August 10, 2022
Business/Tech

Big Tech Can’t Stop Obsessing Over Apple and TikTok

big-tech-can’t-stop-obsessing-over-apple-and-tiktok

On July 26, Alphabet, the parent company of Google and YouTube, announced its results. In its earnings call, the company’s CEO Sundar Pichai said that YouTube Shorts, its version of TikTok-like short form videos, were watched by more than 1.5 billion users every month. A day later, Meta—parent company of Facebook and Instagram—also unveiled their results.

“TikTok’s great innovation was realizing that social media no longer has to be social, just media,” says digital strategist Jay Owens. And that recognition is one that other companies—key among them Meta, with Instagram—are trying to follow. “Meta doubtless had data showing that friends and family were no longer the main sources of engagement on Instagram and Facebook—but didn’t quite dare make the leap to making Instagram’s Explore tab the homepage,” she says. “Now they’re playing catchup—and users seem set to have not one but three apps dominated by vertical video.”

Instagram chief Adam Mosseri has already decided to dial back some of the more significant changes to the app after a public outcry, but the company is still likely to pursue its strategy of promoting Reels. It all spells concern for users, who are seeing the panoply of different apps they use transmogrify into a number of Frankenstein’s monsterlike super apps that look and act principally the same as each other, just with a different logo. “Strategically, it’s a mess,” says Owens. “Platforms need to double down on investing in content and nurturing their creators from first viral hit to global star. But the shift to a purely algo-sorted feed disempowers creators.”

While all the apps compete in a race to be copycats of each other, they face other big issues. Snap, Twitter, and Meta’s results all highlighted one of the existential issues for online advertising and user tracking: The changes introduced in iOS 14.5 that allowed users to opt out of the ability to be tracked by big apps.

Apple’s introduction of app-tracking transparency (ATT) empowers end users—but leaves apps shorn of access to user data that they had grown accustomed to profiting from. It allows users to either consent to, or deny, apps tracking them and reporting data back to advertisers. The ability to opt out has always existed, but has traditionally been less explicit than Apple’s unavoidable popup. Meta could lose $10 billion in ad revenue this year because of the user prompt on Apple devices. “We’re … continuing to face targeting and measurement headwinds such as Apple’s iOS changes, which we believe are contributing to the growth challenges across the digital advertising industry,” said Meta’s chief financial officer Dave Wehner, who post-call moved to become the company’s chief strategy officer. Alphabet’s chief business officer, Philipp Schindler, admitted to “pullbacks in spending by some advertisers” due to uncertainty within the industry.

The change hit Meta properties particularly hard, and has dealt the company a one-two punch in combination with the rise of TikTok, which is stealing Meta’s users—and therefore its advertisers, who want their products to be seen by the most people. Andrew Rosen, founder and principal of media analyst company Parqor, says “a combination of trends of users moving away from Meta properties to TikTok, and Meta having a more difficult time monetizing them post-ATT has forced Meta to iterate its product design.”

But Meta CEO Mark Zuckerberg was ruing Apple for more than its changes to how apps can track their users. The company is embroiled in a “very deep, philosophical competition” over the future direction of the metaverse, Zuckerberg said in internal comments reported by The Verge. While Meta has played a key role in the formation of a cross-industry Metaverse Open Standards Group, Apple has steered clear—a sign that, Zuckerberg believes, is an indication that Apple wants to develop a closed-off system for the metaverse tied to its headsets, similar to the environment it has developed for its iPhones.

As for Apple itself, the results on July 28 showed that unlike some of its competitors, the company was able to beat analyst estimates for its total revenues, and to manage to keep its head above water. “This quarter’s record results speak to Apple’s constant efforts to innovate, to advance new possibilities, and to enrich the lives of our customers,” said Tim Cook, Apple’s CEO. For Wedbush’s Ives, it was a more bravura performance than that: equivalent to a “Top Gun: Maverick-type feat for Cook and co.”

Leave a Reply

Your email address will not be published.