Friday, February 4, 2022 [Tweets] [Favorites]

Facebook Blames Apple, Usage Declines

Kif Leswing (Hacker News, MacRumors):

Facebook said on Wednesday that Apple’s App Tracking Transparency feature would decrease the company’s 2022 sales by about $10 billion.

[…]

Meta shares sank 23% in extended trading on Wednesday after the company warned about numerous challenges and came up short on user numbers. Facebook said first quarter revenue will be $27 billion to $29 billion, while analysts were expecting that number to exceed $30 billion.

Via John Gruber:

Worth noting that on Facebook’s analyst call, when pressed on this $10 billion figure, Wehner offered nothing to back it up. Really strong vibes of “The problem isn’t us, or our products — it’s mean old anti-competitive Apple.” It doesn’t seem like anyone bought that line.

Alex Sherman:

Facebook parent Meta lost more than $232 billion in value Thursday. That’s the biggest one-day drop in value in the history of the U.S. stock market.

There’s a kind of symbiosis here where Facebook wants to blame Apple, and Apple wants to take credit for protecting users from it. But the amount of protection is far less than commonly understood, and Facebook’s main problem is not App Tracking Transparency, but rather fading interest from its own users.

Alex Heath:

Since its inception, Facebook’s user growth has essentially been up and to the right.

[…]

Not only was user growth across Facebook, Instagram, and WhatsApp essentially flat last quarter, but the main Facebook app lost 1 million daily users in North America, where it makes the most money through advertising.

John Gruber:

All social networks are fleeting. They’re like hit TV shows — they come and go. Facebook itself (i.e. the blue app) and Instagram aren’t going to disappear, but their times as the new hotness are gone and will never return.

Nick Heer:

This alarmist story is accompanied by a chart illustrating the year-over-year declines in the prices of shares in Meta, Pinterest, Snap, and Twitter. It gives enormous credence to Mark Zuckerberg’s claims that App Tracking Transparency, which rolled out last spring in iOS 14.5, is to blame for a forecasted decline in advertising revenue.

But Facebook has made the same claim before, even as earnings grew. Also, it is not like a negative impact by App Tracking Transparency is some sort of universal truth, as implied by the Times.

Previously:

Update (2022-02-08): Ben Thompson:

The latter’s App Tracking Transparency (ATT) initiative severed the connection amongst e-commerce sellers, app developers, and Facebook by which Facebook achieved that ROI, and while the company is better positioned than anyone else to build a replacement, it is important to note that the impairment entailed in probabilistically measuring ad effectiveness instead of deterministically is a permanent one.

[…]

Still, Facebook’s forecast, disappointing as they were to investors, was for $27-29 billion in revenue this quarter; this is still a major player in an advertising market dominated by the three companies mentioned in this article, with one looming dark horse.

[…]

One of the biggest questions about the advertising landscape going forward is if Apple is going to move down to the “Apps + Discovery” quadrant that remains Facebook’s purview. If the company did they would have an unbeatable advantage: remember, Apple has made clear through its App Store policies and testimony in the Epic case that it views apps on the App Store as first party for Apple (this is how the company justifies its anti-steering provisions, likening links to websites to putting up signs in its own store for another, even though the signs in question are in the app and not the App Store). It follows, then, that Apple would see no inconsistency in denying Facebook the ability to have knowledge about installation and conversions derived from a Facebook ad, even as Apple has perfect knowledge of those installations and conversions from its own ads.

Update (2022-02-16): Peter Kafka:

Facebook is still making an enormous amount of money from advertising — analyst Michael Nathanson estimates the company will generate $129 billion in ad revenue in 2022.

[…]

Another way of putting it, via Alex Austin, the CEO of Branch, a company that helps advertisers figure out how their campaigns are working: After Apple introduced its anti-tracking changes in the spring of 2021, advertisers who used Branch’s services to measure paid ads on iOS dropped by 20 percent. Instead, Branch customers spent more time using the company’s services that track “organic” marketing campaigns using tools like email, and on services for advertisers who used Google’s Android phones — where those anti-tracking measures don’t exist. “It’s clear that the market is still figuring out how to handle [Apple’s new rules] on iOS, and shifting focus to Android and organic channels on iOS,” he told Recode.

Facebook says it’s working on a fix to make things better for advertisers in the near term via an “aggregated event measurement” workaround. Which in plain English means that while it won’t be able to tell advertisers which individual users clicked on a link or downloaded an app after seeing an ad, it can tell them what a larger group of users did.

Via Dave Mark:

Obviously, the goal was better privacy, not a move against Facebook specifically.

I mean, I don’t think that’s obvious. We’ve long known that Tim Cook doesn’t like Zuckerberg, and Facebook is obviously a major Apple rival and potentially a direct competitor in the AR space. It would be great for Apple if Facebook were less powerful. What reason do we have to take the privacy rhetoric at face value?

Mike Isaac and Jack Nicas:

The executives have also jabbed at each other. In 2017, a Washington political firm funded by Facebook and other Apple rivals published anonymous articles criticizing Mr. Cook and created a false campaign to draft him as a presidential candidate, presumably to upend his relationship with former President Donald J. Trump.

Update (2022-03-09): Ben Thompson:

It’s worth underlining this point: the App Store would not be nearly the juggernaut it is today, nor would Apple’s “Services Narrative” be so compelling, were it not for the work that Facebook put in to build out the best customer acquisition engine in the industry (much to the company’s financial benefit, to be clear)[…]

Facebook was by far the best and most efficient way to acquire new users, while Apple was able to sit back and harvest 30% of the revenue earned from those new users. Yes, some number of users came in via the App Store, but the primary discovery mechanism in the App Store is search, which relies on a user knowing what they want; Facebook showed users apps they never knew existed.

2 Comments

Facebook has an incredible amount of lock in, despite the general dislike.

Practically everyone I know dislikes Facebook for a variety of reasons — which we discuss on Facebook.

And this is the thing, Facebook does what it does for users very well, at very large scale. It just also does other things to users very well, at very large scale.

"Facebook’s main problem is not App Tracking Transparency, but rather fading interest from its own users"

I used to log into Facebook regularly to see what my friends were up to. Now everybody who isn't an antivaxxer has left the platform, so the only reason to log in is if you want to find reasons to feel despair about humanity's future.

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