Google’s Next Move: The Final Nail In Facebook’s Coffin?

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After Apple deciding to take the anti-tracking route to safeguard user privacy on their devices, now Google is aiming to do the same with Android. For Facebook, there could be nothing worse than this at this time if that becomes a reality.

According to people in the know, the search giant is discussing how it can limit data collection and cross-app tracking in a way that isn’t as stringent as Apple’s solution but effective enough to appease users concerned with their privacy on the internet.

This move, of course, comes at a time when consumers have become increasingly pro internet privacy and are demanding better and more secure technologies to safely navigate the world wide web.

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Currently, Google’s parent company Alphabet Inc. (NASDAQ: GOOGL) is seeking input from its stakeholders about this potential move which is similar to a new primacy standard for web browsing called the Privacy Sandbox – which it has already begun developing.

That being said, the obvious question that arrives is – Won’t the limiting data collection affect Google’s own advertising business as well?

The answer to that is a resounding yes! The search giant minted a whopping $46.2 billion in advertising revenue in Q4 2020 alone. For full year, a record $146.9 billion in revenue came from ad business, representing about 80.86% of Google’s total segment revenue.

But then again, as mentioned earlier, Google doesn’t aim to completely cut off advertisers and marketers from collecting data but lessen it in a way that raises the privacy bar in Android devices along with addressing consumer concerns.

A Gooogle spokesperson, in a statement about the same, said the company is looking for ways to work with developers in order to ensure both user privacy and enable a ‘healthy ad-supported’ app ecosystem.

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But there is a large more concerning aspect to the decision of Google – the impact on Facebook, which can be proven fatal.

Google’s Push For Privacy: More Trouble For Facebook

Now, after Apple, the fact that Google wants to follow into the iPhone-maker’s footsteps as well can spell more trouble for Facebook. The social media behemoth, which is currently knee-deep in crisis-management to safeguard its own ad platform from the forthcoming changes introduced by Apple’s App Tracking Transparency, was one of the first companies to protest this move.

From full-page newspaper ads to interviews, Zuckerberg heavily rallied against Apple’s pro-privacy move by claiming that not having the ability to effectively serve personalised ads will harm small businesses globally which are reliant on its platform to generate revenue.

In fact, many publishers and analysts form a view that Apple’s decision could be the beginning of the end of Facebook – unless the social media giant decides to pivot its business model completely.

Facebook’s annual revenue reached an all-time high of $85.97 billion in 2020 and the largest chunk of this pie came from ads. Advertisement accounted for 97.9% of Facebook’s 2020 revenue and the performance was largely led by the social media behemoth’s unparalleled, and highly criticised, tracking capability to serve targeted ads.

Facebook’s data-tracking capabilities are significantly crippled by Apple’s decision of taking the anti-tracking route. It will almost shut the doors for Facebook which has been peeping into the iOS devices and serve target ads to reap the most out of iPhone and iPad users for years now.

Thus, now that Google wants to get on the whole user-privacy bandwagon as well, albeit a less strict way unlike Apple, it will be interesting to observe how does Facebook react to it.

Currently, the Android alternative of Apple’s feature is still in an early exploratory stage. Insider sources have revealed that Google has not yet set a date in stone about the potential changes it is discussing internally.

The people in the know have also mentioned that Google’s Android solution talks indicate that it might just be similar to its plans for the Chrome web browser in order to keep advertisers happy while improving on privacy at the same time.

In January 2020, the search giant announced that it intends to phase out third-party cookies in Chrome within two years, something that Google reaffirmed earlier this year as well.

Cookies are a popular way for websites to be able to identify and track users around the internet in order to serve them personalised ads.

As of now, Privacy Sandbox – the web alternative from Google allows some ad targeting with a somewhat less-specific data collection. As part of that solution to address privacy in web browsers the company developed a technology known as ‘Federated Learning of Cohort’ which basically lets advertisers target groups of people based on similar interests instead of targeting them as individuals.

Thus, it is now being gauged Google is very likely to take a similar approach with its Android platform as well. At the time when Facebook is ready at war with Apple, the opening of this new front could prove fatal for Facebook as it’s going to be too much to handle for Mark Zuckerberg and team. It would be interesting to see what strategies he employs to defeat the new privacy policies and keeps facebook on its growth path. However, if he fails to do so Wall Street may penalise him the harshest way he could have ever imagine.

Besides, the move could be tricky for Google as well considering ad business accounts for the largest chunk of the pie for Google – if not the whole pie like Facebook. At last, no one likes to shoot in his own foot!

We will keep you updated on all future developments. Until then, stay tuned.

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