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Online privacy and profit clash with fortunes at stake

SAN FRANCISCO (AFP) – Facebook and Google are under growing pressure to better balance privacy and ad-targetting – with their fortunes at stake as users rebel, regulators loom and Apple pounces on the moment to polish its image.

At the heart of the issue is how much Internet companies should know about people’s online lives, a flow of data that is key to the many billions Big Tech makes on ads each year.

The firms have faced steadily stricter rules since the European Union (EU) passed a massive data privacy law in 2018 that, among other regulations, requires firms to seek direct consent of users before installing cookies on their computers.

But new pressure is building due to advancing landmark European legislation that could set unprecedented oversight on Big Tech, and Silicon Valley giants are targetted by a tangle of United States (US) official probes and lawsuits.

“They are really between a rock and a hard place. Their entire business model is under threat,” analyst Rob Enderle said of the threat to Meta and Alphabet, the parent companies of Facebook and Google.

The Meta sign at the company headquarters in Menlo Park, California. PHOTO: AP

One of the battlegrounds is the use of so-called “third-party cookies”, software snippets that track users’ online behaviour, and which have been portrayed as villains in a “surveillance advertising” scheme considered downright creepy.

Google has pledged to replace that technology, but critics have voiced worry that its proposed changes could just mean less data transmitted to third-parties while the Internet giant would continue to amass detailed info from people who use its ubiquitous services.

For its part, Apple announced last year that users of its one billion iPhones in circulation can decide whether to allow their online activity to be tracked for the purpose of targetting ads – a change which it said shows its focus is on privacy but which critics noted does not prevent the company itself from tracking.

Meta expects that policy, which impacts the precision of the ads it sells and thus their price, to cost the social media giant USD10 billion in lost revenue this year.

That news contributed to questions about the firm’s long-term prospects, prompting a historic plummet of the company’s value in recent weeks.

Still, the social media firm is exploring ad-targetting technology that would keep users’ data “locally on their device rather than sending individual data to a remote server or cloud”, Meta Marketing Executive Graham Mudd wrote in a post.

Analyst Enderle believes that Facebook could thus circumvent the Apple software change and regain some of that lost ad revenue.

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