The battle between Apple (AAPL) and Facebook’s parent Meta (FB) continues, with the iPhone maker releasing a new report on Tuesday refuting accusations that it was making big profits from last year’s iOS privacy changes that stymied Meta’s advertising business.
The report, which was funded by Apple and carried out by Columbia Business School professor Kinchuk Girat, aims to show that while Meta estimates that Apple’s app tracking transparency technology will cost its advertising business $10 billion in 2022, that money will not go to Apple.
According to the report, which Jerath wrote using publicly available data, claims that advertisers are flocking to Apple as a result of the new policy’s impact on Meta are simply inaccurate.
The report comes just a day before Meta announces its first-quarter earnings, which is the company’s first report since it announced that Apple’s new policy will cost it about $10 billion in advertising revenue in 2022. On the other hand, Apple, which is set to announce Q2 earnings on Thursday, saw record advertising revenue in the first quarter.
Transparency in App Tracking, introduced by Apple to iOS 14.5 users in 2021, asks users if they want apps to track their activity across the web. Turning off the feature prevents companies like Meta from learning more about their users via third-party websites and apps, which affects ad targeting.
Without accurate ad targeting, advertisers will turn away from services like Meta and spend their advertising budgets on other platforms or services.
However, Apple appears to be pre-empting any accusations that its own advertising business has benefited from the new policy at the expense of Meta.
“I find allegations that Apple has solicited billions of dollars for advertising from other companies as a result of ATT for its lack of supporting evidence,” Jerath wrote in the paper.
During a February Meta earnings call, COO Sheryl Sandberg specifically blamed Apple for the company’s advertising issues.
“Apple created two challenges for advertisers,” Sandberg said. “The first is that the accuracy of targeting our ads has decreased, which increases the cost of achieving results. The other is that measuring those outcomes is becoming more and more difficult.”
According to the report, while Meta’s advertising activity has been criticized for privacy changes, competitors such as YouTube (GOOG and GOOGL) have been relatively unscathed.
Interestingly, while Snap (SNAP) said the policy had stoked a grudge against its advertising business during its past earnings, it didn’t mention it during the company’s most recent earnings.
As for whether Apple stole Meta ad revenue, Gareth says, that’s unlikely, given that Apple primarily serves ads for app installs, not things like physical products or vacations in remote locations.
What’s more, Gareth wrote, Apple’s ad space is relatively small, and if it can manage to bring in the billions that social media companies have lost as a result of its app-tracking policy, its own advertising would become so expensive that it would do nothing. It t be worth the money for advertisers.
So where did the ten billion dollars go? Gareth says that according to commentators, advertisers are spending more through companies like Walmart (WMT), Amazon (AMZN), Google and TikTok. In the meantime, he found that Apple’s advertising activity was growing even before it introduced the new tracking policy.
The relationship between Apple and Meta has increasingly soured over the years as the iPhone maker has continued to exercise control over which apps can appear in its App Store. The transparency of app tracking has been a particularly sore point for Meta, which posted a full-page ad claiming that Apple’s technology would harm small businesses that rely on Meta to reach potential customers.
We’ll turn to the Meta earnings call on Wednesday to see if executives have any rebuttal to Apple’s report.
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