Facebook announced its latest earnings call for the third quarter of 2021 on October 25. While the company posted good numbers, it missed out on Wall Street expectations. One of the main reasons for the lower numbers has been Apple’s iOS 14.5 update, which allowed users to prevent apps and websites from tracking their data for targeted advertisements.

Facebook reported $29.01 billion in revenue, a YOY increase of 35 percent, but it still fell short of the $29.56 billion expected by FactSet polled analysts. While growth remained strong, it was below the previous two quarters’ 52 percent increase. It was also the smallest growth figure since Q4 FY21. Net profits also rose by 17 percent to $9.2 billion (or $3.22 per diluted share).

Why Facebook hates iOS 14 update

Facebook blamed Apple’s changes in privacy and tracking and the increased regulatory pressure against its advertising models in various countries. The company had warned investors of the possible impact in its previous earnings call, also cautioning about the effect of Apple’s changes on the next quarter. But investors seemed to be happy with the earnings report of the social media giant as shares closed 1.9 percent higher.

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Facebook and Google, the two biggest advertisement platform providers, vehemently opposed Apple’s proposed iOS changes earlier in the year, with some experts estimating that the companies stood to lose $8 billion and $18 billion over the next 12 months, respectively.

The new changes in the Apple ecosystem enable users to give or deny permission to any app to collect their IDFA tag. The Identifier for Advertisers (IDFA) tag is a unique device identifier that is used in conjunction with cookies and tracking pixels to create a virtual database of each user. This database is then used to create ads specifically for each user and to determine each ad’s effectiveness.

“Our outlook reflects the significant uncertainty we face in the fourth quarter in light of continued headwinds from Apple’s iOS 14 changes, and macroeconomic and COVID-related factors,” Facebook CFO Dave Wehner said.

But does ‘Ask App Not To Track’ really work?

But while Facebook has blamed Apple, privacy advocates believe that Apple’s ‘Ask App Not To Track’ does very little in the first place. A recent study by Johnny Lin, a former Apple engineer and co-founder of the software company Lockdown Privacy, says the feature only gives "a false sense of privacy” as it doesn’t always work, reported the Wall Street Journal.

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"We found that App Tracking Transparency made no difference in the total number of active third-party trackers," the study says. "We further confirmed that detailed personal or device data was being sent to trackers in almost all cases."

Insta, WhatApp race ahead

While Facebook did not see any growth in its user base since the previous quarter, its associated apps have posted strong growth figures. Monthly active users worldwide for Facebook hit 2.91 billion with no growth over the previous quarter, but an increase of 7 percent over the previous year. Facebook, Instagram, Messenger, WhatsApp together, however, saw their active user base hit 3.58 billion, up 70 million quarter over quarter and an annual increase of 12 percent.

“We made good progress this quarter and our community continues to grow,” Facebook CEO Mark Zuckerberg said. “I’m excited about our road map, especially around creators, commerce and helping to build the metaverse.”

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(Edited by : Shoma Bhattacharjee)