Facebook Drops After Warning Apple Ad-Tracking Will Slow Growth

(Bloomberg) -- Facebook Inc. fell as much as 4.3% to the lowest point since July after warning Apple Inc.’s new data collection restrictions will hurt its third-quarter results.

The company said in a blog post Wednesday that recent changes made by Apple to limit targeted advertising will “have a greater impact in the third quarter compared to the second quarter.”

The stock’s tumble reflects investors’ concern that Facebook is already seeing declines in its digital advertising business after Apple implemented a software update to limit targeted advertising on iPhones. Apple’s new rules require app users to explicitly say they are willing to allow their activity to be followed across the internet. Large brands and small businesses often rely on user activity as a way to reach precise groups of prospective customers.

Facebook Chief Financial Officer Dave Wehner previously warned that Apple’s changes would have a greater impact in the third quarter than they did in the second, which had a negative impact on the stock then. This week’s comments stirred more consternation.

Apple has said the changes are designed with people’s privacy in mind. Meanwhile, Facebook launched a public relations campaign, arguing the new app rules will hurt small businesses that rely on targeted advertising and don’t have the money to spend on broad marketing campaigns. Small businesses make up the bulk of Facebook’s ad sales.

“Apple’s privacy changes are really hampering their ability to do personalized ads,” Facebook Chief Operating Officer Sheryl Sandberg said in an interview this month. “And they really do need to do personalized data. They need to find people who like yoga and meditation in their particular part of the country.”

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