Apple’s the winner after iPhone privacy push hits Facebook and Snap

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Snap, Facebook, Twitter and YouTube have lost nearly $10bn after iPhone privacy changes © Bloomberg

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The cost of letting users opt out

If Mark Zuckerberg hasn’t got enough problems right now, here’s another one for the list: Apple’s decision to change the privacy settings of iPhones has caused an estimated $9.85bn of revenues to evaporate in the second half of this year at Facebook, Snap, Twitter and YouTube.

Apple’s App Tracking Transparency Policy, introduced in April, forces apps to ask for your permission before they can track your behaviour to serve you targeted ads.

Unsurprisingly, a lot of people don’t want Facebook or YouTube recording what they’re looking at — and most have opted out, leaving advertisers in the dark about how to target them.

Advertisers have responded by cutting back their spending on these platforms and diverting their budgets elsewhere: in particular to Android phone users and to Apple’s own growing ad business (hmm . . .).

Column chart of Share of total installs (%) showing Apple privacy push capped rivals and helped its own ad network thrive

Apple’s chief executive Tim Cook said last week that Apple made the changes because “we believe strongly that privacy is a basic human right,” but here at #techFT we’re a bit sceptical. Apple’s advertising business has more than tripled its market share in the six months since the changes were implemented.

Who has the most to lose? Snap lost the most as a percentage of its business because of its focus on smartphones. The social media group’s shares plummeted 24% last month after it cited Apple’s privacy changes as the reason why revenues in the forthcoming quarter will probably be lower than forecast.

Yet it’s Facebook, which fared the worst in absolute terms, that could lose the most business as the cost of running ads on its platform has been increasing for years.

David Wehner, Facebook’s chief financial officer, called the effect of Apple’s policies “challenging” and “a little bit more disruptive than we anticipated”. Evan Spiegel, Snap’s chief executive, went further, saying the new rules have “upended” the industry.

Impact of Apple's decision to change iPhone's privacy settings

Does Apple have too much power over its rivals? “It is disturbing that a business decision by one company can crush the revenues of so many others,” says our chief business commentator Brooke Masters. “Yet that happens all the time with the big gatekeeper companies.”

The Internet of (Five) Things

1. Tinder founders in court over bitter break-up
Three years ago Tinder’s founders sued the app’s parent company, alleging media mogul Barry Diller’s IAC Corp and its online dating unit Match Group lowballed Tinder’s 2017 valuation at $3bn, just as the dating app’s popularity was exploding. After years of failing to come to a settlement, a trial opened on Monday with Sean Rad seeking $2bn in damages.

2. China’s equivalent of GDPR launches today
Under China’s new Personal Information Protection Law, Chinese websites must now obtain explicit consent from internet users before collecting their personal data. Companies who breach the law can be fined up to 5 per cent of annual revenues and employees can even face prison. It’s good news for data protection officers though, who overnight have become China’s most sought after staff.

3. Bill Gates: fight climate change with clean technology
As the UN climate summit COP26 kicks off, Bill Gates argued that the world needs to start scaling up innovations — such as sustainable aircraft fuel, green steel and extra-powerful batteries — that can mitigate the worst impacts of climate change and help us adapt to the effects that we already feel. He said energy start-ups face unique challenges to get the products to market.

4. Big banks are hiring crypto experts
As the value of cryptocurrencies soar to an estimated $2.8tn, Wall Street and City banks worried about missing out are going on a hiring spree. But crypto evangelists shouldn’t get too excited (even if those starting salaries look nice). Bankers said they are investing in digital asset expertise for defensive reasons. They do not expect ever to set up operations trading in unregulated cryptos.

5. Dell spins off $64bn VMware
In one of the largest corporate spin offs, Dell Technologies will shed its 81 per cent stake in publicly traded VMware, creating an independent software company with a stock market value of nearly $64bn. Not bad for a company that was bought 18 years earlier by EMC for less than $1bn.

Tech week ahead

Tuesday: Lyft and the Match Group will report their third-quarter earnings.

Wednesday: Electronic Arts and Roku will release earnings.

Thursday: Uber, Airbnb, Pinterest, Nintendo and Cloudflare will report earnings.

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