Facebook pivoting toward 'privacy-enhancing' technology for targeted ads

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More specifically, the social media giant is working to create a system that delivers personalized ads without needing data about individual users. Facebook is calling this effort "privacy-enhancing technologies," and it includes systems that use cryptographic and statistical techniques to offer ad measurement and personalization while minimizing data collection.

"We are optimistic that new privacy-enhancing technologies will prove that personalization remains possible and effective as our industry evolves to become less reliant on individual third-party data," Facebook's Graham Mudd wrote. "These technologies will help us minimize the amount of personal information we process, while still allowing us to show people relevant ads and measure ad effectiveness for advertisers."

For example, Facebook in 2020 began testing a system called Private Lift Measurement that allows advertisers to see how campaigns are performing while limiting what user data is available to advertisers — or Facebook itself. Facebook has also open-sourced a platform that allows third parties to develop more private ad measurement products.

Additionally, Facebook says it is also exploring using on-device learning. Already widely used by Apple on iPhones and other devices, on-device learning could allow for highly targeted ads without sending any user data to an external server or cloud.

In an interview with The Verge on Wednesday, Mudd said that "we definitely see that personalization will evolve very meaningfully over the course of the next five years. And that investing well ahead of that will benefit all of our customers and enable us to help shape that future state of the ads ecosystem."

The Facebook privacy pivot comes amid major changes to the advertising industry, including government scrutiny and the proliferation of privacy features like Apple's App Tracking Transparency. In addition to Facebook, Google is also exploring advertising systems that rely less on individual user data.

Facebook's pivot also, in a way, signals defeat. The company launched a full-scale campaign against Apple's ATT feature in 2020. That campaign ultimately fizzled out when Facebook realized it had "no choice" but to comply with Apple's new privacy technologies.

The company disagrees with that characterization, however. In a statement to The Verge, a Facebook spokesperson contended that the switch in directions is only a move toward a "different and better" advertising approach.

"We are advocating for a different and better approach to advancing privacy in advertising. One that is based on industry collaboration and a focus on supporting small businesses and an open internet economy. Apple's approach is exactly the opposite: exerting its control over the App Store to benefit its own bottom line," the spokesperson said.