With Less Data-Driven Baggage, Can Apple Help Lead the Way on Advertising Privacy?

It has the freedom to make drastic decisions about user information

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One year ago, several major ad-tech trade groups accused Apple of threatening to “sabotage” the economic underpinnings of the internet after the tech giant cracked down on how companies track users through its Safari browser’s cookie-tracking policies. The June 2017 change placed a 24-hour limit on ad retargeting as a way to improve both customer experience and privacy. Groups such as the 4A’s, American Advertising Federation, Interactive Advertising Bureau and the Association of National Advertisers urged Apple to reconsider its “opaque and arbitrary” standards.

“You’ve got a hostage situation where the bad players in ad tech have taken people hostage,” said Tony Haile, former CEO of Chartbeat, whose startup, Scroll, charges readers a subscription price in exchange for an ad-free format. “And Apple’s response was to throw a hand grenade into the room.”

In the year since, Apple, which declined to comment for this story, has become one of the more prominent promoters of user privacy. The company, now valued at more than $1 trillion, earns most of its revenue from hardware and software unrelated to advertising—contrasting itself with the likes of Facebook, Google and others that rely far more on the power of user data for revenue. That gives the maker of the iPhone the freedom to make seemingly drastic decisions about user data that others might be slower to follow.

Just this month, for example, it removed several apps from its App Store after learning that some were covertly collecting and selling user data, and next month it will begin requiring all apps to link to their privacy policies that detail exactly how data is collected and used. In other words, Apple’s freedom from the throes of data allows it to zig while its rivals zag.

“The truth is, we could make a ton of money if we monetized our customer—if our customer was our product,” Apple CEO Tim Cook said in an interview with MSNBC in late March. “We’ve elected not to do that.”

"The attack is all on tracking, but I look at that as a symptom, and the most publicly visible evil activity, but really it’s just one."
Sam Tingleff, vp of engineering for IAB Tech Lab

One of the first casualties of Apple’s move last fall was Criteo, one of the largest players in ad tech. After Apple began blocking pervasive tracking, the retargeting company was forced to cut 2018 revenue projections by a fifth, causing its stock to crash by 25 percent last December. Industry insiders also have said to varying degrees that Apple is making retargeting more difficult. 

Sam Tingleff, vp of engineering for IAB Tech Lab, said much of the industry has already adapted to Apple’s moves, but it might be harder when the company rolls out iOS 12 this week. And while he understands the “track-lash” to the ad-tech industry’s years of bad behavior, he said Apple’s being somewhat “hypocritical” by changing its browser while not making apps play by the same rules.

“The attack is all on tracking, but I look at that as a symptom, and the most publicly visible evil activity, but really it’s just one,” Tingleff said.

Karsten Weide, an analyst with IDC, said the changes might help users know that Apple cares about privacy, but it’s also likely not being entirely altruistic—there’s also a business reason. If Apple narrows the flow of data from the mobile web, it could redirect developers to spend more time on mobile apps, where the money is for Apple.

According to IDC’s estimates, in-app mobile ad revenue in the U.S. will grow to $61 billion in 2019 from $51 billion in 2018—a stark contrast from mobile browsers, which will generate an expected $5.8 billion in 2018.

And even Facebook can be at the whims of Apple’s signal changes. “Anytime that they make a change, where let’s say if they were not to accept third-party cookies or pixel data, those would be changes that would impact us,” said Carolyn Everson, Facebook’s head of marketing. “But, we’ve had a really great relationship with them to talk about the importance of data privacy and security.”

But through all of this, Apple isn’t totally against all data-driven advertising. Earlier this year it expanded a test for ads for publishers within Apple News using Google’s online ads services.

Larry Downes, project director at the Georgetown Center for Business and Public Policy, said part of the problem is that it can be difficult to even define privacy—especially when it comes to tech, where data is often collected and then anonymized. He said even the word itself is often “emotionally loaded.” (He also said companies like Facebook and Google could likely learn a thing or two from Apple when it comes to having consistent marketing messages.)

“I don’t think there is a privacy problem,” he said. “I think there’s a perception of a privacy problem.”

This story first appeared in the September 17, 2018, issue of Adweek magazine. Click here to subscribe.

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