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Tech stocks lose billions in value as Apple moves to secure user data

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Photo by Drew Angerer/Getty Images

A new feature included in Apple’s iOS14 update that makes it easier for iPhone users to secure their personal data caused other tech companies to lose billions of dollars.

A new report revealed that four social media companies lost almost $300 billion in market value since April of 2021.

Markets Insider reported that “The earnings results from social media companies on Wednesday highlighted the weakness ton investors, resulting in a steep sell-off in their stocks. In Thursday trades, Meta Platforms fell 22%. Snap fell 18%. Twitter fell 8%, and Pinterest fell 11%. Since Apple’s privacy update went into effect in late April 2021, these four social media companies have erased a combined $278 billion in market value.”

Since late April of 2021, Meta has lost $169 billion in value, Snap has fallen by $50 billion, Twitter’s market share decreased by $26 billion, and Pinterest lost $33 billion. Snap, Twitter, and Pinterest each lost around half of their previous market evaluations.

This massive decline in value comes as Meta missed its projected Q4 earnings targets and announced that it expects that Apple’s new data security measures to cost it roughly $10 billion in revenue.

What exactly is this new feature that has the tech industry in disarray?

Users must now opt-in to being tracked by companies and digital applications. When a user downloads a new app, a window pops up asking users whether or not they would like to allow the program to track them.

The overwhelming majority of tech companies that are “free to use” services — Meta’s Facebook and Instagram, Twitter, Snapchat, and essentially every other social media company ؙand search engine — make their money by monetizing their users’ data.

Essentially, these companies make their money by being digital billboards. Tech companies tend to be highly trafficked web domains, which means companies want to advertise on them. In order to determine what ads to show its users, tech companies use sophisticated algorithms that sift through anything and everything from a user's geographical location to their personal interests as indicated by their online habbits.

Without this data, digital marketing is significantly less effective. Without this data, companies like Facebook and Instagram have significantly less to offer advertisers.

That being said, Meta — the parent of Facebook of Instagram — is undergoing a lengthy transition period with the goal of entirely reshaping the future of the digital world by mainstreaming the Metaverse.

So, their share price may have plummeted today, but there is little reason to think they will fail. Companies such as Meta and Alphabet have always been very mission oriented and forward thinking.

It is likely that in the long run they will view not being able to access every single aspect of your digital life as nothing more than a short setback.

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