LLast year, Apple (NASDAQ:AAPL) implemented changes to its operating system that made it more difficult for third parties to collect data about users of its electronic devices such as iPhones or iPads. Social media companies like Metaplatforms (NASDAQ: META) suffer. They rely heavily on targeted ad sales and marketers are unwilling to pay that much without this feature.

Impressive, Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) held up reasonably well to these changes. Let’s dive deeper into how these changes impact meta platforms and why Alphabet doesn’t do so badly.

Meta-platforms will take a $10 billion hit in 2022.

Apple’s iOS 14.5 update, released last year, includes an app tracking transparency tool that limits the amount of data app developers can collect. These companies now have to ask users for permission before they can track their activity, an option that many choose not to give. Of course, marketers are willing to pay higher prices for accurate and targeted advertising. This virtually eliminates instances where advertisements for a steak restaurant in Denver are sent to a vegetarian living in Omaha, Nebraska.

Meta management pointed to the change as a substantial headwind, noting that it would cost the company more than $10 billion in revenue in 2022. To put that figure into context, Meta said $118 billion in revenue in 2021. The social media giant reported fiscal 2022 second-quarter results on July 27, showing its revenue declined for the first time in its history. Meta forecasts a similar drop in the third quarter.

Alphabet’s Android operating system is insulated from Apple’s decisions

That said, Alphabet has held up relatively well amid Apple’s changes. Meta CFO David Wehner suggested Alphabet performed better because it faces a different set of restrictions as it pays to be the default search engine on iOS devices. He said Apple designed these changes to create browsers that give search ads better access to data for measurement and optimization (targeting) purposes. All of this may be true. Naturally, Apple wouldn’t want to alienate a partner who pays it to become the default search engine.

However, another reason why Alphabet is handling these changes effectively (it saw a 13% increase in revenue in its last quarter, while Meta was down 1%) is that its own Android operating system counts more than 3 billion active devices worldwide. Android platform users are not affected by the changes made by Apple. On Android devices, Alphabet sets the rules so that it can set policies in its favor.

Taken together, these two factors collectively strengthen Alphabet’s position in the advertising industry. In 2021, marketers spent $763 billion globally, an increase of 22.5% from 2020. Within the market, digital’s share increased from 52.1% in 2019 to 64 .4% in 2021. Part of the reason marketers are shifting dollars to digital channels is because of the better return on investment. It remains to be seen if this trend will continue amid Apple’s iOS changes. Nonetheless, this is a high-stakes outcome for all involved, and investors should stay tuned.

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Suzanne Frey, an executive at Alphabet, is a board member of The Motley Fool. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Parkev Tatevosian holds positions in Alphabet (C shares) and Apple. The Motley Fool has positions and recommends Alphabet (A-shares), Alphabet (C-shares), Apple and Meta Platforms, Inc. The Motley Fool recommends the following options: $120 long calls in March 2023 on Apple and 130 short calls $ in March 2023 on Apple. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.