Facebook And Snapchat Blame Apple For Missing Revenue Expectations
During the earnings call yesterday Facebook blamed Apple's new App Tracking Transparency (ATT) feature for not meeting the revenue expectation and that this will cause a negative impact on Facebook's future revenue. Snapchat did the same thing in their earning call five days ago. They also mentioned Apple's new ATT feature as a reason for not meeting the revenue expectations. There is a lot of news here. Let's unpack them in an orderly fashion.
What is App Tracking Transparency (ATT)?
ATT is a new feature. It has to do with user privacy, data collection and use practices by the app makers. Starting with iOS 14.5, iPasOS 14.5, and tvOS 14.5 app developers are required to ask users for permission to track them across apps and websites owned by other companies.
If you use an iPhone or an iPad and are running the latest software, you may have already experienced a pop up menu when you start an app asking for your permission to track your activity across other apps and websites. Most of us would decline for obvious reasons. Why would we want any of them to track our activity?
The fact of the matter is that they have been doing this without us noticing for a long time already. They still do. This feature has exposed them. If you see an app asking for this permission, that means they have been tracking our activity not only on their app but also other apps and websites. To learn more about ATT in detail feel free to visit Apple's developer page on this topic.
Tracking refers to the act of linking user or device data collected from your app with user or device data collected from other companies’ apps, websites, or offline properties for targeted advertising or advertising measurement purposes. Tracking also refers to sharing user or device data with data brokers.
Apple
I don't believe Apple has made this change out of goodness of their heart and that they don't want user activities tracked. I tend to believe they have ulterior motives, like diverting the ad revenue to themselves from third party ad companies and companies like facebook and snapchat. I welcome this new feature. They should have done this a long time ago. But at the same time I wouldn't completely trust Apple either when it comes to user data.
What is the revenue expectation or street expectation?
I had to look this up in Investopedia to confirm what I think it is. It is simply made up by so-called analysts who provide research coverage on various companies. To be more specific, it is an average of forecasts made by these so called market or company analysts. I do not trust them either. There is so much information manipulation going on the wall street, I wouldn't be surprised if they are involved with investment bankers and big money investment firms.
Sophisticated deception tactics?
After earning calls with both of these companies Facebook and Snapchat, both companies had blamed Apple for not meeting expectations and lowering expectations for the future revenues. Various news sites started reporting this, and stocks started going down, etc.
But the funny thing is both of the companies significantly increased their revenue compared to the previous ones. Span's revenue improved by 57% to $1.07 billion. This is the first time they had a billion dollar revenue quarter. But since the street expectation was $2+ billion, this is a bad thing? Doesn't make sense.
If we look at Facebook's revenue and compare with the previous quarter, things look great for Facebook. They have been making more and more. In fact, this Q3-21 they made the most at $29 billion.
I would like to highlight two kinds of manipulations I think are happening here. First, both companies at the cost of exposing themselves that they have been tracking their user activities everywhere and that's how they make a lot of money, they felt a need to do this in order to lower the expectations for the next quarters. Because in the end it is all about money for them. It is all about making their stock prices go up. When expectations are low and they beat them, news manipulation brings stock prices higher. They all make money.
Second manipulation is by these so called experts, investment bankers/traders, and newsmakers. I think all three share the same playbook and operate with the same goal - to manipulate the news and the markets. Regardless if the news is good or bad they can still make money, as long as they control the narrative. While I am just mentioning a couple of these companies, there are many more who do the same thing, follow the same methodology to enrich themselves and their shareholders.
The problem with all of these companies and parties involved is that they utilize deception and manipulation in achieving their money making, market grabbing strategies and goals. It is not about the free market anymore. It is about how to control the market, how to control the people, and monetize anything and everything they can.
Decentralization is the way!
For this reason decentralized solutions like Bitcoin and Hive are important to emerge as strong alternatives. Because these innovations bring the power and ownership back to the people, provide transparency, create fair free market networks.
Big tech networks are too powerful though. Despite the fact that now iPhone users have an ability to opt out of their activities being tracked, they still made record revenues. Despite these companies publicly exposing themselves that the way they make money is through advertising using data on their users, their activities, browsing history, purchasing habits, it is highly unlikely to cause mass exodus from these platforms. They still have tools in their pocket they can utilize to keep users around and keep onboarding more.
