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Meta struggles to navigate a changing privacy landscape

Meta struggles to navigate a changing privacy landscape

Last updated May 7, 2022 by Kristopher Marsh

The ability to market products and services direct to consumers has rarely been more accessible than with smartphones. However, as privacy concerns increase, the age of unrestrained digital marketing may be over, as evidenced by a recent shareholder lawsuit against Meta Platforms after changes to the Apple iOS ecosystem led to a significant profit downgrade.

Meta is the holding company of Facebook, the social network whose business model relies on leveraging the personal data of its users to deliver targeted advertising. As this model comes under pressure, however, the company has forecast a $10 billion reduction in revenue shortly after reassuring investors that the impact of Apple’s iOS privacy tweaks were manageable.

The complaint, brought by the Plumbers and Steamfitters Local 60 Pension Trust in a United States federal court, alleges that Meta executives failed to inform shareholders that their efforts in mitigating Apple’s iOS privacy changes were failing, and that management painted a false and misleading picture of their ability to rebuild the company’s advertising business.

Meta and many other technology companies are revisiting their core assumptions following Apple’s decision that app developers be required to seek permission from users before they are tracked. These changes have seen users opt out of cookies and other cross-app tracking methods, thereby reducing the effectiveness digital marketing, as well as its profitability.

In 2021, Facebook rebranded as Meta Platforms to reflect the company’s shifting focus towards building the metaverse as a digital extension of the physical world. While this vision of the future is ambitious, it does seem clear that some shareholders are equally concerned about the present, and how a changing privacy landscape may undermine the value of their investment.

Featured image by bidaya / CC0

Filed Under: Blog

About Kristopher Marsh

Insurance and risk management professional. Connect with me on LinkedIn.

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