Meta on Wednesday saw its shares fall in after-hours trading after reporting mixed Q4 results and a lower-than-expected outlook for the first quarter of 2022. On a conference call, the company detailed the extent to which Apple's iOS changes are hurting the business, forecasting a $10 billion impact in 2022.
In Q4, the impact of Apple's iOS changes were "in line with our expectations and similar to Q3 headwinds," CFO David Wehner said on the call. "We believe the impact of iOS overall as a headwind on our business in 2022 is on the order of $10 billion. So it's a pretty significant headwind for our business."
Apple's iOS 14.5 update, released in April 2021, included an App Tracking Transparency (ATT) feature that has had a notable impact on digital advertising. The ATT feature requires app developers to get permission from a user in order to track their activity across other apps and websites when using an iPhone or iPad. Like Meta, the social media company Snap has complained that the updated iOS platform is impacting its revenues.
Wehner called out e-commerce as one area where Meta saw a "meaningful slowdown in growth in Q4." He added that it was "quite notable that Google called out seeing strength in that very same vertical" in its own Q4 results, which were published earlier in the week.
The CFO said that Google "faces a different set of restrictions from Apple." He suggested Apple is motivated to favor Google because of the billions Google has been estimated to pay Apple in order to remain the default search engine on iOS devices.
"Given that we know that e-commerce was one of the most impacted verticals from iOS restrictions, it makes sense that those restrictions are probably part of the explanation for that difference between what they were seeing and we were seeing," Wehner said. "We believe those restrictions from Apple are designed in a way to carve out browsers from the tracking Apple requires for app. So what that means is that search ads could have access to far more third party data, for measurement and optimization purposes, than app-based ad platforms like ours."
He added, "Given that Apple continues to take billions of dollars a year from Google Search, the incentive clearly is for this policy discrepancy to continue."