Apple's app tracking policy cost four social media platforms nearly $10 billion
Snapchat is estimated to have lost the maximum amount of revenue as a percentage of its business
Facebook, Snapchat, YouTube and Twitter have lost around $10 billion (£7.3 billion) in revenue so far as a result of Apple ' s App Tracking Transparency (ATT) policy.
Apple announced the policy last year, saying it would require apps to get the user's permission before tracking their data across apps or websites owned by other companies for advertising, or sharing their data with data brokers.
The policy went into effect in April this year with the rollout of iOS 14.5.
According to ad tech firm Lotame, speaking to the Financial Times, the four social media platforms lost 12 per cent of revenue in the third and fourth quarters, for a total of $9.85bn.
Of the four platforms, Facebook has lost the most money in absolute terms - estimated to be over $8 billion (about £5.8 billion) due to its massive size, while Snapchat lost the maximum amount of revenue "as a percentage of its business", because its advertising in mainly tied to smartphones.
Lotame COO Mike Woosley told the FT that advertisers are seeing decline in revenue because most iPhone users have opted out of tracking for social apps.
Verizon-owned analytics firm Flurry stated in May that just 4 per cent of iPhone users in the US had agreed to allow apps to track their online activities. The opt-in rate was higher worldwide, however, with about 12 per cent of users allowing apps to track their activities on the internet.
Flurry's findings were based on a sample size of 5.3 million daily mobile active users with iOS 14.5 worldwide and 2.5 million such users in the US.
The loss of user tracking has forced advertising companies to rework on their systems to deal with the privacy-centric idea.
"Some of the platforms that were most impacted - but especially Facebook - have to rebuild their machinery from scratch as a result of ATT," adtech consultant Eric Seufert told the FT.
He said it could take at least a year for new tools to be produced, as they need "to be developed from scratch and tested extensively before being deployed to a high number of users."
Facebook CFO David Wehner described the ATT feature "a little bit more disruptive than we anticipated".
When Apple first announced its plans to update its iOS privacy settings in June 2020, it led to immediate pushback from the wider advertising industry, including Facebook which placed full-page ads in several US newspapers in December 2020, criticising the iPhone maker for the decision.
Facebook argued that the new privacy changes would be devastating to small businesses that rely on targeted ads and that the changes would curb the ability of businesses to reach their customers effectively.
Dan Levy, head of Facebook's small business programme, said that Apple privacy rules were "about profit, not privacy".
He also accused Apple of behaving anti-competitively by using its App Store in a way that benefits its bottom line at the expense of small businesses and developers.
Apple defended the move, saying it was "standing up" for the people who use its devices.
"Users should know when their data is being collected and shared across other apps and websites - and they should have the choice to allow that or not," the company said.
Apple eventually introduced the ATT function in iOS 14.5 update in April.
Since introducing privacy changes, Apple has seen its advertising business improve, prompting calls of hypocrisy on the company ' s part.
"None of this is altruistic," said BlueConic COO Cory Munchbach.
"Apple has done a great job in turning privacy into a PR play, but they wouldn't be doing this if there weren't money in it."