Advertising fortunes at stake in a conflict between online privacy and profit

SAN FRANCISCO (AFP) – Facebook and Google are under increasing pressure to better balance privacy and ad targeting – with their fortunes at stake as users rebel, regulators loom and Apple leaps at the moment to polish its image .

At the heart of the matter is what internet companies should know about people’s online lives, a stream of data that is essential to Big Tech’s billions generated from advertisements each year.

Companies have faced increasingly strict rules since the European Union passed a massive data privacy law in 2018 which, among other regulations, requires companies to seek direct consent from users before installing cookies on their computers.

But new pressure is mounting due to the advance of landmark European legislation that could impose unprecedented surveillance on Big Tech, and the Silicon Valley giants are facing a tangle of official investigations and lawsuits. United States.

“They’re really between a rock and a hard place. Their whole business model is at risk,” analyst Rob Enderle said of the threat to Meta and Alphabet, the parent companies of Facebook and Google, respectively.

One of the battlegrounds is the use of so-called “third-party cookies”, snippets of software that track users’ online behavior and have been shown as bad guys in a considered “monitoring advertising” system. like downright scary.

Google has pledged to replace this technology, but critics fear the proposed changes will simply mean less data passed on to third parties, while the internet giant would continue to collect detailed information from people who use its services. ubiquitous.

For its part, Apple announced last year that users of its billion iPhones in circulation can decide whether or not to allow their online activity to be tracked for the purpose of targeting ads – a change it says , shows it focuses on privacy, but critics note. does not prevent the company itself from following.

Meta expects the policy, which impacts the accuracy of the ads it sells and therefore their price, to cost the social media giant US$10 billion (S$13.4 billion) in loss of income this year.

The news has contributed to questions about the company’s long-term prospects, causing the company’s value to plummet in recent weeks.

Still, the social media company is exploring ad targeting technology that would keep user data “locally on their device rather than sending individual data to a remote server or cloud,” wrote Meta Marketing Manager Graham Mudd. , in an article.

Mr. Enderle thinks that Facebook could thus circumvent the change of Apple software and recover part of this lost advertising revenue.

“Apple sees Google and Facebook as competitors, so they’re much less likely to make it easy for either company,” he added.

U.S. pressure on tech companies has increased on the privacy and anti-trust fronts, particularly after the Facebook whistleblower scandal last year spurred regulatory efforts long stalled by strong law enforcement. partisan divisions.

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