Ten billion dollars. These are the potential revenues that Facebook may have to give up – according to the financial manager’s estimates Dave Wehner – during 2022. For a company that last year had a turnover of almost 120 billion dollars (with 40 billion in earnings) this is an important figure, but it does not compromise its financial health. The problem, however, is that over time the situation looks set to worsen.
The latest quarterly published on July 27 seems to confirm the forecast. Meta recorded its first decline in revenues in its history: down 1% to 28.8 billion dollars, below the expectations of the analysts. Net profit also dropped to 6.7 billion. And for the third quarter, the company estimates revenues between 26 and 28 billion, less than the market forecasts. But drops were also recorded in the quarterly reports of Twitter and Snapchat. And companies are now trying to run for cover.
Apple’s privacy effect and the advertising crisis
The reason for the loss of earnings feared by Meta is in fact linked to the crucial change related to privacy introduced by Apple in April 2021. Since then, the operating systems of the iPhones and iPads ask the user directly whether or not he wants to enable the sharing of his data for advertising purposes with the app he is using. Before this change, however, data sharing was active by default and, to block it, you had to venture into the maze of the iPhone settings.
Twitter records below expectations and accuses Elon Musk
by Arcangelo Rociola
To understand the importance that the Cupertino move has had on the digital advertising industry on mobile, just think that – according to data from the analysis company Flurry – only 21% of users have agreed to share their data with applications. who request it. This is not even an isolated case: the growing attention to privacy and the stringent regulations that, especially but not only in Europe, have been enacted in recent years are making it increasingly difficult to share data that, in recent decades, the giants of Silicon Valley had grown accustomed to harvesting and using with great ease.
Google Analytics blocking
Another recent example is the decision of the Italian Privacy Guarantor – as well as of the French and Austrian counterpart – to block the use of Google Analytics, a very popular website traffic monitoring tool that processed user data in the United States. in violation of the GDPR. It is still very early to end the “surveillance capitalism” that has represented the business model of many Silicon Valley companies since its inception, but it is clear that collecting, aggregating and selling personal and user behavior information will become in the future more and more complicated.
The analysis
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by Arcangelo Rociola
For social networks (and other tools) – which earn their money through data collection, used to target advertisements as effectively as possible – this is an increasingly looming threat. And in fact some realities seem to begin, timidly, to take countermeasures.
Snapchat
At the end of June, Snapchat (a social network little used in Italy, but which in the world boasts 330 million active users daily, more than Twitter) made official the introduction of Snapchat + in the United States, Canada, United Kingdom, France, Germany and still others. For 4 dollars a month, the most loyal users of the platform founded by Evan Spiegel will be able to change the icon of the app, find out who has seen their Stories more than once, unlock special badges, see the movements of friends (if they have enabled function) and more.
Snapchat’s own product manager, Jacob Andreou, however, admitted that he does not expect this service to become a significant source of revenue, while confirming that ads will continue to be “the center of our business over the long term.” Despite this important clarification, more and more platforms are starting to experiment with these forms of payment.
Twitter e Telegram
Twitter, for example, has recently launched the Twitter Blue service, a monthly subscription of $ 3 per month (not yet active in Italy) that offers additional features and the ability to customize the app. Elon Musk himself, who could become the owner of Twitter in the future, has also explicitly signaled his interest in giving life to a form of subscription to the social network.
Although it is a different case, it is also worth noting how Telegram, a messaging service with 500 million users, has recently introduced a form of subscription that allows you to combine different chats within a specific folder and send files up to four gigs in size and more.
First experiments
These are only the first experiments, which probably also have the purpose of testing the willingness of users to pay for services they are used to using for free. Is it possible to imagine a future where all of us will pay a modest amount to use our favorite platforms, which are then ad-free and more privacy-friendly? Difficult to say: to equalize the aforementioned 120 billion in turnover, Meta would need to get around 3 dollars a month from its 3.6 billion total users (including Instagram, Facebook and Whatsapp). An affordable figure, but how many would they be willing to pay? And what would we do if we had to pay a small amount for every service we are willing to use for free today (social media, messaging platforms, search engines and more)?
There is another important aspect. As pointed out during a Social Media Summit organized by MIT, switching to a subscription-based model could in fact improve the ecosystem of social networks, which today incentivize the most polarizing, sensational and divisive content in order to make us spend as much time as possible. on the platform, maximizing our exposure to advertising. A necessity that, of course, would disappear when the advertisements were replaced by subscriptions.
For the moment, these are still very distant scenarios and on whose chances of success the experts have shown a lot of skepticism. If giving up data collection still seems impossible, it is also true that, in the future, continuing to collect and exploit them economically could become increasingly difficult.