Shulou(Shulou.com)11/24 Report--

As social networking giant Meta is being hit by shrinking revenues and layoffs, CEO Mark Zuckerberg (Mark Zuckerberg) has declared 2023 a "year of efficiency".

Many problems are not unique to Meta, but other tech giants, including Google, face similar problems. Us inflation, rising interest rates and an uncertain global situation have led companies to cut online advertising budgets to cope with a potential recession.

But Meta faces an even bigger problem: in the words of one of the company's executives, Meta's app family (including Facebook, Instagram and WhatsApp) is "subject to Apple's whim".

In 2021, Apple adjusted its iOS operating system to limit the ability of apps to track users. In February 2022, Meta estimated that the change would significantly affect the company's ability to deliver targeted advertising to iPhone users, costing it $10 billion. Apple CEO Tim Cook (Tim Cook) has repeatedly criticized Facebook's business model in the past, and Apple has even called privacy a "human right".

From Meta's recent results and its emphasis on efficiency and cost, it is easy to see that the cold war between Meta and Apple is affecting the company's profits. While Zuckerberg continues to promote virtual reality, and the so-called meta-universe is expected to help Meta escape Apple's platform, it is not clear when the plan will actually hit the ground, or how it will work.

"whenever we look to the next computing platform, we will find that they want to improve their status." "they want to participate in the construction of the application layer, they want to become an operating system, and they want to have their own hardware like Apple," said Mark Shmulik, an analyst at Bernstein, an investment bank.

But people familiar with the matter say the situation will intensify until that goal is achieved, unless Meta makes the necessary adjustments to its advertising strategy, especially if it can no longer rely on other companies' operating systems or on tracking user data.

"as long as they run on iOS, they may wake up to find that Apple has changed its privacy rules again." "I think this is probably the main reason for the disagreement between the two sides, because Facebook knows they can deal with these problems, but can't avoid further blows," said Gene Munster, an analyst at Loup Ventures.

Advertising strategy needs to be adjusted urgently over the past year, Meta has been trying to develop better tools to improve advertising effectiveness without tracking users. Munster believes that this strategy must be pushed forward. This includes the use of artificial intelligence to help advertisers make decisions, which Meta also talked about in a recent earnings call.

"Meta's focus this year is to continue to develop better tools to minimize the risk from Apple." "I think this year is very important for them because they have been working on it for a year, but they haven't finished the task yet," Munster said. "

Analysts also believe that because of the increasing competition in the advertising industry, Amazon is starting to work in this area, and Apple is developing its own advertising business, so Facebook needs a new strategy more than ever before.

Some analysts warn that focusing on meta-universe cannot completely solve the problem. Carolina Milanesi, an analyst at Creative Strategies, says people spend far less time in virtual environments than on mobile devices. So Meta is right to focus on this business, but it should not replace the innovation of its main advertising business.

Meta should also consider what value they can offer users when they ask for data tracking rights, says Mr Milanes. Users currently don't see any value that Facebook and Instagram provide when they access their data, but if they can change that, they may be able to solve the big hurdle of Apple's new iOS privacy rules.

"if Facebook provides users with a reason to share data, create value for it, and get a clear and important return for the data I share, I will share the data." Milanes said.

Finally, Facebook needs to rethink how to continue to advertise to users in a changing privacy framework without tracking user data and relying on other companies' operating systems. Schmlick of Bernstein believes that Facebook may have begun to make some achievements in this area, after all, it faces new regulations such as the California Consumer Privacy Act and the European General data Protection regulations every year.

"this forces Meta to quickly establish a flexible model, not just to adapt to Apple's changes, but to really adapt to the current situation in the use of digital advertising data." Shmlick said.

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