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Meta is desperate to fight back against Apple’s privacy changes


META is having a rough year. The company’s share price has fallen 57% since the start of the year, bringing CEO Mark Zuckerberg’s personal fortune down to $72 billion, according to the Bloomberg Billionaires Index.

As the macroeconomic climate hits the entire tech industry, Meta and other tech companies that rely on ad revenue are facing a unique hurdle — Apple’s massive privacy change (AAPL) called “Application Tracking Transparency.”

The feature, which allows users to determine whether they want apps to track them online, is expected to cut Meta’s revenue by $10 billion this year, the company said in February. The company is now being accused of trying to bypass the feature and violating state and federal data collection laws in a proposed class action lawsuit in California.

Apple’s privacy changes have dealt a devastating blow to Meta’s bottom line, but that’s not the company’s only problem. The rise of TikTok has left the social media giant struggling to reinvent Instagram to capture the attention of Generation Z. Meanwhile, Facebook’s mainstream app has completely lost its edge over the younger set.

These problems have created a whirlpool of terror that the Meta is trying to escape from. And he hopes that his bet on the metaverse will be his salvation.

How Meta allegedly collects data about the sites you visit

Apple 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 vintage game consoles on eBay (EBAY) and ads for the old Nintendo (NTDOY) and PlayStation (SONY) started showing up on various sites I visited.

The idea is that by tracking users online, companies like Meta can create better consumer group profiles and use them to help advertisers target their ads more precisely to the people they hope will buy their products.

AUSTIN, TX - MARCH 15: Mark Zuckerberg speaks via video at Into the Metaverse: Creators, Commerce and Connection during the 2022 SXSW Conference and Festivals at the Austin Convention Center on March 15, 2022 in Austin, Texas.  (Photo by Samantha Burkardt/Getty Images for SXSW)

Mark Zuckerberg speaks at the Into the Metaverse: Creators, Commerce and Connection conference 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 tracking disables this access for apps, making it harder for advertisers to reach specific customers. As a result, these advertisers can focus their campaigns elsewhere. Meta isn’t the only company affected by Apple’s privacy practices. Snap also cited this as part of the reason for some of the company’s difficulties due to declining ad revenue.

According to the lawsuit, filed on behalf of Facebook users and citing research by Felix Krause, Meta gets around users’ desire 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 you click a link in their bio to read an article. Once you select a story to read, it opens in Instagram’s built-in browser. This, according to Krause and the lawsuit, happens when Meta injects its own code into websites and can collect data about what you’ve viewed.

Meta denied any wrongdoing in a statement to Yahoo Finance, saying, “These allegations are baseless and we will vigorously defend ourselves. We have carefully designed our in-app browser to respect user privacy choices, including how data may be used for advertising.”

Meta throws everything at the wall

However, Zuckerberg and company are not just concerned about Apple’s privacy changes. The company is also facing its biggest competition in recent years with the advent of TikTok. Meta has been so obsessed with solving this problem that TikTok has thrown its way, redesigning Instagram to be more like a short video app.

Users did not like the changes very much. Users, including Kim Kardashian, were so disapproving of the test version of the app that Instagram CEO Adam Mosseri released a public statement saying the company would not be launching the version of the software. However, he explained that Instagram will continue to promote short videos.

The Meta has many reasons to be concerned about competition. According to surveys by Piper Sandler and Pew Research Center, the company is losing its edge when it comes to teen appeal.

The company is changing not only on Instagram. In July, Meta announced major changes to the core Facebook app, adding Home and Feed tabs. Home is meant to mimic the discovery engine that powers TikTok, giving users the ability to find new accounts they can follow, while Feeds is where they’ll find posts from friends and family.

Of course, there’s also the Meta’s big push into the metaverse, which it introduced last October along with its rebrand. However, these efforts are draining money from the Meta’s coffers, and this is expected to continue for years to come.

Investors don’t seem to care about Facebook’s metaverse either. Just take a look at its stock price trajectory over the past year and you can see that the crash began on the same day that the company announced that changes at Apple had become a multi-billion dollar problem.

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

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Any advice? Email Daniel Hawley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHawley.

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