Google deals another blow to Facebook

style="float: right; margin-bottom: 10px; font-weight: 600;"Sat 19th Feb, 2022

Meta Platforms, the Internet company built around the social network Facebook, gave the stock market a shock two weeks ago when it said during the presentation of financial results that it was preparing for a dramatic slowdown in its revenue growth in the current quarter. Among other things, he cited increased competition as a reason, such as from the smartphone app Tiktok.

In addition, he also specified for the first time the extent of the financial damage caused by stricter data rules from Apple. In a new version of the operating system for its iPhones, the electronics group has created an obstacle to the collection of user data and thus to the advertising business of companies like Facebook. In order to be able to track users' online activities via "tracking" and evaluate them for the selection of tailored ads, explicit consent is now required when opening apps. According to market research data, many iPhone users object to this. Meta predicted this would cost $10 billion in revenue this year. The share price plunged 26 percent in one day after the news and has not recovered since.

Now Google has made a push that parallels Apple's new approach and could further strain the advertising business of Meta and other companies. The Internet company said it is working on "more private advertising solutions" for Android phones that would limit the sharing of user data. This is said to be part of a privacy initiative called "Sandbox," which already includes Google's Chrome Internet browser and will be expanded to Android in the future. Google's move means that collecting and analyzing advertising-relevant user data will now be made more difficult by the manufacturers of both market-leading operating systems for smartphones. Meta's share price lost another two percent of its value on Wednesday.

Google, meanwhile, clearly distanced itself from the iPhone manufacturer in its announcement, without mentioning it by name. The group spoke of "other platforms" that "clumsily" limit existing advertising technologies. It also referred to a study that looked at Apple's new data rules and questioned their effectiveness. He stressed the fundamental importance of online advertising, which makes it possible to offer many services for free to users. He also promised to keep existing advertising systems in place for at least two years while new solutions are worked on. Any changes would be announced well in advance. Android app makers should also be able to contribute to the development of the new systems.

Google's softer approach probably has something to do with the fact that the company itself generates most of its revenue from online advertising. It also makes use of huge amounts of data, for example in the selection of ads that are placed next to the results of its search engine. Apple, on the other hand, makes its business primarily with devices such as the iPhone and has also often expressed fundamental criticism of the evaluation of user data for advertising purposes.

Google gave few concrete details on Wednesday as to how exactly the advertising system, which is geared toward more data protection, should look in the end. First of all, the group has published four "design proposals". These include, for example, an approach that dispenses with a previously used mechanism for identifying individual Android devices, but still allows tailored advertising to be shown.

In contrast to Meta, Google recently presented brilliant quarterly figures and does not seem to be too affected by Apple's stricter data rules, even with its various online services. Facebook's parent company smells method in this and has suggested it is being deliberately disadvantaged by Apple over Google. Chief financial officer David Wehner recently said Google could benefit from the new restrictions in competition with Meta because Internet browsers on Apple's devices are not affected by the restrictions, unlike apps. Google, therefore, has access to more advertising-relevant data with its search engine on the browser. The iPhone manufacturer also has an incentive to maintain this "discrepancy" between Google and Meta. After all, it receives billions annually for having Google's search engine set as the default on its devices.

Photo by Pawel Czerwinski

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