Apple’s ad business sees windfall; is accused of breaking its own privacy rules

Apple’s ad business sees windfall; is accused of breaking its own privacy rules

The rules made it more difficult to target specific interest groups through third-party ad networks like those owned by Google and Facebook, making Apple’s own ad business far more valuable. But some suggest this is because the iPhone maker breaks its own privacy rules.

Apple’s ad business has grown dramatically since the company’s App Tracking Transparency rules came into effect, says a new report.

Background

As we’ve explained before, Apple first created a unique device identifier for use by advertisers, then later introduced App Tracking Transparency rules, which required developers to seek user permission to take advantage of it.

App Tracking works by Apple assigning a unique identifier to your device. It doesn’t reveal any details about you, but does allow them to see (for example) that iOS user 30255BCE-4CDA-4F62-91DC-4758FDFF8512 has visited gadget websites, and therefore would be a good target for gadget ads. It also allows them to see that iOS user 30255BCE-4CDA-4F62-91DC-4758FDFF8512 was shown an ad for a particular product on a particular website, then subsequently went to a particular retailer site to buy it – therefore that ad was (likely) successful.

With App Tracking Transparency, app developers must ask you if you want to allow that tracking. If you say no (as most people do), then the apps are not allowed to use that system. That makes third-party advertising worth less.

Apple’s ad business benefited from the change
The Financial Times reports that because Apple’s own search ads effectively let developers target users by interests, it became much more appealing once ATT rules came into force.

Apple’s advertising business has more than tripled its market share in the six months after it introduced privacy changes to iPhones that obstructed rivals, including Facebook, from targeting ads at consumers.

The in-house business, called Search Ads, offers sponsored slots in the App Store that appear above search results. Users who search for “Snapchat”, for example, might see TikTok as the first result on their screen. Branch, which measures the effectiveness of mobile marketing, said Apple’s in house business is now responsible for 58 per cent of all iPhone app downloads that result from clicking on an advert. A year ago, its share was 17 per cent.

“It’s like Apple Search Ads has gone from playing in the minor leagues to winning the World Series in the span of half a year,” said Alex Bauer, head of product marketing at Branch. That is set to see Apple’s ad business revenue climb from $5B this year to $20B/year within three years, estimated one research group.

Apple gives its own ad business special privileges
However, some ad execs and developers say that Apple is only benefiting because it breaks its own privacy rules by exploiting its knowledge of user interest in this way – and more. One mobile advertising executive, who asked not to be named for fear of retaliation, said Apple had “given itself a free pass” because it is “not subject to the same policy that every other ad network is”

Chris Stevens, SpotHero’s chief marketing officer, pointed to the “retargeting” tool, a service offered by Apple to let companies follow users to re-engage with them at a future date. “Apple was unable to validate for us that Apple’s solutions are compliant with Apple’s policy,” he said.

But claimed benefits may be overstated
Media analyst Eric Seufert has previously made the same point – that Apple’s ad business does give itself privileges unavailable to competitors. However, he said the analysis behind the FT piece may overstate the position, for several reasons: Apple said that the aim of ATT was to protect users, but didn’t confirm or deny whether it has benefitted financially.

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