially Facebook—have to rebuild their machinery from scratch as a result of ATT,” he said in an interview with the outlet. “My belief is that it takes at least one year to build new infrastructure. New tools and frameworks need to be developed from scratch and tested extensively before being deployed to a high number of users.”

As for Apple, this last quarter saw the tech giant surpass revenue estimates for its advertising business by $700 million, topping out at around $18.3 billion, the Financial Times reports.

Due to Apple’s transparency feature with iOS 14.5, apps have to ask users for permission to track their activity for targeted advertising. (Though it’s worth noting that some shady app developers have found workarounds to track you anyway, an issue Apple is dragging its feet on addressing).

So far, the bulk of users have opted to deny permissions. In the weeks immediately following the feature’s launch, only 4% of U.S. iPhone users agreed to let apps track them after updating their devices. That lack of user data has left advertisers largely flying blind when it comes to ad targeting on iOS, triggering several to invest their money elsewhere and slash spending on platforms like Snap, Facebook, Twitter, and YouTube, the Financial Times reports.

In short, when comparing 2021 to previous years, the total amount of ad spending remains relatively unchanged, but social media companies are seeing their slice of the pie shrink at an alarming rate.

“Spend isn’t decreasing, it’s just moving,” said Charles Manning, CEO of mobile marketing company Kochava, in an interview with the Financial Times. “Where marketers spend money is where they see results.”

Social media companies are still feeling the sting. In Facebook’s third quarter earnings report earlier this week, Facebook’s chief operating officer, Sheryl Sandberg, detailed several challenges caused by Apple’s new policy.

“We started to see that impact in Q2, but adoption on the consumer side ramped up by late June, so it hit critical mass in Q3,” she said. “As a result, we’ve encountered two challenges. One is that the accuracy of our ads targeting decreased, which increased the cost of driving outcomes for our advertisers. And the other is that measuring those outcomes became more difficult.”

But while these losses may hurt Facebook (now called Meta) in the long run, they likely won’t be particularly devastating given the company’s array of platforms and diverse investments. Snap, on the other hand, might not be so lucky. Following an unimpressive third-quarter earnings report attributed in part to Apple’s privacy changes, the company’s stock tanked by roughly 25%.

Snap “grappled with industry changes to the way advertising is targeted, optimized, and measured on iOS that created a more significant impact on our business than we had expected,” chief business officer, Jeremi Gorman, said in a prepared statement via CNN. Snap also cited global supply chain issues for why it fell short of revenue estimates, an issue tech companies around the world continue to grapple with—particularly as the holiday season grows closer.