How Will Apple’s Growing Ad Business Affect Consumer Privacy?

The enormous success of Google’s online advertising business (earning $209 billion in revenue in fiscal 2021) has inspired other technology firms such as Amazon, Meta, and Microsoft to build their own online ad operations. Three firms in particular – Amazon, Facebook (owned by Meta), and Google – account for about 74 percent of global digital ad spend. Their success has gained them considerable financial rewards, but also some complications. For instance, Google is being scrutinized by legal authorities (including the U.S. Justice Department) for possibly wielding an unfair advantage owing to its clear dominance of the market.  

And Facebook’s ad business, which relies on the ability to track user activity across the web via third-party cookies, has made the company vulnerable to recent privacy measures that restrict such activity. For instance, in 2021, Apple initiated Application Tracking Transparency (ATT) on iPhone devices. ATT allows consumers to decide whether apps can track them across other applications and websites -- which is essential for Facebook to gather data and then serve up more relevant ads. After scores of users opted out of having their behavior tracked, Facebook said ATT would cost the company $10 billion in lost revenue in 2022 – leading to a massive drop in the Meta’s valuation. Apple, for its part, insisted that ATT was essential to protecting consumer privacy. 

This context is important not only because of the impact on Facebook but as a pretext for an interesting development that has arisen in the ad wars: Apple, the crusader for consumer privacy, is said to be ramping up its own online ad business that relies on tracking consumer data. 

According to Bloomberg, Apple will expand ads to new areas of users’ iPhones and iPads. Apple already sells display ads as follows: 

• Inside of its News and Stocks apps. 
• Inside the App Store, across the iPhone, iPad and Mac. The App Store also has Google-like search ads, as shown below. 

• Inside of TV+ for its Friday Night Baseball agreement with Major League Baseball. 

As shown below, in the News and Stocks apps, the display ads in News and Stock apps are similar to what a user would see on an ad-supported website.  

Apple soon will expand the ads to: 

• The main Today tab (the home page of the App Store, which includes content ranging from App of the Day to Game of the Day). 
• In third-party app download pages. 

For search ads in the app store, developers can pay to have their apps featured in the results when users search terms related to the app. 

According to Bloomberg, advertising already generates $4 billion in revenue annually (a far cry from what Google makes from ads), and Apple wants to increase that to the double digits. Hence, the expansion of ads. 

Selling ads means Apple tracks user data to make them more targeted (and will probably do even more). But wait – didn’t Apple just make it harder for businesses to track user data via ATT? Yes, that’s true. But ATT applies to tracking user data cross the web and apps – known as third-party data. Apple’s own ads rely on first-party data, or the data that the company collects from people directly. Indeed, per Bloomberg, Apple says ATT does not apply to Apple because Apple’s own ad program “does not follow you across apps and websites owned by other companies.” 

Implications 

For businesses, this means more opportunities to advertise to the global base of Apple device owners – especially iPhone users. The iPhone is a premium device catering to people who are more affluent compared to the general population – and sales of iPhones are full steam ahead. So, businesses must be chomping at the bit to connect with them, which is where advertising comes into play. 

For Apple, an expansion of ads: 

• Casts the company’s consumer privacy campaign in a new light. As Curt Maly of Black Box Social Media said in June, “Apple didn’t update iOS to ‘help protect users.’ Apple collects all the info they block on Facebook, Apple is about to get into the ad platform game once again and this is yet another reason for people to flock to a better ad platform.” This could complicate Apple’s own consumer-privacy program just as Google’s advertising business has done to Google’s privacy efforts.  

• Could help Google in its fight against anti-trust legislators. Google can point to Apple’s expansion of an ad business as proof that there is plenty of room in the industry for more competitors (albeit one with a very small revenue base compared to Google’s). 

Advertising on Apple is in early days. We advise businesses to take a closer look at what Apple is doing in order to build their brands with affluent iPhone users. And work with your agency partners to keep close tabs on the ever evolving and complicated consumer privacy landscape.  

Contact IDX  

To learn how you can succeed in a privacy-first world, learn more about our Reporting & Analytics services here or  contact us here. We know the terrain and how to help.   

Related IDX Content  

“Why Google’s Cookie-Less Future Is on (Temporary) Hold,” Paul Headley, August 9, 2022. 

“How Is Google Following Apple’s Consumer Privacy Push?” Paul Headley, March 8, 2022.  

“How and Why Google Is Embracing Consumer Privacy,” Paul Headley, February 15, 2022.   

“Potential Implications of Google’s War Against Third-Party Cookies,” Paul Headley, IDX, April 13, 2021. 

“Important Steps When Considering a Cookie Manager,” Stu White,IDX, December 9, 2020.   

“Why Toxic Cookies Are Killing Your Reputation,” David Corchado, IDX, November 18, 2020.  

“The Problem with Privacy,” David Corchado, IDX, July 28, 2020.  

“Why the CCPA Is a Challenge for Businesses,” David Corchado, January 21, 2020.  

“Five Questions to Ask about Respecting Consumer Privacy,” David Corchado, December 4, 2019.  

“Vueling Airlines Cookie Fine Demonstrates the Costs and Complications of GDPR Compliance,” David Corchado, October 30, 2019.  

“What Is the California Consumer Privacy Act (CCPA)?” David Corchado, September 3, 2019.  

“Keeping up with GDPR, PECR and the evolving privacy and data protection landscape,” David Corchado, August 28, 2019.