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How Apple’s “Ask App Not To Track” Prompt Assisted Tiktok In Its Battle Against Facebook

Apple’s recent privacy changes leveled the digital advertising playing field, paving the way for TikTok to dominate the social media business even further.

Apple dropped a nuclear bomb on the world of online advertising in April 2021. The company released a new iPhone privacy setting called App Tracking Transparency, or ATT, which displays a popup asking you, an iPhone user if you want to “Allow this app to track your activity across other companies’ apps and websites?” You can choose between “Ask app not to track” and “Allow.” The vast majority of people choose the former, which prevents apps from collecting certain types of data. Behind the scenes, the change triggered a seismic shift in the technology landscape. According to Meta, formerly known as Facebook, one setting alone cost the company an estimated $10 billion. Its stock price has dropped by 70% this year. But ATT had another unintended consequence, one that received far less attention than Meta’s problems. TikTok gained a significant advantage in its battle for social media dominance thanks to Apple’s iPhone privacy setting.

“While Meta struggled to maintain performance, TikTok presented a buyer’s market for advertisers, with low demand and high supply,” said John Donahue, co-founder of programmatic ad consulting firm Up & to the Right, who has worked with major advertisers such as Coca-Cola, Hershey’s, and Linksys. “In life, timing is everything, and TikTok couldn’t have timed it better.”

ATT crippled Facebook’s ad targeting systems, prompting advertisers to seek out new places to spend their money. Even though ATT harmed TikTok in the same ways that it harmed Meta, the short-form video app was in an ideal position to offer an alternative to Meta: its popularity was exploding, its newness meant ad prices were low, and it had designed novel advertising models built for the new privacy world order.

The privacy setting “demonstrated the risk of putting all of your eggs in one basket,” according to Donahue.

According to Insider Intelligence, TikTok’s expected ad revenue for the year has been reduced, but it is still expected to grow 155%, up $6.01 billion from 2021. Meanwhile, Insider forecasts that Meta’s global ad revenue will fall for the first time, falling 2% from 2021 to $2.25 billion. It would be absurd to blame ATT for all or even most of Meta’s losses; the recession, as well as the company’s long-shot bet on virtual reality and “the metaverse,” played significant roles. Similarly, Tiktok’s success is heavily influenced by cultural shifts. But there’s no doubt that TikTok snatched up advertising dollars that would have otherwise gone to Facebook and Instagram, and Apple’s Privacy setting played a significant role in that.

“ATT has accelerated the shift to start funneling more money into TikTok,” said Jasmine Enberg, an Insider Intelligence social media analyst. “While Facebook, Instagram, and others suffered as a result of ATT, TikTok benefited in some ways.”

App Tracking Transparency is intended to prevent companies from tracking your activities across multiple apps, websites, and services. The setting specifically disables access to an ID number known as the Identifier For Advertisers, or IDFA, which Apple created to assist ad tech companies in tracking and targeting you with ads. Assume you have a gaming app that you’d like to monetize. You can connect to Facebook’s advertising network, collect the IDFA, and send it to Facebook so that they can determine which targeted ads to show you.

But, more importantly, the IDFA is used to assess the effectiveness of advertisements. Companies like Meta track your web activity and watch as your IDFA appears in different apps, noting whether your behavior changed after seeing a specific ad. This process provides an important metric for advertisers who are deciding where and how to spend their money. However, ATT cut off the flow of data, making all of that tracking and analysis much more difficult. The Facebook ad network was built around easy access to that information, and the change shook its systems.

ATT created a level playing field. TikTok uses targeted advertising extensively, and the privacy setting hampered the company app in the same way that it did Meta. Aside from timing, TikTok’s advantage stemmed from the app’s development of advertising formats that promised to engage users in compelling new ways. TikTok’s “Spark Ads,” for example, provide ad spots that allow advertisers to sneak in marketing that looks exactly like the platform’s organic content, which helped TikTok entice advertisers by providing a path to the “authenticity” that users crave. TikTok also provided opportunities to collaborate with new and popular influencers, capitalizing on the trust that content creators have with their audiences. At the same time, Meta and other older social media players were scrambling to catch up with TikTok and retrofit their systems for ATT.

