WSJ: ‘Inside Facebook’s $10 Billion Breakup With Advertisers’

Suzanne Vranica, Patience Haggin, and Salvador Rodriguez, reporting for The Wall Street Journal (News+ link):

Martha Krueger, who runs a gift-basket business called Giften Market, used to spend her entire advertising budget on Meta Platforms Inc.’s Facebook and Instagram. She picked up a new customer for every $14 she spent. When Apple Inc. introduced a privacy feature for mobile devices last year that restricts user tracking, she said, her costs to acquire such customers rose 10-fold. In October, she shifted her whole ad budget to search ads on Alphabet Inc.’s Google.

I’m not saying this isn’t true for Krueger’s specific case, but a 10-fold increase in customer acquisition cost doesn’t sound right in general. It feels like we’re talking about Facebook’s business model having utterly collapsed. Their “bad” results last quarter showed an 8 percent year over year drop in profit, yes, and investors very much were spooked by that, yes — but they still reported over $10 billion in profit and almost $34 billion in revenue for the quarter.

Putting aside the company’s claim to be shifting its attention to a “metaverse” future, it’s a mistake — or at least very premature — to speak in the past tense about Facebook as we know it.

Nick Heer, writing at Pixel Envy:

But there is one argument I think can be addressed in short order: all Apple did to push Meta’s buttons is that it now requires explicit consent for tracking. If Meta’s business model cannot handle a simple question of permissions, that is a pretty crappy business model. It should have been better prepared for a day when lawmakers started asking questions. But it was not. Meta’s best move has been to use the plight of small businesses, lured by its short-term promises, to excuse its unethical practices. Shame.

Update: A brief follow-up post.

★ Wednesday, 23 February 2022