For years, internet giants that provided “free” services had their business model based on collecting user data and monetizing it in the form of advertisements. Recent global incidents that have brought data privacy issues to light have also forced internet companies to change their methods to give their users better management of their online data. At the same time, these big tech companies such as Facebook, Apple, Google and Amazon have also come under antitrust scrutiny for their attempts to monopolize their businesses.
Recent developments at Apple and google to give users a better choice to control how the data they generate online is used, also reflects the two-sided nature of the issues to be resolved. On the one hand, the decisions of the iPhone maker and the search engine company to allow users to control their data can be seen as a measure to improve user privacy, on the other hand, they further consolidate the position of these companies.
What did Apple and Google do?
Last year, Apple introduced App Tracking Transparency (ATT) on iPhone and iPad. The feature requires apps to ask users for permissions to track their activity on other apps and websites. This has impacted companies that rely on advertising as a revenue model as the new feature has virtually closed the doors for these companies to harvest iPhone user data and use it for targeted advertising. Facebook’s parent company Meta said the impact of Apple’s decision could be “in the order of $10 billion” for 2022
Google announced a similar move earlier this month when it said it would bring the privacy sandbox to Android. That means he would extend the privacy solution he created for the web to Android devices. The new solution will “limit” the sharing of user data with third parties and will work without cross-app identifiers, including advertising identifiers. Advertising ID is a unique, user-resettable identifier for advertising provided by Google Play Services.
What is Google’s Privacy Sandbox?
While the Privacy Sandbox on Android could take another two years to go live, Google is already developing a version for the web. According to the company, Privacy Sandbox for the Web will phase out third-party cookies and limit secret tracking. A “cookie” is a small piece of data stored in the browser when a user visits a website. Third-party cookies are stored by a service that operates across multiple sites. For example, an advertising platform may store a cookie when you visit a news site. First-party cookies are stored by a website itself.
Why did this hurt Meta?
According to a New York Times report, with users given the choice to opt out of app tracking, many have done so for apps such as Facebook, hampering the social media app’s primary modus operandi of supporting its online advertising activity. With less user data collected from their online activity, such as e-commerce and search engine queries, and other social media browsing activities, it has become more difficult for Facebook to target specific advertisements, causing advertisers to potentially run fewer promotions on the site. Platform. Additionally, the fact that it’s iPhone users who can opt out of app tracking makes the situation worse for platforms dependent on online ads like Facebook, since these users typically have higher conversion rates than Android users and end up spending more money through targeted online advertisements. ads.
Additionally, while Privacy Sandbox on Android might have a greater impact on Meta given the larger global market share of Android devices, the implementation of the solutions on the web might also harm Meta. These developments are particularly harmful for Facebook because, unlike Google and Amazon, Facebook must depend on third-party tracking of user activity to generate data. In the case of services like Google and Amazon, users help companies generate first-hand data by running search queries on the search engine or e-commerce platform.
How do these developments promote data concentration?
Solutions like Privacy Sandbox mean the phasing out of “cookies” – the go-to technology for tracking user activity by online advertisers. Google had proposed replacing cookies with FLoC (Federated Learning of Cohorts). This meant that instead of the interest-based advertising that was enabled by cookies, users would be grouped into groups with comparable interests. Privacy experts had argued that rather than completely stopping tracking users’ online activity, the FLoC put tracking directly into Google’s hands. The decision also prompted antitrust investigations from the United Kingdom and the European Union.
Google eventually pulled the plug on the FLoC project and replaced it with Topics. Using Topics, Google’s Chrome browser would organize a user’s top interests in a week based on browsing history. A key difference between FLoC and Topics is that the latter will exclude categorization based on sensitive categories such as race, religion, sexual orientation, etc.
While Google’s move would mean users have greater choice to limit the collection and use of their data by third-party apps, Google would continue to track these users through its bouquet of apps such as Search, Gmail, Google Maps, GPay, YouTube. , etc
Additionally, Apple’s decision to limit app tracking has also tipped the scales in Google’s favor when it comes to online advertising. Notably, online advertising is Google’s core business unlike Apple.
A Wall Street Journal report pointed out that since Apple introduced its privacy feature last year, the cost for small businesses – advertising on Meta’s Facebook and Instagram platforms – to acquire customers has increased. , and these smaller companies changed their “total advertising budget”. ” to search for ads on Google.
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