Google’s new privacy restrictions will limit sharing of user data with third parties.
Facebook parent Meta Platforms (FB) – Get Meta Platforms Inc. Class A Report should brace for impact from another potential privacy related ad tracking change that could prove to be much more costlier than Apple (AAPL) – Get Apple Inc. Report just by virtue of the sheer reach of Android devices.
Search giant Google owned by Alphabet (GOOGL) – Get Alphabet Inc. Class A Report is working to limit the distribution of its user data with third parties over the next few years. Third-party apps and services are created by companies or developers that aren’t Google and include apps like Facebook, Roblox (RBLX) – Get Roblox Corp. Class A Report, Slack (WORK) – Get Slack Technologies, Inc. Class A Report among others.
The company said it plans to support its existing ads platform features for at least two years.
To be sure, Google’s Android operating system is used by about 85% of smartphone owners world-wide, The Wall Street Journal reported.
Google on Wednesday introduced a multi-year initiative to build what it described as a “Privacy Sandbox” on Android, with the goal of introducing new, more private advertising solutions.
The Mountain View, California., based company is working on proposed alternatives, to better protect users’ privacy and curb covert surveillance.
“Specifically, these solutions will limit sharing of user data with third parties and operate without cross-app identifiers, including advertising ID,” Google’s Vice President, Product Management, Android Security & Privacy Anthony Chavez wrote in a company blogpost.
“We realize that other platforms have taken a different approach to ads privacy, bluntly restricting existing technologies used by developers and advertisers. We believe that — without first providing a privacy-preserving alternative path — such approaches can be ineffective and lead to worse outcomes for user privacy and developer businesses,” Chavez added.
Earlier this month, Meta formerly Facebook, said it expects changes to Apple’s privacy controls to cost the social media company $10 billion in 2022.
“Like others in our industry, we’ve faced headwinds as a result of Apple’s iOS changes,” Sheryl Sandberg, Meta’s chief operating officer admitted during a company conference call. “Apple created two challenges for advertisers. One is that the accuracy of our ads targeting decreased, which increased the cost of driving outcomes. The other is that measuring those outcomes became more difficult.”
In 2020, as part of its iOS 14 and iPadOS 14 update, Apple launched a number of important privacy features intended to help users make more informed decisions about their data.
Apple’s App Tracking Transparency now require apps or developers to get the user’s permission before tracking their data across apps or websites owned by other companies.
The feature, which rolled out in March 2021, dented Facebook’s fortunes among several other companies.
Could This Dent Facebook’s Digital Ad Dominance?
Google’s move to curtail user tracking across apps on Android smartphones, could also hurt rival Facebook’s online advertising prospects in the absence of its ability to track user behavior across majority of the smartphone devices.
Digital ad spending is expected to command 72% of the overall advertising pie by 2026, more than double of its share in 2016, WPP’s media buying firm GroupM projected.
Share of online advertising revenue grew 30.5% to $228.96 billion in 2021 as the world recovered from the coronavirus pandemic with social media and audio platforms (podcast and music streaming services) driving the jump.
Separately, a survey of 5.4 million phones conducted by app analytics firm Flurry showed that only 14% Americans allowed their user data to be tracked.
The worldwide daily opt-in rate in this survey was just 24% for apps that have displayed the prompt asking to allow for tracking.
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