The battle between Apple (AAPL) and Facebook parent Meta (FB) continues to heat up, as the iPhone maker released a new report on Tuesday it says refutes accusations that it profits handsomely from iOS privacy changes last year that have hamstrung Meta’s advertising business.
The report, which was funded by Apple and performed by Columbia Business School professor Kinshuk Jerath, is meant to show that while Meta estimates Apple’s App Tracking Transparency technology will cost its ad business $10 billion in 2022, that cash isn’t going 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 one day before Meta will announce its Q1 earnings, the company’s first report since it announced Apple’s new policy will cost it some $10 billion in ad revenue in 2022. On the other hand, Apple, which is set to report its Q2 earnings on Thursday, saw record ad revenue in Q1.
App Tracking Transparency, which Apple rolled out to iOS 14.5 users in 2021, asks users if they want apps to track their activity across the web. Turning the feature off keeps companies like Meta from being able to learn more about its users via third-party websites and apps, which impacts ad targeting.
Without accurate ad targeting, advertisers will shift away from services like Meta and spend their advertising budgets on other platforms or services.
Apple, however, is seemingly preempting any accusations that its own ad business has profited from the new policy at Meta’s expense.
“I find claims that Apple captured billions of advertising dollars from other companies as a result of ATT to lack supporting evidence,” Jerath wrote in the paper.
During Meta’s February earnings call, COO Sheryl Sandberg specifically blamed Apple for the company’s advertising issues.
“Apple created two challenges for advertisers,” Sandberg said. “One is that the accuracy of our ads targeting decreased, which increases the cost of driving outcomes. The other is that measuring those outcomes became more difficult.”
According to the report, while Meta’s ad business was slammed due to the privacy changes, rivals like YouTube (GOOG, GOOGL) were relatively unscathed.
Interestingly, while Snap (SNAP) said the policy dinged its ad business during its prior earnings, it didn’t mention it during the company’s latest earnings.
As for whether Apple has stolen Meta’s advertising revenue, Jareth says that’s unlikely, since Apple primarily serves up ads for app installs, not things like physical products or vacations to distant locales.
What’s more, Jareth writes, Apple’s ad space is relatively small, and if it did manage to bring in the billions lost by social media companies as a result of the app-tracking policy, its own ads would become so expensive that they simply wouldn’t be worth the money for advertisers.
So where did the $10 billion go? Jareth says that, according to commentators, advertisers are spending more through companies like Walmart (WMT), Amazon (AMZN), Google, and TikTok. Meanwhile, he found Apple’s ad business was growing even before it introduced the new tracking policy.
Apple and Meta’s relationship has increasingly soured over the years as the iPhone maker has continued to exert control over what apps can appear in its App Store. App-tracking transparency has been an especially sore spot for Meta, which took out a full-page ad claiming Apple’s technology will hurt small businesses that rely on Meta to reach potential customers.
We’ll be tuned into Meta’s earnings call on Wednesday to see if executives have any rebuttal to Apple’s report.
More from Dan
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit
Got a tip? Email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.
Source: https://finance.yahoo.com/news/apple-says-its-not-benefiting-from-i-os-changes-that-burned-facebook-202733599.html