The News that Shook the Marketing Sphere

Facebook’s rollercoaster of events kept the digital marketing world sleepless during the past months. This social media giant has been notorious for several debatable events related to privacy and data collection during the past years. Starting with the Cambridge Analytica debacle, Facebook had the public’s eyes turned on them regarding the ethical issues of tracking its users’ data. Something that Facebook has been describing as economically stimulating, others have been criticizing as crossing the boundaries of basic human rights.

As this wasn’t big enough for Facebook, Mark Zuckerberg shocked the public by conditioning all WhatsApp users. They must agree to give all meta-data to Facebook, or it will instantly delete their profile. On the other hand, Apple has been preparing for its new privacy policy to protect the users from data manipulation. This turn of events caused a real ‘clash of the titans’ and general rebellion among the tech industries.

So, what exactly happened?

Facebook’s integration with Whatsapp

In 2014, Facebook announced a controversial purchase of one of the biggest messaging services, Whatsapp. Suddenly, users could see the text: “Whatsapp, from Facebook” on their splash screen when they open the application.

Why did Facebook decide to make such a huge move?

The $19 billion purchase sounded absurd since Facebook couldn’t gain anything from WhatsApp that it already doesn’t have, and at that time, WhatsApp was a relatively young company. However, Facebook noticed the chat app’s rapid growth and took a defensive step by bringing it under its umbrella. The majority of WhatsApp users are located outside of the United States, mainly in Brazil, Mexico, India, and many other countries. Facebook saw the potential of getting even closer to these massive foreign markets.

A few years later, Facebook still hasn’t filled the financial gap made by this colossal purchase. People even forgot that these two apps have the same ownership.

Facebook’s business model is based on commerce, payment, and advertising. Unfortunately, WhatsApp doesn’t quite fit in this monetizing scheme. It is a closed-source app with an implemented end-to-end encryption policy. All messages, and personal information are highly protected, which is also one of the main reasons for this app’s growth. Despite Facebook’s ownership, the encryption system restricted them from using WhatsApp as a profiting platform since they couldn’t collect user data.

Mark Zuckerberg finally decided to put an end to it and get the engine started. WhatsApp users now have to accept the new terms and conditions that force them to share their meta-data with Facebook or any other companies they own. If users refuse to accept that by February 8th, they will not be authorized to use the app.

If users continue using WhatsApp under the new terms, they will get more targeted ads because Facebook has created a much more detailed profile of them. The new policy began a massive uprising, causing many users to delete the app and switch to other encrypted apps like Telegram and Signal. Users argue that this is pure blackmailing and not a privacy policy.

The update doesn’t apply to the European Union since it violates the GDPR compliance laws.

Apple’s new iOS 14 privacy feature

The tech giants Apple have always been privacy oriented. During the past few years, Tim cook has been continuously opening the topic of privacy abuse and user monitoring. At the CPDP conference, held in Brussels, Tim Cook stated that “This is not the world we want to live in, and it degrades our fundamental right for privacy.” He also explained that Apple endorses the new GDPR compliance because it opens the doors to a new, better future.

Now, the new iOS14 comes with a privacy update that requires permissions from the user to collect data for commercial purposes. With that, the users can see how the app tracks their data and choose if they accept it or not. The policy proved what has already been speculated, that Facebook, Instagram, and WhatsApp are continually harvesting all kinds of user data used for detailed ad targeting.

As Apple enjoys its white knights’ position, fighting for users’ right to privacy, Facebook feels directly attacked. According to Facebook, the restrictions will have a negative effect on businesses and the open market. Businesses rely on targeted ads to effectively reach their customers, and now there is a risk they will lose a significant percentage of their revenues.

Facebook stands back behind small businesses and fears that now their chances to stand out and compete with large companies will decrease.

How will the iOS 14 privacy policy affect Facebook Ads?

It is really unpredictable, and it depends on what percentage of the company’s audience is using iOS.

When a user downloads an app, Apple immediately stops the app from tracking the user’s data until the user agrees to share it voluntarily. Naturally, most people won’t agree to be tracked since they appreciate their privacy.

This will generally affect Facebook Audience Network since there won’t be enough data for these ads to run effectively. The accuracy of ad delivery to relevant customers will decrease, as well as the engagement with the right customers. Conversions made through targeted ads may drop significantly. In addition to that, marketers will have a hard time calculating their optimal budget for ad spending.

Not only it affects the ads on the networks, but this will also severely affect free apps. These apps survive on ad placement since they don’t get any revenue from in-app purchases and subscriptions. In that case, free apps will have two choices: start charging for in-app purchases or subscriptions (which will increase the risk of losing users), or they will sadly have to close down.

It is not questionable that it is time to change the era of constant monitoring and unethical profiting out of user data. Nevertheless, it is an immense change that will have drastic repercussions on many businesses and marketers. The consequences of these moves are yet to be seen, and although corporations must make the most ethical decisions, in the end, it is up to marketers to adapt and make the most of it.

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S&M Solutions

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