“Advertisers lost trust in Facebook because the platform experienced weekly, if not daily, volatility as they updated their algorithms,” said Alexa Kilroy, head of the brand at Triple Whale, an analytics platform that manages advertising data and campaigns for over 6,000 businesses. “TikTok was building the plane while they flew it.”

When contacted for comment, TikTok did not address whether or not ATT gave it an advantage, instead focusing on how the company is overcoming the obstacles posed by ATT. “We want to meet marketers where they are and also develop new solutions—with marketers—that will withstand changes in the data landscape,” said TikTok spokesperson Kate Amery.

Advertising on Meta was no longer a sure bet, and the new opportunities on TikTok were even more appealing. While the timing was ideal for TikTok, it was disastrous for Meta. For years, Facebook and Instagram have been in a downward spiral. Facebook became known as a site for baby boomers after young people abandoned it. Instagram has failed to innovate, and stealing features from other apps is no longer effective. Whereas Instagram successfully ripped off Snapchat’s Stories, its attempt to imitate TikTok with Reels is a colossal failure. Meta clogged its apps with more advertisements and algorithmically tailored content and tuned its services to drive engagement at the expense of a healthy, enjoyable user experience. These issues, along with years of controversy, have left Meta with a business problem that TikTok does not have: Facebook and Instagram are no longer cool.

ATT is involved in a public feud between Meta and Apple. ATT was poised to have a disproportionate impact on Meta, whether or not that was Apple’s primary goal. Following the announcement of ATT, Meta ran full-page advertisements in major newspapers, criticizing Apple for harming small businesses by limiting their ability to advertise. Tim Cook responded the next day on Twitter:

“We believe users should have a choice over the data that is being collected about them and how it’s used. Facebook can continue to track users across apps and websites as before, App Tracking Transparency in iOS 14 will just require that they ask for your permission first.”

Despite Cook’s tacit acknowledgment that ATT was aimed at Meta, Apple insists the move was solely for consumer protection. “A user’s data belongs to them, and they should get to decide whether to share their data and with whom,” said Shane Bauer, an Apple spokesperson. “We have given users the choice whether or not they want to allow apps to track them.”

Apple made no mention of ATT’s impact on TikTok. Meta did not respond.

“Even before ATT hit, advertisers were starting to diversify their revenue streams and many were already experimenting with TikTok,” Enberg says.

Meta’s clients were ready to jump, and Apple kicked Meta when it was down. We still don’t know how well Meta will recover from the blow if it will recover at all.

Despite Apple’s claims that “privacy is a human right,” the company is profiting from your data and Meta’s decline, albeit perhaps not as much as TikTok. After pushing out competitors and making room for itself with ATT, Apple is launching a new advertising network. So far, Apple has slipped new ads onto the iPhone, is developing ads for Apple TV, and appears to be intent on poaching Meta’s advertisers. In recent months, the company has also updated its tools to assist advertisers in tracking user behavior and measuring the effectiveness of advertisements. According to new research, Apple is more cautious about using user data than its competitors, but it does track you when it has explicitly promised not to. Again, the company denies being a part of a digital advertising scam. Apple sent Gizmodo a funded academic study arguing that ATT will not help Apple’s ad business.

Aside from potential hypocrisy, it’s ironic that a privacy setting helped usher in the age of TikTok, a company that raises new and troubling privacy concerns due to potential ties to the Chinese government. The geopolitical privacy issues are so pressing that Donald Trump’s administration threatened to outright ban TikTok, a threat that echoes in the remarks of the FCC’s hardliners. Finally, the privacy issues confronting the entire tech industry are so severe that it makes no difference who owns TikTok because the Chinese government has plenty of other ways to obtain American data. However, concerns about TikTok’s data practices are not entirely unfounded.

What is clear is that Apple’s restrictions on targeted advertising gave TikTok an advantage in its battle to control the social media landscape, but that advantage is likely to have worn off. “I think TikTok has experienced their accelerant for the most part, and from here, it’s a natural trajectory,” said Donahue of Up & to the Right.

By knocking Meta off its perch, ATT gave TikTok a boost, but it won’t give the company much more of an advantage in the future. During Facebook’s meteoric rise in the early 2010s, the company was able to print money with targeted ads due to a complete lack of privacy rules. TikTok, on the other hand, is in a completely different situation. The field is crowded with competitors, and ATT reduces the profitability of social media advertising.

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