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Google and Facebook Under Huge Pressure Over User Privacy

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Google and Facebook Under Huge Pressure Over User Privacy

Google and Facebook are under growing pressure to better balance privacy and ad-targeting — with their fortunes on the line as users rebel, regulators loom, and Apple takes advantage of the moment to polish its image.

Essentially, the question is about how much internet companies should know about people’s online lives. This is a flow of data that is crucial to the billions Big Tech makes on ads every year.

As a result of a massive EU data privacy law passed in 2018, the firms have faced steadily stricter rules. Among other regulations, this law requires firms to obtain consent from users prior to installing cookies on their computers.

Furthermore, there is growing pressure due to landmark European legislation, which could set up unprecedented oversight on Big Tech, while US probes and lawsuits target Silicon Valley giants.

Rob Enderle, an analyst at Enderle Research, said of Meta and Alphabet, the parent companies of Facebook and Google, that they are between a rock and a hard place.

One of the issues at stake is the use of so-called “third-party cookies,” software snippets that track online behaviour. These are portrayed as villains in the so-called “surveillance advertising” scheme that some find hideous.

Google to eliminate tracking cookies

Google has pledged to replace that technology. However, critics have expressed concern that the change would simply result in fewer data transmitted to third parties. This is because the internet giant will continue to gather detailed information from the people who use its services.

Apple, on the other hand, announced last year that one billion iPhone users could decide whether their online activities should be tracked for advertising purposes. It claims the change demonstrates its commitment to privacy, although critics note the move does not prevent the company from tracking itself.

It is expected that Meta stock will lose $10 billion in revenue this year due to this policy.

This affects the precision of the ads and thus the price of those ads.

Google announced in its Feb. 1 earnings release that it is doing a 20-for-1 stock split. That means that on July 15 Google stock shareholders will receive 19 additional shares for everyone that they own on the record date of July 1.

It also means the Google stock price per share would be divided by 20, which now implies a price of $138, given a recent price of $2,758.

Facebook stock tumbles

Meanwhile, Meta Facebook stock is as cheap now as it has ever been, after a 32% fall in its shares, to $219, since Feb. 2, when its dismal fourth-quarter earnings shocked investors.

Shares of Meta, formerly Facebook  FB-2.02%, fell 0.8% on Monday but were up 2% in premarket trading Tuesday.

Also on  Tuesday, Facebook CEO Mark Zuckerberg announced new plans for the company’s move into the metaverse, introducing company values such as “live in the future” and telling employees they would be called metamates.

Meta stocks gained slightly on the day, but remain approximately 31% below where they were at the time of its disappointing earnings release at the start of the month.

The sudden collapse has been attributed to sluggish user growth, the uncertain metaverse bet, and new Apple (AAPL) privacy settings that limit the effectiveness of targeted campaigns.

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