Just consider this. Out of Facebook's $29 billion total revenue, advertising revenue was $28.28 billion. 97% of their total revenue is from ads. And how much of that do they give back to their users?
To quote Douglas Rushkoff, technology and media expert about traditional social media - "Digital networks are just the latest media to go from promoting social bonds to destroying them - from fostering humanity to supplanting it". Shifting from centralized social media that focuses on neatly packaging 'eyeballs' and 'clicks' as a form of business model to decentralized standards that ordinary people derive value and participate in economic models that benefit them may just be the future.
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I really find this interesting, keep up the good work@geekgirl. I wonder why they are after people's activities online by tracking it doesn't make sense to me
They would say they want to deliver better user experience. But what they mean is they want to know as much as possible so the ads they show you are something you might be interested in and click on them. That's how they would make more money. I think.
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Forecasting makes sense from an internal business planning perspective but beyond that it never made sense to me, especially the way revenue target expectations influence the markets (as you pointed out in your post). The targets go up every quarter and it doesn't seem to matter how much the company made last quarter, they need to make more the next. But it's impossible for anything to grow continuously. But the pressure to grow makes companies constantly "spin" and manipulate their financial information to make it look like revenue is increasing. Then, like you pointed out, when targets are not met for whatever reason, the market reacts negatively, even if the company's revenue and profit increased from last quarter.
It's like
Company: "yaaaa, this quarter we made 5 billions dollars more than last quarter. The company is doing great!"
Analysist: "yes you made an extra 5 billion but you said you were going to make 5.1 billion. Your company sucks!" Downgraded
Market: "Sell everything!!!!!!"
Me: 🤔... yes yes. This world makes no sense.
🤣🤣🤣
lol. Yes, exactly!
Well, I don't use an iPhone or iPad do I'm not familiar with that pop-up message. Even if I was, me accepting or declining depends. If declining means that I won't be able to use the app, I would have no option but to just accept.
From what you've explained, this may have been going on long before now only that the new feature makes it known to users now.
I'm wondering why they want to have access to users' activities by tracking their phones.
If I make my research and see that it causes no harm if it is safe, then it's fine. If not there's no way.
It just sounds like a selfish motive. To track users activities in other to earn from them.
I think it is about optimizing profits. They use your data to show you ads that have higher probability of you clicking on them and potentially buying things. :)
Oh, I get it.
So that's how they earn from users activities.
I bet Apple wants to increase their share. But it is good thing - maybe some people will finally realize that "if something is free then you are the product"🙃
I think Apple wants some of that advertising money for themselves.
It's really rather exposing them than preventing the tracking, the Apps are constantly reminding their users to grant this permission - like all the freakin time and on every start. The idea is to be IN YOUR FACE until you click "ok".
Besides that, everyone knew that after the pandemic high times, the digital super Hype had to consolidate at least a little bit, that's what we're about to see later this and early next year.
I'm most concerned about the Power of Alphabet and Google, especially without Sundar Pichai at their lead next year. The Sharks are winning in their corporate bubbles.
I really like the last part of your post. Having dencentralized social media. Until now Hive is only one I have come across which has great potential. Though we really need to work on making the onboarding easier. And I really think evolving ways to make revenue out of data can help decentralized platforms grow too. The only difference being you control if you want to share your data, and you along with the blockchain benefit from it. Also, I think dApps which gives you features similar to twitter and Facebook are lacking. Or at least I have not come across them. That needs to be worked upon as well.
When you aren't paying for the product, you are the product is what I hear thrown around a lot. We all know they make money off advertisements and people just like convenience. So we need more people to wake up and know that their data is valuable. Until that happens, I don't really think there is too much we can do right now.
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Very interesting, that Facebook now has a convenient scapegoat for revenue loss. Their troubles may continue, but they are posed to enter crypto with Libra and completely take over the stablecoin realm. They may transition from the data selling social media facilitator to the big leagues of controlling everyone’s money. Time will tell.
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So sad, they have been enriching their own personal pockets without even considering the users that they are using their data for ads.. this is why decentralization is the future, no central Authority, Transparency and users has control over their account