Explained: Why Apple and Google privacy changes have hurt Meta – The Indian Express

For years, the business model of Internet giants that provided free services hinged on collecting user data and monetising the information in the form of advertisements. The global spotlighting of data privacy issues has, however, forced the companies to change their ways of working. At the same time, the big tech firms Facebook, Apple, Google, Amazon have come under increasingly intense antitrust scrutiny for attempts to monopolise their businesses.

Decisions made recently by Apple and Google to give users greater control over the use of the data they generate online can be seen both as a boost to user privacy and as a step towards consolidating further the position of these companies.What have Apple and Google done?

Last year, Apple added the app tracking transparency (ATT) feature to iPhones and iPads, which requires apps to seek users permission to track their activity across other apps and websites. This impacted companies who were dependent on advertising as a revenue model, because the ATT feature cut their access to the data of iPhone users, which they harvested and used for targeted advertising. Meta, Facebooks parent, said the financial hit from Apples move could be in the order of $10 billion for 2022.

Earlier this month, Google announced that it would bring the Privacy Sandbox the privacy solution that it is building for the web to Android devices. The new solution would limit the sharing of user data with third parties, and operate without cross-app identifiers, including advertising IDs. The advertising ID is a unique, user-resettable ID for advertising provided by Google Play services.

The Privacy Sandbox on Android could go live in two years.But what is the Privacy Sandbox?

In the context of the web, Google has said that the Privacy Sandbox will phase out third-party cookies and limit covert 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 ad platform might store a cookie when you visit a news site. First-party cookies are stored by the website itself.

So, if the news site is storing a cookie, it will use it to offer curated news items the user is more likely to read. But if an ad platform like Facebook stores a cookie when one visits a news site, it is likely to use that information and categorise the user in certain buckets based on preferences, and will offer advertisers the ability to target the user with specific ads. This can also be used for political advertisements.

How do cookies work, in plain terms?

Imagine you are flying with a friend, and you have a check-in bag each. Imagine that before putting the bags in the aircraft belly, airline personnel go through their contents. They find a bottle of Chanel perfume and Tommy Hilfiger clothes in your bag, and put a red sticker on it. In your friends bag they find a camera tripod and books on photography, and put a blue sticker. (These stickers are cookies.)

At the destination, the driver of your cab notes the stickers, and hands you separate advertisement flyers: to you for Hermes bags, and to your friend for Canon DSLRs. Brands and local businesses have paid the cab company to hand over pamphlets to passengers, and your ride is now free.

How has Meta been hurt?

Having got the choice to opt out of app tracking, many iPhone users have done so for apps such as Facebook, stymieing the primary channel for the companys online advertising business, according to a report in The New York Times.

With the reduction in the volume of data gathered from users online activity such as e-commerce and search engine queries, and other social media activity, it has become more difficult for Facebook to target specific ads, potentially cutting the incentive for advertisers to run promotions on the platform. Online ads targeted at iPhone users typically have higher conversion rates than Android, so these users opting out of app tracking is especially damaging.

While Privacy Sandbox on Android could have a deeper impact on Meta given the larger global market share of Android devices, even the implementation of the solution on the web could hurt Meta. Unlike Google and Amazon, Facebook depends heavily on tracking the third-party activity of users to generate data. In the case of Google or Amazon on the other hand, users help generate first-hand data through their queries.

How could these developments lead to further concentration of data?

Solutions such as the Privacy Sandbox mean the phasing out of cookies, currently the go-to tech for online advertisers.

Google had proposed that cookies should be replaced with FLoC (Federated Learning of Cohorts) which meant that instead of interest-based advertising that was enabled by cookies, users would be bunched into groups with comparable interests. But privacy advocates argued that rather than stopping the tracking of users online activity, FLoC put the tracking directly into Googles hands. Antitrust investigations were opened in the UK and the European Union.

Google gave up the FLoC project, and last month announced Topics, through which the companys Chrome browser would curate a users top interests in a week based on browsing history. A key difference between FLoC and Topics is that the latter will exclude categorisation based on sensitive categories such as race, religion, sexual orientation, etc. A developer trial will launch soon, Google said.

While Topics would give users greater choice to limit the gathering and use of their data by third-party apps, it would still continue to track these users through its bouquet of apps such as Search, Gmail, Google Maps, GPay, YouTube, etc.

Additionally, Apples move to limit tracking by apps has tipped the scales in favour of Google as far as online advertising is concerned. Notably, online advertising is Googles core business, unlike Apple.

A report in The Wall Street Journal has pointed out that after Apple introduced its privacy feature last year, the cost of acquiring customers for small businesses advertising on Metas platforms Facebook and Instagram went up and some of these small businesses moved their whole ad budget to search ads on Google.

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Explained: Why Apple and Google privacy changes have hurt Meta - The Indian Express