Consumer strikes back – What Meta meltdown mean?

Is Apple Inc the Jedi warrior who ends the total dominance of the personal data empire?

On Feb 3, Meta (Facebook) declared the quarterly results.??The announcement that it estimated $10Bn revenue loss on account of privacy changes by users on their iPhone, sent the share price down by 26%. Nasdaq Index with a large representation of social media stocks followed suit.

When social media became popular (Facebook had a billion subscribers in 2012 and now stands at 2.911 billion in Q4 2021) during the last decade, it became the medium of choice of customer reach for almost all businesses. This was primarily premised on the ability for hyper-personalized promotions using practices bordering on snooping on customers intoxicated with social media usage, primarily on apps on Android and iOS devices.

This was facilitated by a feature for identifying the mobile device through the SDKs provided by the two dominant mobile operating systems namely – iOS and Android. Apple inc's iOS through?Identifier For Advertising (IDFA)?and Android through its Advertising ID (AAID) allowed the applications the ability to completely map out what the user was doing while using the app. When the app is social media like Facebook, Twitter, Pinterest…., the individual behavior could be vastly contextualized with corroborated social network information. This rich and varied information payload, when analyzed with advanced algorithms with the help of elastic computing power of the “on-demand” cloud computing platforms, the?SMAC?marketing platform was born. (SMAC – Social and personal data from Mobiles being Analyzed on the Cloud) SMAC through unchecked use of user information made hyper-personalized campaigns possible.

If you are a marketer, by paying social media tax to some of the?FANGs, it was possible to get more efficient campaigns. The user was initially amused, later amazed, then annoyed, and finally SCAMed with the snooping and didn’t have an effective way of controlling what the snooper saw. Till recently. This led to the BigTechs known as?FANGs, who honey-trapped the hapless user to allow each of her digital actions to be snooped upon, analyze it to hyper-target products, whose marketers could reduce total costs of customer acquisition by moving the promotion budgets to?FANGs.

This changed last year. Last April, Apple launched iOS 14.5 with a very advanced privacy feature giving the user the choice to limit/stop the apps' ability to track the device and in-app events through “Apple’s App Tracking Transparency (AATT)” feature. This was a ticking timebomb or an app minefield, that social app providers wanted to wish away. While this feature alone doesn’t prevent snoopers, it allows users to limit what is being snooped. Most social media pundits thought that the users are too lazy to use?AATT?to limit what the apps were tracking. They were wrong.

On Feb 3, when Facebook, nay Meta, announced their results, they had to admit a $10B hit on the revenue for the year ($118 billion was the yearly revenue) on account of?AATT?change by about 22.5% of the smart-phone users who decided to remain private. (For the data-driven readers, 22.5% is estimated from the reported 70% of iOS users choosing to remain private – iOS accounts for approximately 30% of smart-phone users)

This resulted in a share price fall of about 25%.??

Will Alphabet, who offers Android OS which runs for about 70% of smartphones, follow suit????Google has already announced the removal of AAID in Android 12, generally available from October 2021. Alphabet had to do this to prevent losing market share to Apple, especially in the premium category customers who are most sought after.

The implications are least likely to be limited only to shareholders of Meta. We may see yet another valuation reset of Meta shares on account of the AAID removal in Android 12 and associated revenue losses. Many social media honeytrap systems may also implode.

There are few obvious pointers for Digital Marketers and digital stores, who were paying social media tax may be highlighted as:

• You are in a difficult place if you are dependent only on digital channels and are looking for hyper-personalization using social data as a critical aspect of customer engagement. More and more customers will choose to be private and social media incursions into customer’s privacy will be limited drastically
• You don’t own the customer’s data. They belong to the customer. You will have to directly incentivize the customer to share their viewpoint and not to pay a monopoly for data theft.??
• Regulatory (though I have not elaborated upon this topic here) changes like?CCPA,?GDPR, and many others will limit personal data commerce and social espionage. This will prompt many more device and OS providers to empower the customer with the choice of extent of data sharing. This may further limit the extent of social snooping and its commerce.
• Large e-commerce and banks will be forced to avoid privacy incursion even during their customer acquisitions. To ensure that they don’t break any rules, they will need to use algorithms and tripwires of varying nature.
• A lot of time and capital may need to be invested in making the customer data collation transparent and with the customer’s consent.??

The elephant in the room was/is Android from Alphabet.?

Unlike iOS from Apple Inc, Android doesn’t come with a pure-play, for-profit, communication device. Though it is built on Open Source and licensed to many independent device providers and there are many hidden revenue streams since the device is always linked to a Google account and all actions on the device are connected to the google account and are tracked. Google also knows what you are searching for, what videos you watch, and what communications you receive.

Will this mean Alphabet needs to be broken down? Will it?ring baby bells?all over again? This time many characters from Alphabet and many trees from Amazon. Lawmakers are busy debating....