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Online privacy and profit clash with fortunes at stake, Telecom News, ET Telecom

(Image for representation purposes only – iStock)

San Francisco: 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 every year.

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

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

“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 have expressed concern that the proposed changes could simply mean less data passed on to third parties, while the internet giant continues to collect detailed information from people who use its ubiquitous services.

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 that it is focused on privacy but that the reviews rating 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 $10 billion in lost revenue this year.

– ‘Scary factor’ – The news has helped question 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.

Analyst Enderle believes that Facebook could thus circumvent Apple’s software change and recover some 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.

US pressure on tech companies has increased on the privacy and antitrust fronts, particularly after the Facebook whistleblower scandal last year spurred regulatory efforts long stalled by strong partisan divisions. .

In the absence of federal action, the states launched their own lawsuits.

In one such lawsuit filed in January, several states accuse Google of tracking users’ location data when consumers believe they could protect their privacy on the tech giant’s services.

Whatever changes tech companies might make, watchdogs are questioning the model of large online services funded by advertising and user data.

“I think behavioral ads are just plain bad for society,” said Electronic Frontier Foundation technologist Bennett Cyphers.

“The negative side effects aren’t just the invasion of people’s privacy — it’s allowed some of the most toxic parts of the internet today to thrive, because it’s all about eyeballs.”

He cited issues with “clickbait garbage”, plagiarism, misinformation and inflammatory content that makes money from ad impressions.

As an alternative, he said ads can be served based on context — automotive ads on an automotive news website, for example.

From an industry perspective, the process of finding a better system is ongoing, as is managing the general public’s perception of online advertising activity.

“People and government officials are extremely concerned about how cookies are used,” said Angelina Eng, vice president of the industry group Interactive Advertising Bureau.

“We just haven’t found the right balance yet because there are several bad actors that create that scary factor,” she added.